Asia's Free Trade Agreements

305 Pages·2013·1.68 MB·English

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A Joint Publication of the Asian Development Bank
and the ADB Institute with Edward Elgar Publishing
AASSIIAA’’SS FFRREEEE TTRRAADDEE
AAGGRREEEEMMEENNTTSS
HOW IS BUSINESS RESPONDING?
wl
Asian Noodle Bo
Edited by
Masahiro Kawai and Ganeshan Wignaraja
LIST OF PUBLICATIONS
Also by Masahiro Kawai
Asian Regionalism in the World Economy: Engine for Dynamism and
Stability (co-edited with J.W. Lee and P. Petri)
Asia’s Contribution to Global Economic Development and Stability
(co-edited with S. Stone)
Policy Coherence towards East Asia: Development Challenges for
OECD Countries (co-edited with K. Fukasaku, M.G. Plummer and
A. Trzeciak-Duval)
Financial Development and Integration in East Asia (co-edited with
C.Y. Ahn, T. Ito, and Y.C. Park)
Financial Interdependence and Exchange Rate Regimes in East Asia
(edited)
Exchange Rate Regimes in East Asia (co-edited with G. de Brouwer)
The New World Fiscal Order (co-edited with C.E. Steuerle)
Also by Ganeshan Wignaraja
Pan-Asian Integration: Linking East and South Asia (co-edited with
J. Francois and P. Rana)
National Strategies for Regional Economic Integration: South and East
Asian Case Studies (co-edited with J. Francois and P. Rana)
Competitiveness Strategies in Developing Countries (edited)
Small States in Transition: From Vulnerability to Competitiveness (with
M. Lezama and D. Joiner)
Mauritius: Dynamising Export Competitiveness (with S. Lall)
Technology and Enterprise Development: Ghana Under Structural
Adjustment (with S. Lall, G.B. Navaretti and S. Teitel)
Trade Liberalization in Sri Lanka: Exports, Technology and Industrial
Policy
The Postwar Evolution of Development Thinking (with C. Oman)
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Asia’s Free Trade
Agreements
How is Business Responding?
Edited by
Masahiro Kawai
Dean and CEO, Asian Development Bank Institute, Japan
Ganeshan Wignaraja
Principal Economist, Offi ce of Regional Economic Integration,
Asian Development Bank, Philippines
A JOINT PUBLICATION OF THE ASIAN DEVELOPMENT BANK
AND ADB INSTITUTE WITH EDWARD ELGAR PUBLISHING
Edward Elgar
Cheltenham, UK • Northampton, MA, USA
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© Asian Development Bank and Asian Development Bank Institute 2011
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means, electronic,
mechanical or photocopying, recording, or otherwise without the prior
permission of the publisher.
Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Cheltenham
Glos GL50 2JA
UK
Edward Elgar Publishing, Inc.
William Pratt House
9 Dewey Court
Northampton
Massachusetts 01060
USA
A catalogue record for this book
is available from the British Library
Library of Congress Control Number: 2010929041
ISBN 978 1 84980 386 1
Typeset by Servis Filmsetting Ltd, Stockport, Cheshire
Printed and bound by MPG Books Group, UK
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Contents
List of contributors vii
Foreword by Haruhiko Kuroda ix
Preface xi
List of abbreviations xiii
PART I OVERVIEW
1 Introduction 3
Masahiro Kawai and Ganeshan Wignaraja
2 Main fi ndings and policy implications 33
Masahiro Kawai and Ganeshan Wignaraja
PART II NORTHEAST ASIA
3 Japan 77
Daisuke Hiratsuka, Ikumo Isono and Hitoshi Sato
4 People’s Republic of China 106
Zhang Yunling
5 Republic of Korea 130
Inkyo Cheong and Jungran Cho
PART III ASEAN ECONOMIES
6 Singapore 159
Chia Siow Yue
7 Thailand 199
Ganeshan Wignaraja, Rosechin Olfi ndo, Wisarn Pupphavesa,
Jirawat Panpiemras and Sumet Ongkittikul
8 Philippines 227
Ganeshan Wignaraja, Dorothea Lazaro and
Genevieve De Guzman
v
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vi Contents
PART IV CONCLUSION
9 Conclusion 261
Masahiro Kawai and Ganeshan Wignaraja
References 270
Index 283
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Contributors
Inkyo Cheong is Director of Jungsuk Research Institute, Inha University,
and Professor of Economics at Inha University, Incheon, Korea.
Chia Siow Yue is Senior Research Fellow at the Singapore Institute of
International Aff airs.
Jungran Cho is Research Fellow at Jungsuk Research Institute, Inha
University, Incheon, Korea.
Genevieve De Guzman was a Consultant at the Asian Development Bank,
Manila.
Daisuke Hiratsuka is Director- General of the Research Planning
Department, Institute of Developing Economies- Japan External Trade
Organization (IDE- JETRO) and Director of the ERIA Support Offi ce,
JETRO, Tokyo.
Ikumo Isono is Research Fellow at the Bangkok Research Center, Institute
of Developing Economies- Japan External Trade Organization (IDE-
JETRO), Tokyo.
Masahiro Kawai is Dean and CEO of the Asian Development Bank
Institute, Tokyo.
Dorothea Lazaro is Program Coordinator at the ASEAN–Australia–New
Zealand FTA Support Unit, ASEAN Secretariat, Jakarta.
Rosechin Olfi ndo was a Consultant at the Asian Development Bank,
Manila.
Sumet Ongkittikul is Research Specialist at the Thailand Development
Research Institute (TDRI), Bangkok.
Jirawat Panpiemras is Research Specialist at the Thailand Development
Research Institute (TDRI), Bangkok.
Wisarn Pupphavesa is Advisor at the Thailand Development Research
Institute (TDRI), Bangkok.
Hitoshi Sato is Research Fellow at the Development Studies Center,
vii
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viii Contributors
Institute of Developing Economies- Japan External Trade Organization
(IDE- JETRO), Tokyo.
Ganeshan Wignaraja is Principal Economist at the Offi ce of Regional
Economic Integration, Asian Development Bank, Manila.
Zhang Yunling is Professor and Director of the Institute of Asia- Pacifi c
Studies, Chinese Academy of Social Science (CASS), Beijing University.
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Foreword
Asia’s economic importance in the world economy has been shaped by
rapid globalization alongside progressive regionalization. The region was
transformed from an underdeveloped backwater into a global factory
through structural reforms and liberalization and 50 years of outward-
oriented development strategies, infrastructure investment and upgrading
of human capital. Over time, ‘factory Asia’ developed deeper regional
roots as production networks and supply chains increasingly connected
various economies in diff erent stages of development. The rapid expansion
of Asian trade and investment briefl y stalled during the global fi nancial
crisis of 2008–09 but is expected to pick up in the next few years. Amidst
slow progress in the World Trade Organization (WTO) Doha trade talks,
protectionism remains a risk to Asia’s trade prospects.
Since the millennium, free trade agreements (FTAs) are increasingly
being used to pursue trade and investment liberalization in Asia. East Asia
has emerged at the forefront of Asia’s FTA spread with 47 FTAs in eff ect
as of June 2010 and another 90 or so in various stages of preparation. The
rapid spread of FTAs since 2000 has sparked concerns about the ‘Asian
noodle bowl’ eff ect of multiple, overlapping agreements particularly on
small and medium- sized enterprises (SMEs). In response to such concerns,
Masahiro Kawai, Dean of the Asian Development Bank Institute (ADBI),
and Ganeshan Wignaraja, Principal Economist at the Asian Development
Bank’s Offi ce of Regional Economic Integration, spearheaded this study
on the business impact of Asian FTAs by using enterprise surveys in
several East Asian economies. This study, the fi rst of its kind to shed light
on the FTA debate, shows that concerns about the Asian FTA noodle
bowl eff ect may be overstated and SMEs have not been unduly aff ected, at
least in this point in time. But as the number of FTAs grows and business
increasingly uses FTA preferences, we may expect more concerns about
the Asian noodle bowl to arise in the future.
The region needs to think about appropriate measures to overcome the
Asian FTA noodle bowl in the future. The study suggests several practical
measures, including encouraging rationalization and fl exibility of rules of
origin, upgrading origin administration, improving business participation
in FTA consultations, and strengthening institutional support systems
for SMEs. The study also suggests two additional proposals to mitigate
ix
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x Foreword
the Asian FTA noodle bowl, albeit long- run initiatives: crafting a region-
wide FTA and multilateralizing Asian regionalism. Concluding the Doha
Round and avoiding protectionism are, of course, vital. It is hoped that
this study will contribute to strengthening regional trade policies in Asia
and compatibilities with global trade rules.
Haruhiko Kuroda
President, Asian Development Bank
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