Challenges to the global trading system : adjustment to globalization in the Asia-Pacific region

253 Pages·2007·1.47 MB·English

by  Peter A Petri

Challenges to the Global Trading System
International trade continues to expand robustly in East Asia and elsewhere, but
global trade negotiations have collapsed and globalization is widely criticized. One
line of argument is that ‘real world’ trade policy favours rich countries and the strongest
producers within them. Another sees globalization as the cause of varied social ills,
including income inequality, environmental degradation, violations of labour and
human rights, and the destruction of culture.
In this book, the participants of the 30th Pacific Trade and Development
Conference—including the then-Director General of the World Trade Organization,
leading government officials, academics and executives from a dozen major Pacific
Rim economies—debate whether global negotiations have ended once and for all, or
are suffering temporarily from ‘globalization fatigue’, whether East Asia’s new regional
partnerships will advance or undermine the global trading system; and whether the
region’s trade tensions with the United States will intensify or subside. They provide
new empirical evidence on how trade affects the distribution of income, the location
of pollution-intensive industries, the causes of ‘outsourcing’, the structure of the
intellectual property regime and international security. They also probe the implications
of adjustment to globalization: how can countries reap the benefits of trade while
controlling the risks faced by the poor and, perhaps more importantly, the politically
strong?
Offering an unusually wide-ranging perspective on the adjustment problems caused
by trade, as well as strategies for managing these problems, Challenges to the Global
Trading System is an invaluable resource for students and scholars of Asia-Pacific
studies, international relations and development studies, as well as those with a more
general interest in Asian studies.
Peter A. Petri is the Carl J. Shapiro Professor of International Finance at Brandeis
University.
Sum ner J. La Croix is a Senior Fellow at the East-West Center and professor and
chair of the Department of Economics, University of Hawaii.
Pacific Trade and Development Conference Series
Edited by Peter A. Petri and Sumner J. La Croix
Titles published by Routledge in association with the PAFTAD International Secretariat
and the Australia–Japan Research Centre, The Australian National University include:
Business, Markets and Government in the Asia Pacific
Edited by Rong-I Wu and Yun-Peng Chu
Asia Pacific Financial Deregulation
Edited by Gordon de Brouwer and Wisarn Pupphavesa
Asia Pacific Economic Cooperation/APEC: Challenges and Tasks for
the 21st Century
Edited by Ippei Yamazawa
Globalization and the Asia Pacific Economy
Edited by Kyung Tae Lee
The New Economy in East Asia and the Pacific
Edited by Peter Drysdale
Competition Policy in East Asia
Edited by Erlinda M. Medalla
Reshaping the Asia Pacific Economic Order
Edited by Hadi Soesastro and Christopher Findlay
Challenges to the Global Trading System
Adjustment to globalization in the Asia-Pacific region
Edited by Peter A. Petri and Sumner J. La Croix
Challenges to the Global Trading
System
Adjustment to globalization in the Asia-Pacific
region
Edited by
Peter A. Petri and
Sumner J. La Croix
First published 2007 by Routledge
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Publisher’s note: This book has been prepared from camera-ready copy
provided by PAFTAD International Secretariat.
© 2007 PAFTAD International Secretariat for selection and editorial
matter; individual chapters, the contributors
All rights reserved. No part of this book may be reprinted or reproduced
or utilized in any form or by any electronic, mechanical, or other means,
now known or hereafter invented, including photocopying and recording,
or in any information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Pacific Trade and Development Conference (30th : 2005 : Honolulu, Hawaii)
Challenges to the global trading system : adjustment to globalization in the Asia-Pacific region /
edited by Peter A. Petri and Sumner La Croix.
p. cm. — (Pacific Trade and Development Conference series ; 8)
Includes bibliographical references.
ISBN 978-0-415-42986-3 (hardback : alk. paper) 1. Asia—Commerce—Congresses. 2. Pacific
Area—Commerce—Congresses. 3. International trade—Congresses. I. Petri, Peter A., 1946- II. La
Croix, Sumner J., 1954- III. Title.
HF3751.7.P32 2005
382.095—dc22
2006039009
ISBN 0–203–44186–9 Master e-book ISBN

ISBN 10 0-415-42986-2 (hbk)
ISBN 10 0-203-44186-9 (ebk)
ISBN 13 978-0-415-42986-3 (hbk)
ISBN 13 978-0-203-44186-2 (ebk)
Contents
List of figures vii
List of tables and boxes viii
List of contributors x
Preface xiii
List of abbreviations xv
1 New challenges to the global trading system 1
Sumner J. La Croix and Peter A. Petri
2 The challenge of policy in the era of globalization 9
Supachai Panitchpakdi
3 Globalization fatigue, not globalization backlash 15
Douglas A. Irwin
4 The emergence of ‘intra-mediate trade’: implications for the
Asia-Pacific region 21
Yumiko Okamoto
5 The political economy of the proliferation of FTAs 43
Yung Chul Park, Shujiro Urata and Inkyo Cheong
6 US trade policy towards China: discrimination and its implications 58
Chad P. Bown and Rachel McCulloch
7 Does trade lead to a race to the bottom in environmental
standards? Another look at the issues 83
Erlinda M. Medalla and Dorothea C. Lazaro
8 What’s new about outsourcing? 115
Justin Yifu Lin and Ying-Yi Tsai
9 Have developing countries gained from the marriage between
trade agreements and intellectual property rights? 131
Sumner J. La Croix and Denise Eby Konan
vi Contents
10 Economic interdependence and security in the Asia Pacific 155
Rong-I Wu, Chyuan-Jenq Shiau and Chi-Chen Chiang
Policy Perspectives 183
11 Practitioner’s perspectives on trade and development 184
Mari Pangestu
12 US trade strategy and the Asia-Pacific region 190
Lisa Coen
13 Balancing regional and multilateral commitments: the case
of Iceland 192
Geir H. Haarde
14 Globalization and politics 194
Doug Bereuter
Business Perspectives 197
15 New dimensions of globalization 198
Narongchai Akrasanee
16 California: a microcosm of Pacific Rim trade issues 200
Richard M. Rosenberg
17 Globalization at the University of Hawaii 203
David McClain
18 Competition and fairness in the execution of globalization 205
Arthur L. Goldstein
19 International opportunities and national choices 209
Pang Eng Fong
Academic Perspectives 211
20 Adverse trends in trade negotiations 212
Peter Drysdale
21 Sustaining the multilateral trading system 215
Hugh Patrick
22 Adjustment, compensation and contingent protection 217
Peter A. Petri
23 First- and second-order adjustments to globalization 220
Hadi Soesastro
24 Managing adjustments to globalization 222
Kim Song Tan
Index 224
Figures
4.1 The new pattern of trade and productivity growth 29
4.2 Conventional measure of trade openness and productivity
growth 29
4.3 The link between the degree of integration and changes
in investment ratios 30
4.4 The link between the degree of integration and skill upgrading 31
4.5 The link between the degree of integration and innovation
activities 32
7.1 Trade structure of pollution-intensive products: industrial
chemicals 94
7.2 Trade structure of pollution-intensive products: iron and steel 94
7.3 Trade structure of pollution-intensive products: pulp and paper 94
7.4 Trade structure of pollution-intensive products: non-metallic
minerals 94
7.5 Trade structure of pollution-intensive products: non-ferrous
minerals 94
7.6 Growth of environmental goods trade, 1990–2002 106
8.1 Growth of semiconductor (SC) content in the electronics
system 120
8.2 Cycle of the semiconductor industry 121
8.3 IDM vs. fabless business model 122
8.4 Worldwide semiconductor capital spending by region 123
Tables and boxes
4.1 Ratios of trade to GDP 25
4.2 Shares of capital goods, parts and components and machinery 27
4.3 Shares of exports and imports by end-use categories in
Australia and New Zealand 28
4.4 Wage inequality: decreased or increased? 33
4.5 Shares of exports and imports by end-user categories for new
ASEAN members 35
4.6 Growth performance of ASEAN countries 37
5.1 Progress of major FTAs in East Asia 45
5.2 Impact of FTAs on GDP 49
5.3 Impact of FTAs on regional GDP in East Asia 50
5.4 Impact of FTAs in East Asia on regional capital stock 52
5.5 Effects of tariff elimination and stringency of ROO on trade 53
5.6 Tariff elimination in FTAs 53
5.7 Summary of ROO in major FTAs 54
5.8 Overall assessment of quality of FTAs 54
6.1 US antidumping actions against its ten most frequently
investigated trading partners, 1980–2003 62
6.2 China’s relative performance in multi-country US antidumping
investigations that ended in duties against at least one country 64
6.3 China safeguard investigations by the United States under
Section 421 67
6.4 Examples of China textile safeguard investigations by the
United States in 2004 68
6.5 Recent examples of US preferential trade agreements 70
6.6 Preferential trade agreement partners’ 2003 textile and
apparel exports to the United States, compared with China 71
6.7 Sources of US, Australian and Japanese imports of textiles

and clothing, 2003 72
6.8 Percentage change in export values in constant US dollars 73
7.1 Average share of trade products, per country group, by
pollution classification 1996–2000 90
Tables ix
7.2 Revealed comparative advantage index 91
7.3 Share of product group by pollution classification in total exports,
per country group 1996–2000 92
7.4 Classification of pollution-intensive industries 93
7.5 Trade share of selected pollution-intensity products, per country
group 1991–2000 95
7.6 Revealed comparative advantage per product classification 96
7.7 Existing environmental regulations of selected (APEC)
developing countries 98
7.8 National eco-labelling programmes 107
7.9 List of developed and developing countries 108
7.10 MEAs with trade implications 110
9.1 Major features of the TRIPs Agreement 136
9.2 Estimates of net royalty and licence transfers in selected EU
and APEC countries 141
9.3 Estimates of losses from piracy in selected Asia-Pacific
countries (2003) 147
9.4 WCT and WPPT contracting parties in Asia 148
10.1 Trade development in selected Asia-Pacific countries 160
10.2 Merchandise exports within regional trade blocs 161
10.3 Trade dependence index of 14 economies 162
10.4 FDI flows in Asia and the Pacific 163
10.5 Development indicators of East Asian and Pacific developing
countries, 1986–2003 164
10.6 Inflows of foreign workers of selected countries 165
10.7 Registered foreign workers in Taiwan, by origin 165
10.8 Overseas workers from the Philippines, by destination 166
10.9 The proliferation of FTAs in the Asia Pacific 167
10.10 Military expenditure, selected countries, 1989–2003 169
10.11 Cross-Strait exchanges, 1988–2003 172
Box 7.1 Five main environmental effects of trade liberalization 96
Box 7.2 Differentiating government environmental regulation approaches 97
Box 7.3 The green provisions in the WTO 100
Box 7.4 A disguised restriction on international trade? A note from WTO
dispute settlement decisions 102
Box 7.5 How the WTO relates to environmental agreements 104