In defence of FTAs : from purity to pragmatism in East Asia

Abstract

This paper discusses the shift in East Asia from a focus on multilateral trade liberalization through the WTO to a pragmatic approach since 1999 favouring bilateral and regional FTAs while continuing to support the WTO system. It is argued that such FTAs are a second-best option compared to WTO agreements. However, while economists may seek the ideal solution, governments will focus on the politically attainable, especially as new multilateral agreements require lengthy negotiations beyond the life span of governments. As the WTO negotiating process has become bogged down, even once sceptical governments in East Asia are turning to FTAs. It is contended that such FTAs could form a lattice network within and across regions. In this context, the paper discusses the underlying security rationale for the conclusion of FTAs, highlighting the nexus between security interests and international economic policy in East Asia.