Regionalism as an Engline of Multilateralism: A Case for a Single East Asian FTA

Abstract

As East Asia becomes increasing integrated through market-driven trade and FDI, free trade agreements (FTAs) are proliferating. Consodildation of mutiple and overlapping FTAs into a single East Asian FTA can help mitigate the harmful noodle bowl effects of different or competing tariffs, standards and rules. A region-wide FTA will also encourage participation of low-income countries and reduce trade-related business costs, particularly for small and medium enterprises. A computable general equibrium (CGE) model examines the economic impact of various types of FTAs in East Asia (among ASEAN 1's, ASEAN 3, and ASEAN 6) finding that consolidation at the ASEAN 6 level would yield the largest gains to East Asia among plausible regional trade agreements.

Keywords: Free trade agreement, ASEAN, multilateralism, CGE models

JEL Classification: F13, F15, F17