Economic Integration in Asia: Bilateral Free Trade Agreements Versus Asian Single Market

Abstract

Institutional regionalization has come late to East Asia compared to Europe, but its pace has accelerated since the mid-1990s. Many agreements, including bilateral ones, cover an ever-increasing portion of the East Asian region, including China. We first analyze regional economic integration in East Asia, questioning the notion of open regionalism. In a second part we explore the possible consequences of different kind of agreements. We rely on the CEPII's CGE model (MIRAGE. As regards the geometry of the agreement(s), two sets of scenarios are considered, following a Hub-and-Spoke versus a Full-FTA assumption, with or without sensitive products inclusion. Among the main results, we find that Asian countries do have diverging interests. While ASEAN maximizes its benefit in the bilateral scenario including agricultural liberalization (SC1); Japan and Korea are the best in the Asia global agreement scenario, including sensitive products for Japan (SC2) but excluding these products for Korea (SC 4). The main losers are the close countries and primary goods producers such as Taiwan, South Asia (excluding India), North of Africa, South America.Please enter abstract text here.

Keywords: computable general equilibrium models, economic integration, Asia, trade simulation, models, mirage, FTA, market access

JEL Classification: D58, F15, N85