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The drawbacks of preferential trade agreements in Asia

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  • Dieter, Heribert

Abstract

Preferential trade agreements have spread throughout Asia. However, they have not facilitated intra-regional trade as much as their supporters have suggested. The complexities of rules of origin - part and parcel of all preferential agreements - have resulted in low utilization rates in Asia. The key driver of trade integration in Asia has instead been the rise of China. In the past two decades, China has managed to establish itself as the indispensable trading partner in the region. In 2011, China ran a trade deficit with its neighbouring countries whilst running surpluses with the USA and the EU. At the same time, deeper trade integration in Asia, e.g. an Asian wide customs union, appears to be an unrealistic goal. At this juncture, the political obstacles that hinder a deepening of co-operation are formidable. Other Asian countries wish to cooperate with China, but they demonstrate an ever-rising reluctance to enter far-reaching integration projects with Bejing.

Suggested Citation

  • Dieter, Heribert, 2013. "The drawbacks of preferential trade agreements in Asia," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-26.
    • Handle: RePEc:zbw:ifweej:201324
    DOI: 10.5018/economics-ejournal.ja.2013-24
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    References listed on IDEAS

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    1. Heribert Dieter & Richard Higgott, 2007. "Linking Trade and Security in Asia: Has Washington's Policy Worked?," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 62(02), pages 151-174, June.
    2. Richard E. Baldwin, 2008. "Managing The Noodle Bowl: The Fragility Of East Asian Regionalism," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 53(03), pages 449-478.
    3. Asian Development Bank (ADB), 2013. "Asian Economic Integration Monitor March 2013," ADB Reports RPS135470-3, Asian Development Bank (ADB), revised 05 Nov 2013.
    4. T. J. Pempel, 2006. "The Race to Connect East Asia: An Unending Steeplechase," Asian Economic Policy Review, Japan Center for Economic Research, vol. 1(2), pages 239-254, December.
    5. Ross Garnaut & David Vines, 2007. "Regional free-trade areas: sorting out the tangled spaghetti," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 23(3), pages 508-527, Autumn.
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    3. Eckhardt, Jappe & Serrano, Omar, 2014. "Economic Integration and Rivalry in Asia: Comparing Regional Trade Strategies of China and India," Papers 762, World Trade Institute.

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    More about this item

    Keywords

    Regional integration; Asian co-operation; ASEAN; China; preferential trade agreements;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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