Given the large scale of its contribution to world trade, Asia has been relatively slow in establishing such agreements. However, prompted by the 1997 Asian financial crisis, Asian economies have started to move toward regionalism. According to Richard Pomfret, an economist at Adelaide University in Australia, as many as 70 trade agreements were signed by East Asian countries between 2000 and 2007. As a member of the WTO and the 16th-largest trading nation in the world, Taiwan is entitled to participate in RTAs and would indeed be an acceptable partner in any such arrangement. However, due mainly to obstruction from China, Taiwan has signed RTAs with only five of its diplomatic allies in Central America and is still engaged in long-standing discussions on a bilateral agreement with the United States.
As distinct from the so-called "noodle bowl" of a large number of over-lapping trade agreements, there is serious interest in the issue of a Asian regionalism. Shedding light on the topic, a new book, "Asia's New Regionalism and Global Role," was jointly published by India's Research and Information System for Developing Countries and by the Institute for Southeast Asian Studies, coming from Singapore.
According to its preface, the work brings together revised versions of a selection of papers presented at conferences on Asian economic integration held in 2005 and 2006, and it seeks to carry forward the debate on the issue which is "currently engaging the minds of leaders and policy makers of the region." The publication is edited by three scholars, Nagesh Kumar, K. Kesavapany and Yao Chaocheng, from India, Singapore and China, respectively. Following an editorial introduction, the book is organized into five major theme-oriented parts, each devoted to a particular aspect of the issue.
The basic premise argues that there is a need for a new approach to Asia's role in the global economy. It claims that existing groups, notably the Asia-Pacific Economic Cooperation forum that includes Taiwan and the Association of Southeast Asian Nations plus Three forum that brings together the Southeast Asian economies with China, Japan and South Korea, have failed to make any tangible progress toward their stated goals of broader economic interaction. The book examines various ongoing attempts toward regional cooperation, but believes the efforts are unlikely to exploit the full potential of economic integration in the region. Amongst other priority areas, a need is seen for a regional institution to mobilize its vast foreign exchange reserves of nearly US$3 trillion.
In its concept of economic integration, the book speaks of "molding a common Asian region" and herein lies a basic weakness that appears throughout--the lack of an agreed geographical definition of Asia. There is the recurring implication that Asia extends from Japan to India, including Southeast Asia. Geographically, of course, Asia extends from Israel to the Kamchatka Peninsula in eastern Russia, but no criteria are offered in the book to suggest it should reach no further west than India. A need to "squarely tackle the issue of the name, process, scope and goal of Asia's future entity" is sensibly argued. However, until such basic determinations are made, it is surely premature to consider matters such as a common identity or an Asian currency unit as mooted.
The book then moves on to review the roles in the Asian integration process of ASEAN, Japan, China and India.
ASEAN is seen as the leading example of Asian regional cooperation with experience that will be relevant and useful to the efforts to build an East Asian community. It lists certain necessary pre-conditions for integration based on that experience.
Particular consideration is given to Japan's trade negotiations and to its preference for economic partnership agreements, which cover issues such as investment and the development of sectors such as services and infrastructure, rather than mere free trade agreements. An overview of EPA negotiations with Asian nations is provided including a short paragraph on the economic relationship with Taiwan, which it describes as "strong." Special emphasis is put on Japan's relations with India, seeing its own key role as integrating ASEAN plus Three with India through trade and investment.
Despite the geographic, demographic and economic size of the nation, only limited space is devoted to China. Understandably, the book draws attention to the rise of China as it becomes the locomotive of the Asian economy and to the prediction that, measured in real terms rather than in U.S. dollars, it is expected to be the world's largest economy by 2020. Two points will be of special interest to Taiwan. The author mentions that some economists from China are proposing to gradually build a Greater China Free Trade Agreement that would include mainland China, Taiwan, Hong Kong and Macau, though further details are difficult to trace. It is also asserted that the process of Asian economic unification will accelerate China's political reform and its move toward democracy--an assertion that all interested in the peaceful progress of Asia will fervently hope is realistic.
A long section deals with India and Asian economic integration. It states that India's integration into the East Asian region, following the initiation of its "Look East" policy in 1991, is deeper than generally recognized. It is rich in tabulated data supporting a detailed analysis of the Indian economy.
The book's three themes deal respectively with trade and investment, monetary and financial cooperation, and regional cooperation for energy security. An examination of trade integration in Asia and the Pacific considers ways in which regionalism could be consolidated and globalised with the key task being to achieve a more rational process of Asia-wide integration than is offered by the many regional RTAs. However, the existence of deep-seated historical conflicts that appear to be preventing further integration is noted. Nevertheless, the view is stated that the formation of an Asian economic community would enhance global welfare rather than divert trade, which is a feature typical of many RTAs.
Monetary and financial cooperation in Asia are examined with special reference to two major topics, being the so-called Chiang Mai initiative, which includes currency swap arrangements aimed at preventing further financial crises like those of 1997, and the risk of global imbalances, notably between the United States, the world's largest debtor, and emerging Asian economies with their huge current surpluses. It is concluded that these current imbalances pose a serious threat to the U.S. economy, and it is suggested that the northern and southern Asian countries and the United States should work together to promote regional cooperation in Asia, which should help the United States reduce its external deficits while boosting growth in Asia.
Finally, the energy outlook until 2020 is examined in terms of its estimated future supply and demand, with various opportunities for regional cooperation being listed. However, given the global concern over climate change and the anticipated expansion in Asia's demand for fossil fuels, there is only a minimal reference to renewable energy.
The contributions to this new book were written by a highly qualified group of academics, businesspeople and public servants from seven countries and are thorough and thought-provoking. Considering the wide diversity of cultures and levels of development across the region covered by the project, both the concept of regionalism itself and the resulting publication are ambitious.
The origin of the book as a collection of conference papers, even when revised, results in both strengths and weaknesses. The strengths are clearly derived from the expertise of its contributors. Its weaknesses are the result of the differing degrees of detail and associated lengths of chapters and a lack of a clear, criteria-based definition of Asia with a consequential element of geographical confusion that arises. The book's subtitle gives a clue to the underlying concept of the region, though nowhere is it formally laid out and, apart from occasional references, the almost complete disregard for Taiwan's separate existence, international politics aside, is a significant blemish on the coverage provided. It is to be hoped that future conferences on Asian economic integration, and any publications emerging from them, will not continue to ignore one of the region's most successful economies.
Apart from one or two minor flaws, such as the occasional extra spaces between words and a few spelling errors, the book is well presented. There are, however, two deficiencies that create difficulties for the reader. There is no index and no glossary of acronyms and abbreviations with which the book is overloaded. Most potential readers will be familiar with entities like ASEAN, APEC, EU, NAFTA, OECD, and probably even RTA, but everybody, except the most regionally aware specialists, will be hard put to decipher such acronyms as AAC, CCL, EAC, ERIA, JACEP, LRP, MRA, NAB, ROO and TAC. Even though most are spelled out when first introduced, the full versions are difficult to retrace.
Despite the absence of an involvement in regional RTAs by Taiwan and minimal reference by the book to the island's economy, it will, as a whole, be of considerable interest to people who are concerned with regional economic matters and the growing efforts to develop closer relationships amongst the East Asian economies.
Copyright 2008 by Philip Courtenay
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