Trade agreements and strategic rivalry in Asia

The Asia Pacific is currently beset by two contradictory trends: growing economic interdependence and deepening strategic rivalry. Amidst these trends, new sets of regional trade agreements are being negotiated, primarily the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP). This article argues that these proposals represent a third phase of competitive regionalism in the Asia Pacific, which will be more complex than the previous two rounds. This complexity is driven by two factors: this time, rivalry is not over scope or leadership but regional order; and this time there is a greater number of leading players in the rivalry.     

Thirty years of the Australia–Japan partnership in Asian regionalism: evolution and future directions

This article reviews the development of the Australia–Japan partnership in building regional institutions such as the Pacific Economic Cooperation Council and the Asia–Pacific Economic Cooperation over the last three decades since the NARA Treaty was signed in 1976. In a unique partnership, academics, business people, politicians and officials in both countries were central to establishing these regional economic institutions. This article, however, argues that while both countries had shared understandings on regional issues during the first two decades after the treaty, the last decade has seen divergent regional understandings, especially over the rise of China. Japan sees the growing influence of China as a political obstacle due to growing bilateral tensions arising from historical and territorial issues, while Australia finds it a great economic opportunity to promote its trade with and attract investments from China. This differing understanding on China between both countries may act as a major hurdle to the effective and functional partnership in East Asian regionalism.     

East Asian ideas of regionalism: a normative critique

Little was done to challenge nationalist assumptions in the name of regionalism. Regarding nationalism as a sensitive matter best left to a later stage of regionalism, they [advocates of regionalism] did not focus on how nationalist outlooks in the media and elsewhere stand in the way of both regionalism and internationalism.

Gilbert Rozman (2000: 18)

With an increasing regional integration and development, there are many competing ideas of, and proposals for, regional development in Asia. This article examines the historical evolution of the idea of regionalism, the meanings of Asian regionalisms, variations of Asian regionalisms and their impact on regional cooperation in East Asia. It discusses Mahathir's idea of neo‐Asianism, Japanese new Asianism, Chinese ideas of regionalism, and variations of Korean ideas of regionalism. It also examines a normative basis of regionalism with special reference to the sovereignty question. The paper concludes that behind East Asian regionalism is nationalism which constitutes driving forces for regionalism; that two competing orders (Asia‐Pacific regionalism versus pan‐Asianism) create different expectations and visions of how East Asia region should evolve and they are in tensions and lead to different directions; and that East Asia lacks a convincing and acceptable normative framework.1     

Australia and middle power approaches to Asia Pacific regionalism

This article presents a liberal-institutionalist conceptual framework drawn from Middle Power theory to analyse Australian foreign policy approaches towards Asia Pacific regionalism. Building on precedents set by the former Keating administration, the Labor government of Rudd/Gillard (2007–13) undertook high-profile efforts not only to engage, but to champion, the regionalism process in the Asia Pacific. This enterprise became fused with a self-proclaimed identity as a ‘creative middle power’. Through an analysis of regional community building, regional security architecture and regional order, the article identifies the strong linkages between the theory and practice of ‘middle power’ diplomacy, and the concept of ‘regionalism’ itself, in Australian foreign policy. The article thus contributes to the theoretical literature by exposing the important intersections between the two concepts and concludes that despite Rudd’s prolific attempts to harness Australia’s middle power credentials, Canberra was not able to significantly affect the process of Asia Pacific regionalism unilaterally.     

Much Lost,Little Gained? Contemporary Trade Agreements in the Pacific Islands

At the close of the 20th century, it was increasingly clear that Pacific Island countries would struggle to remain competitive in international commodity and merchandise trade. As governments worldwide embraced free trade, many Island exporters looked set to be displaced by more efficient producers elsewhere. Island policymakers also faced pressure from more powerful states to renegotiate trading arrangements to bring them into alignment with the rules of the World Trade Organization. This article explains how Pacific Island countries responded to the overlapping challenges of globalization. It considers strategies pursued by Island states in negotiations with the European Union (EU), and with Australia and New Zealand. In both cases, Pacific Islands pressed for agreements that would take account of their unique trading circumstances, and arrangements that would allow more Pacific Islanders to work abroad. After nearly two decades of talks, however, final results proved disappointing. A proposed regional Economic Partnership Agreement with the EU was essentially abandoned, and a regional trade agreement with Australia and New Zealand was concluded without the signature of Fiji or Papua New Guinea – the two largest Pacific Island economies. Ultimately, contemporary trade agreements in the Pacific achieved little to ameliorate the competitive disadvantages Pacific Island states face participating in international trade.     

Symposium: Australia–US Economic Relations and the Regional Balance of PowerAustralia,the United States and the Trans-Pacific Partnership: Diverging Interests and Unintended Consequences

When the talks for a Trans-Pacific Partnership (TPP) were launched in 2010, there appeared to be a coincidence of interests between the American and Australian governments in negotiating a high-quality, ‘21st-century’ trade arrangement that would multilateralise the bilateral and minilateral trade agreements that have proliferated in the Asia-Pacific region in the last 15 years. As the negotiations progressed, however, a divergence between American and Australian interests became apparent. Protectionist interests in the United States have prevented the administration from improving on market access agreements in the current preferential trade agreements with TPP partners, thereby undermining the multilateralisation objective. Some of the elements of the US template for 21st-century trade agreements, notably enhanced protection for intellectual property, and the inclusion of investor–state dispute resolution, clash with Australian trade priorities. Moreover, the central role of the TPP in the US ‘pivot to Asia’ has led to perceptions that it is part of a strategy to encircle China: consequently the TPP may force Australia to make the very choice between China and the United States that the government wishes to avoid.

当2010年启动跨太平洋伙伴关系时,在谈判高质量、“21世纪”的贸易安排时美国和澳大利亚政府的利益似乎走到了一起。这种贸易安排会使过去十五年里亚太地区繁荣的双边及微关系多边化。在谈判进行的过程中,美澳之间的分歧却变得明朗了。美国的保护主义利益集团阻碍政府在现行的与亚太伙伴的最惠贸易协定中改善贸易准入协定,因此损害了多边化的目标。美国21世纪贸易协议的模式,明显加强了知识产权的保护,而且包含了投资者—国家争端解决的内容,与澳大利亚贸易优先的考虑发生了冲突。但亚太伙伴关系在美国重心移往亚洲的计划中至关重要,让人觉得就是包围中国战略的一部分。因此亚太伙伴关系会迫使澳大利亚在中美之间做澳政府并不愿意做的选择。     

Japan's response to China's rise: regional engagement, global containment, dangers of collision

Japan and China's ability to manage their bilateral relationship is crucial for the stability of the East Asian region. It also has a global impact on the security and economic development of other regions. For just as China's rise has inevitably involved an expansion of its global reach, so Japan's responses to the challenges posed by China have increasingly taken a global form, seeking to incorporate new partners and frameworks outside East Asia. Japan's preferred response to China's regional and global rise in the post‐Cold War period has remained one of default engagement. Japan is intent on promoting China's external engagement with the East Asia region and its internal domestic reform, through upgrading extant bilateral and Japan–China–US trilateral frameworks for dialogue and cooperation, and by emphasizing the importance of economic power to influence China. Japan is deliberately seeking to proliferate regional frameworks for cooperation in East Asia in order to dilute, constrain and ultimately engage China's rising power. However, Japan's engagement strategy also contains the potential to tilt towards default containment. Japan's domestic political basis for engagement is becoming increasingly precarious as China's rise stimulates Japanese revisionism and nationalism. Japan also appears increasingly to be looking to contain China on a global scale by forging new strategic links in Russia and Central Asia, with a ‘concert of democracies’ involving India, Australia and the US, by competing for resources with China in Africa and the Middle East, and by attempting to articulate a values‐based diplomacy to check the so‐called ‘Beijing consensus’. Nevertheless, Japan's perceived inability to channel China's rise either through regional engagement or through global containment carries a further risk of pushing Japan to resort to the strengthening of its military power in an attempt to guarantee its essential national interests. It is in this instance that Japan and China run the danger of a military collision.     

Regional Responses to the Southeast Asian Financial Crisis: A Case of Self-Help or No Help?

The currency-cum-financial crises of the 1990s, particularly that which hit Southeast Asia after the devaluation of the Thai baht on 2 July 1997, are suggestive of the relevance and pervasiveness of contagion or negative spillover effects that are largely regional in scope. As such, one of the mantras since the onset of the Southeast Asian financial crisis has been the need for 'regional solutions to regional problems'. Given that the two focal institutions in Southeast Asia, namely the Association of Southeast Asian Nations (ASEAN) and the Asia-Pacific Economic Cooperation (APEC), were perceived as being successful in their past attempts in problem-solving, there were high expectations that such regionalism would be the key in finding solutions to the Southeast Asian financial crisis and mitigating the aftershocks. Accordingly, this paper evaluates the regional responses to the crisis, taking stock of both preventive and curative initiatives of significance. While the focus is on ASEAN and APEC, consistent with the concept of 'loose' or 'non-institutionalised' regionalism in Southeast Asia and the larger Asia-Pacific regions, other ad hoc unilateral or bilateral initiatives of significance by other Asian member countries in APEC are also examined, particularly those by the region's dominant economic power, Japan. Current regional responses have not been very successful. This has led to a shift in the emphasis to unilateral and bilateral arrangements. Japan's contribution has been by far the largest relative to others. The crisis and the responses to it have revealed that unless there is greater institutionalisation, ASEAN countries would continue to look outside the region for assistance to facilitate their recovery.     

Regionalism, Iran and Central Asia

A combination of revolutionary ideology, trouble with neighbours and location in the Middle East, where regionalism is moribund, make the Islamic Republic of Iran an unlikely enthusiast for regional coalition-building. The impetus towards regionalism derives first and foremost from geopolitical considerations–the need to counter the US government's efforts to isolate Iran–but also from domestic dynamics; the regionalist discourse has lent an acceptable ideological colouring to an increasingly pragmatic foreign policy.
Iran's neighbours, however, share neither its geopolitical predicament nor its ideological complexion, and the actual implementation of Tehran's regionalist agenda has been based on functional cooperation, rather than on geopolitics and ideology. Trade promotion and the development of transport infrastructure to link Central Asia and the Caspian to Turkey and the Persian Gulf have been the most appealing areas for northern neighbours, and dominate the agenda of the Economic Cooperation Organization, Iran's main vehicle for multilateral cooperaton with Central Asia and Azerbaijan. Tehran's 1992 proposal for a Caspian Sea Cooperation Organization has so far been stymied by the littoral states' well-publicized disagreements over the sea's legal status, though their numerous multilateral meetings and handful of agreements suggest that the idea has potential in the medium–term.
Notwithstanding the meagre tangible results to date, Iran's tilt towards regionalism has had a positive impact. It has helped to rehabilitate the Islamic Republic in the eyes of its neighbours, contributed to the evolution of policy debate at home and prepared the ground for future multilateral cooperation.     

The United States and Regionalism in Central Asia

This article examines the record of American policy towards regional cooperation in Central Asia. It begins with the determinants of regionalism and the role of external states therein. It then considers the nature of American interests in Central Asia. This is followed by a historical account of the three stages of American policy towards the region. The article argues that regional cooperation has not been a significant aspect of US policy. Instead US policy-makers have preferred bilateral relations or multilateral structures (e.g. the Partnership for Peace, the GUUAM [Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova] group) which draw the region's states beyond its boundaries. US policy tends to reduce incentives for regional actors to develop multilateral cooperation. It may also encourage competitive regionalist agendas on the part of other interested major powers (Russia and China).     

China and East Asia: An Appraisal of Regional Economic Integration

Three Taiwan-based economists evaluate regional economic integration in East Asia, using trade indicators to analyze the degree of trade concentration among East Asian nations, and employing the gravity model to identify key factors influencing bilateral trade flows among them. China is expected to play a key role in East Asia's economic development, and empirical analysis for the period 1990-2005 indicates that East Asia has already evolved into a trading block, expected to become one of three dominant blocks in the global economy. The study, which highlights the key role played by geographical distance and market size, suggests that the impact of the Association of Southeast Asian Nations (ASEAN) for East Asian trade will remain limited in the future. Journal of Economic Literature, Classification Numbers: F15, F31, O53, P33. 7 tables, 41 references.     

Defining the relationship between Australia and the European Union: is the framework treaty enough?

Australia is currently negotiating a framework treaty with the European Union (EU) that aims at closer cooperation on a wide range of shared policy goals. The treaty is not expected to include trade-liberalisation commitments. This article queries why this is, given the importance of trade and business relations with the EU for Australia, and the fact that the EU exerts international influence primarily as a trade power, rather than a foreign and security policy power. Since 2006, the EU has also been negotiating ‘new-generation’ bilateral free trade agreements (FTAs), focusing on tariffs and regulatory non-tariff trade barriers. It has now committed itself to FTA negotiations with many of Australia's trade partners in Asia and the Organisation for Economic Co-operation and Development. An FTA and a complementary framework treaty were concluded with South Korea in 2010, and the EU is currently negotiating a similar package with Canada. As Australia and Canada are comparable trade partners for the EU, the article argues that an FTA on the EU–Canada model could be a more effective avenue for Australia to achieve deeper engagement with the EU.     

Regulatory regionalism and anti-money-laundering governance in Asia

With the intensification of the Financial Action Task Force's (FATF's) worldwide campaign to promote anti-money-laundering regulation since the late 1990s, all Asian states except North Korea have signed up to its rules and have established a regional institution—the Asia/Pacific Group on Money Laundering—to promote and oversee the implementation of FATF's 40 Recommendations in the region. This article analyses the FATF regime, making two key claims. First, anti-money-laundering governance in Asia reflects a broader shift to regulatory regionalism, particularly in economic matters, in that its implementation and functioning depend upon the rescaling of ostensibly domestic agencies to function within a regional governance regime. Second, although this form of regulatory regionalism is established in order to bypass the perceived constraints of national sovereignty and political will, it nevertheless inevitably becomes entangled within the socio-political conflicts that shape the exercise of state power more broadly. Consequently, understanding the outcomes of regulatory regionalism involves identifying how these conflicts shape how far and in what manner global regulations are adopted and implemented within specific territories. This argument is demonstrated by a case study of Myanmar.     

The role of US defense exports in Asia Pacific regionalism

Despite the emergence of a regional economic space, political integration in the form of institutional building has yet to take shape in the Asia Pacific. On the one hand, the area is constructed as part of a localized space articulated in terms of relatively self-contained regional economic networks. On the other hand, Asia Pacific remains fractured in geopolitical structures, relying heavily on the US to organize the region, particularly in the post-war period. This paper focuses on the nature of lagging regional political integration and examines the role that US defense trade (1989–2004), and to a lesser extent military presence, plays in this. Specifically, it shows that US geopolitical strategy, influenced heavily by a realist framework, displays a pattern of bilateral courtship where its defense trade is positively related to allies in Asia. This relationship results in stronger trans-Pacific than regional linkages, inserting an otherwise localized Asian economic space into the more diffused global US-centered geopolitical space.     

The contested rescaling of economic governance in East Asia: a special issue

The special issue this article opens engages with an apparent conundrum that has often puzzled observers of East Asian politics—why, despite the region's considerable economic integration, multilateral economic governance institutions remain largely underdeveloped. The authors argue that this ‘regionalism problématique’ has led to the neglect of prior and more important questions pertaining to how patterns of economic governance, beyond the national scale, are emerging in East Asia and why. In this special issue, the contributors shift analytic focus onto social and political struggles over the scale and instruments of economic governance in East Asia. The contributions identify and explain the emergence of a wide variety of regional modes of economic governance often neglected by the scholarship or erroneously viewed as stepping stones towards ‘deeper’ multilateralism.     

A call for a new Japanese foreign policy: the dilemmas of a stakeholder state

Japanese foreign policy is at a crossroads. A global power transition is under way; while the United States remains the leading global power, across the globe non‐western developing states are on the rise. Within Asia, China is a growing presence, wielding expansive claims on islands and maritime rights, and embarking on a defence buildup. As power shifts across Asia and the wider world, the terms of leadership and global governance have become more uncertain. Japan now finds itself asking basic questions about its own identity and strategic goals as a Great Power. Within this changing context, there are three foreign policy approaches available to Japan: (1) a classical realist line of working closely with the US in meeting China's rise and optimizing deep US engagement with China by pursuing a diplomacy focused on counterbalancing and hedging; (2) a transformative pragmatist line of rejuvenating itself through Abenomics and repositioning itself in East Asia; and (3) a liberal international line of pursuing a common agenda of enhancing global liberal‐oriented norms and rules through multilateral institutions along with the United States and the Asia–Pacific countries. Current Japanese foreign policy contains a mix of all three approaches. The article argues that a greater focus on the second and the third lines would enhance the current approach; it would ensure that Japan is more in harmony with the global environment and help it work positively for global and regional stability and prosperity, thus enabling Japan to pursue an ‘honorable place in the world’ (as stated in the preamble to its constitution).     

How Japan matters in the evolving East Asian security order

This article argues that Japan matters crucially in the evolving East Asian security order because it is embedded both in the structural transition and the ongoing regional strategies to manage it. The post‐Cold War East Asian order transition centres on the disintegration of the post‐Second World War Great Power bargain that saw Japan subjecting itself to extraordinary strategic constraint under the US alliance, leaving the conundrum of how to negotiate a new bargain that would keep the peace between Japan and China. To manage the uncertainties of this transition, East Asian states have adopted a three‐pronged strategy of: maintaining US military preponderance; socializing China as a responsible regional great power; and cultivating regionalism as the basis for a long‐term East Asian security community. Japan provides essential public goods for each of these three elements: it keeps the US anchored in East Asia with its security treaty; it is the one major regional power that can and has helped to constrain the potential excesses of growing Chinese power while at the same time crucially engaging with and helping to socialize China; and its economic and political participation is critical for meaningful regionalism and regional integration. It does not need to be a fully fledged, ‘normal’ Great Power in order to carry out these roles. As the region tries to mediate the growing security dilemma among the three great powers, Japan's importance to regional security will only grow.     

Canada’s Trade Policy: In Search of a Roadmap

This article examines Canada’s trade policy in light of efforts by the Harper government to respond to increasing global competition through the Global Markets Action Plan (2013). Through an analysis of three initiatives, the Canada–Korea Free Trade Agreement (CKFTA), the Canada–European Union Comprehensive Economic Trade Agreement (CETA), and the Trans–Pacific Partnership (TPP), it becomes clear that Canada’s current strategy has only gone part of the way to enact policies that will be most beneficial to its economy. This article shows that Canada’s Global Markets Action Plan, though ambitious, does not correctly prioritize Canada’s interests: it gives too little attention to improving Canada’s strongest trading relationship with its immediate neighbors in North America; it does not comprehensively address the changing nature of trade (which is now focused on trade in value-added products); and finally, its almost singular focus on market access and increasing exports directs attention away from the type of liberalization that would be most beneficial to Canadians, which is opening up the market for imports and dismantling Canada’s supply management system.     

Macroeconomic Effects of 21st Century Trade and Investment Agreements: The Case of the Trans‐Pacific Partnership

Following United States withdrawal, the Trans‐Pacific Partnership agreement (TPP) is likely to be replaced or complemented by a series of bilateral deals between the US and TPP partners. In this case, TPP will shape trade, finance and public policy globally even without formal US participation. Proponents of TPP emphasize its prospective economic benefits, with economic growth increasing due to rising trade volumes and investment. Widely cited projections suggest modest GDP gains after 10 years, varying from less than half a percentage point in the USA to 13 per cent in Vietnam. However, these projections assume full employment and constant income distribution in all countries, excluding some of the major risks of trade liberalization. This article provides alternative projections of the TPP's economic effects using the United Nations Global Policy Model, which allows for changes in employment and income distribution. Using this model, the authors obtain very different results. They find that the benefits to economic growth are even smaller than those projected with full‐employment models, and are negative for Japan and the USA. More importantly, they find that the TPP will likely lead to losses in employment and increases in inequality.     

Contestability ‘theory’, its links with Australia’s competition policy,and recent international trade and investment agreements

This article examines how contestable market theory (contestability) has come to reconfigure the economic and regulatory concept of competition in order to enhance the compatibility of Australia’s economy with international trade and investment agreements. Australia has recently negotiated and signed a raft of bilateral, plurilateral and regional agreements, including the Trans-Pacific Partnership Agreement and the Australia–China Free Trade Agreement. In order to ensure that Australia meets its obligations and commitments to these agreements, two key advisory bodies—the Harper Panel on Competition Policy Review and the Financial System Inquiry—made recommendations, the majority of which were accepted by the government, to ready Australia’s competition governance and economic policy for greater global integration. Such impact is dependent on, among other things, how domestic competition policy meshes with the free market ideology underpinning such international agreements, which favours the breakdown of barriers to markets. Less well known is the role of contestability in radicalising ideology as it countenances monopolisation and privatisation in the guise of market access by justifying the substitution of actual competition with the mere threat of competition. The article concludes that the monopoly power of transnational corporations will be enhanced through the acquiescence of governments to the new governance regime of the Trans-Pacific Partnership Agreement, which, supported by domestic policy, is set to redraw competition policy in the light of contestability theory.