GO 357 The Political Economy of Regionalism Walter Hatch Colby College Asia or Asia-Pacific

Is this Region called “Asia?” A “racially” defined, geographically finite space

“Asia” Northeast Asia (Tigers, Dragons) Northeast Asia (Tigers, Dragons) JapanJapan ROK (South Korea)ROK (South Korea) Greater ChinaGreater China PRC (Mainland China) PRC (Mainland China) Hong Kong SAR Hong Kong SAR ROC (Taiwan) ROC (Taiwan) Singapore (da hub) Singapore (da hub) Southeast Asia (New Tigers, Little Dragons) Southeast Asia (New Tigers, Little Dragons) Malaysia and BruneiMalaysia and Brunei IndonesiaIndonesia ThailandThailand The PhilippinesThe Philippines Indochina (Vietnam, Cambodia, Laos)Indochina (Vietnam, Cambodia, Laos) MyanmarMyanmar

Or is the region called “Asia-Pacific?” A “racially” mixed, geographically expansive space

“Asia-Pacific” (= Asia + some) North America North America Latin America Latin America Oceania Oceania AustraliaAustralia New ZealandNew Zealand Russia Russia

And what about India?

Two Questions What drives the high level of regionalization? What drives the high level of regionalization? What causes the low level of regionalism? What causes the low level of regionalism?

High Regionalization

Asia’s Intra-regional Exports ( )

Asian Exports (by destination) 1990 Asia NorthAmerica Europe Other Source: WTO

Asian Exports (by destination) 2005 Source: WTO Asia NorthAmerica Europe Other

Intra-regional Trade (% of total)

FDI to Asia

FDI to China and India ( )

Regional Institutions ASEAN ASEAN APEC APEC EAEG/EAEC EAEG/EAEC ASEAN + 3 ASEAN + 3 East Asian Summit East Asian Summit

ASEAN

ASEAN: Basics Created in 1967 as pro-capitalist (anti-communist) trade bloc Created in 1967 as pro-capitalist (anti-communist) trade bloc 10 member states 10 member states Population of about 559 million Population of about 559 million Combined gross domestic product of US$884 billion Combined gross domestic product of US$884 billion

ASEAN: Organization Secretariat in Jakarta. Headed by secretary-general, who serves a five-year term. Supported by small staff (about 40). Secretariat in Jakarta. Headed by secretary-general, who serves a five-year term. Supported by small staff (about 40). Key work is done in annual summit meetings. The “ASEAN Way” works by consensus, and carefully protects national sovereignty. Key work is done in annual summit meetings. The “ASEAN Way” works by consensus, and carefully protects national sovereignty. Treaty of Amity and Cooperation in Southeast Asia (1976) spells out “non-interference in internal affairs of members” as one of the founding principles of ASEAN.Treaty of Amity and Cooperation in Southeast Asia (1976) spells out “non-interference in internal affairs of members” as one of the founding principles of ASEAN.

ASEAN: Real Integration ASEAN Free Trade Area (AFTA), 1992 ASEAN Free Trade Area (AFTA), 1992 CEPT of 5% by 2008CEPT of 5% by 2008 ASEAN Vision 2020 ASEAN Vision 2020 Results: Results: exports among ASEAN countries grew from US$43.26 billion in 1993 to almost US$80 billion in 1996, an average yearly growth rate of 28.3 percent.exports among ASEAN countries grew from US$43.26 billion in 1993 to almost US$80 billion in 1996, an average yearly growth rate of 28.3 percent. share of intra-regional trade rose from 20 percent to almost 25 percentshare of intra-regional trade rose from 20 percent to almost 25 percent Pace slowed, though, in 1998Pace slowed, though, in 1998

APEC

APEC: Basics Created by Japan and Australia in 1989 Created by Japan and Australia in 1989 Invigorated by Clinton in 1993 Invigorated by Clinton in 1993 A meta-region A meta-region 21 countries21 countries Russia and Peru?Russia and Peru? Population of over 2.6 billion Population of over 2.6 billion Combined GDP of more than $20 trillion Combined GDP of more than $20 trillion Members account for nearly 47 percent of world trade. Members account for nearly 47 percent of world trade.

APEC: Organization Secretariat, located in Singapore, established in 1993 Secretariat, located in Singapore, established in officials seconded by member economies for fixed terms 21 officials seconded by member economies for fixed terms Small permanent staff (about 30) Small permanent staff (about 30)

APEC: Goals “Bogor Declaration” (1994): achieve free and open trade and investment in the Asia-Pacific by 2010 for developed economies and 2020 for developing economies. “Bogor Declaration” (1994): achieve free and open trade and investment in the Asia-Pacific by 2010 for developed economies and 2020 for developing economies. Three pillars Three pillars Trade and Investment LiberalizationTrade and Investment Liberalization Business FacilitationBusiness Facilitation Economic and Technical CooperationEconomic and Technical Cooperation

APEC: Few achievements Operates by consensus Operates by consensus Thus, nothing gets doneThus, nothing gets done Conflicting ambitions Conflicting ambitions EVSL (1996) as example EVSL (1996) as example Identified 15 sectorsIdentified 15 sectors Pared down to two: fisheries and forest productsPared down to two: fisheries and forest products Japan pulls outJapan pulls out

East Asia Economic Group Former Malaysia PM Mahathir (1990) Former Malaysia PM Mahathir (1990) “Asia for Asians”“Asia for Asians” No Oceania, no USNo Oceania, no US US opposition US opposition Japanese reluctance Japanese reluctance EAEG becomes EAEC (caucus) EAEG becomes EAEC (caucus)

ASEAN + 3 Japan, South Korea and China join ASEAN economic ministers at annual meetings Japan, South Korea and China join ASEAN economic ministers at annual meetings Asian Monetary Fund proposal (1997) Asian Monetary Fund proposal (1997) More US oppositionMore US opposition Chiang Mai Initiative for bilateral currency swaps Chiang Mai Initiative for bilateral currency swaps Asian bond program Asian bond program Asian currency regime Asian currency regime

East Asian Summit China’s idea China’s idea no US, pleaseno US, please ASEAN as core ASEAN as core India, pleaseIndia, please And the Oceania-2And the Oceania-2 16 members 16 members First summit in KL in 2005 First summit in KL in 2005

New Regionalism Singapore gets antsy Singapore gets antsy Bilateral agreementsBilateral agreements China emerges as new leader China emerges as new leader FTA with ASEAN (2002)FTA with ASEAN (2002) Japan tries to catch up Japan tries to catch up

Bilateral FTAs

More Bilateral FTAs

WHY SO LITTLE “HARD” REGIONALISM?

Possible Explanations Nationalism Nationalism Legacy of colonialismLegacy of colonialism Illiberal states Illiberal states Security externalities of interdependence Security externalities of interdependence US role US role Hub-and-spokes relationshipHub-and-spokes relationship Divergent cultures Divergent cultures Divergent levels of development Divergent levels of development