Multilateralism, Regionalism, Bilateral and Crossregional Free Trade Arrangements: All Paved with Good Intentions for ASEAN?

Abstract

Current initiatives in Asia and Asia Pacific regionalism are responses to regionalism happening elsewhere in the context of globalization, information communication technology and knowledge-based economy. The conclusion is that many economies are 'having it both ways' in multilateralism under World Trade Organization (WTO) and new regionalism. The argument is that the 'first best' theory of free trade under multilateralism and WTO have fallen short. A 'second best' theory of new regionalism has been acknowledged by the Doha ministerial declaration to complement and supplement WTO. Both Asia challenged Asia-Pacific Economic Cooperation (APEC) and the Association of South-East Asian Nations (ASEAN) are challenged by ASEAN Plus Three (APT), which originated from the Asian crisis in the failed Asian Monetary Fund (AMF).Singapore has responded to these challenges in bilateral trading agreements, driven by its idiosyncratic features of a small, city-state economy and frustrated by laggard ASEAN. Increasingly, there is a divergence in macroeconomic policy between Singapore and ASEAN in terms of openness and competition. The dilemma in Singapore's strategy of bilateral trading agreements and foreign economic trade policy is precisely this divergence in macroeconomic philosophy and policy. The pressure on ASEAN is no less from APT, China and regionalism elsewhere than from Singapore. However, the present paper concedes that bilateral and crossregional trading arrangements are still second best, and that broader regionalism and multilateralism are still superior. With so many regional trading arrangements and emerging competition policy there may be rules of origin or 'spaghetti bowl' effects for Singapore. In 'realpolitiks' and real political economy, the balancing of gains and benefits is not easy.

Regionalism's multiple negotiations: ASEAN in East Asia

“…The insufficiencies of other regional arrangements-namely, APEC and ASEAN-only made the APT and East Asian cooperation in general more compelling as a necessary mechanism to manage global forces and influences, as well as states' growing interdependence with one another (Wesley 1999;Webber 2001;Low 2003). Of special note were conclusions that ASEAN was especially ill-equipped to manage global economic flows or global political pressures.…”

“…At the same time, while these competitive dynamics have helped affirm ASEAN's relevance, many also see the proliferation of regional and bilateral trade arrangements and negotiations as distracting and inefficient, if not regionally fragmenting for East Asia as a region (Low 2003;Ravenhill 2003). Consolidating East Asia's many FTAs into one could address some of those concerns and stymie potentially destabilizing effects of intra-regional competition.…”

Singapore's Perspectives on the Proliferation of RTAs in East Asia and Beyond

“…However, its enthusiasm and vigor to expand its economic space will be subdued if the regional economies were to slide into a state of inactivity and retrogression amidst the danger of ASEAN splitting on ethnic and security issues. Singapore's bilateral FTAs serve as an insurance policy against that (Low, 2003b).…”

NATO, APEC and ASEM: triadic interregionalism and global order

“…32 For some others, the APECstyle open regionalism centred around the WTO-style of non-discriminatory MFN liberalization with concessions automatically extended to all members. 33 No matter what open regionalism really means, they are WTO-compatible, and in the case of APEC Bogor goals, it could even be WTO-plus, which would drive the WTO multilateral liberalization further.…”