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N° 2006-15 |
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| October 2006 |
| Economic Integration in Asia: Bilateral Free Trade Agreements Versus Asian Single Market |
Hedi Bchir
Michel Fouquin |
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Institutional regionalisation has come late to East Asia compared to Europe, but its pace has
accelerated since the mid-1990s. Many agreements, including bilateral ones such as those
signed between Singapore and Japan, and plurilateral ones such as those between ASEAN
countries (e.g. ASEAN Free Trade Agreement (AFTA below)), cover an ever-increasing
portion of the East Asian region, including China. We first analyse regional economic
integration in East Asia, questioning the notion of open regionalism. In a second part we
explore the possible consequences of different kind of agreements. We rely on the CEPII’s
CGE model (MIRAGE), adapted to the specificity of Asia’s economic integration. As
regards the geometry of the agreement(s), two sets of scenarios are considered, following a
Hub-and-Spoke versus a Full-FTA assumption, with or without sensitive products
inclusion.
Among the main results, we find that Asian countries do have diverging interests. While
ASEAN maximises its benefit in the bilateral scenario including agricultural liberalisation
(SC1); Japan and Korea are the best in the Asia global agreement scenario, including
sensitive products for Japan (SC2) but excluding these products for Korea (SC 4). For EU-
25, it appears that increased competition within Asia has a negative impact on its goods
exports but positive impact on its service exportations. The main losers are the close
countries and primary goods producers such as Taiwan, South Asia (excluding India),
North of Africa, South America. |
Abstract |
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| Computable general Equilibrium Models; economic integration; Asia;
trade simulation |
Keywords |
| D58; F15; N85 |
JEL classification |
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