Summary and Conclusions

In this paper, we examined the inter-relationships between subregionalism, regionalism, and multilateralism using the GMS and AFTA as case studies. In particular, we looked at whether subregionalism or regionalism could assist a country in moving towards multilateralism. We found that the GMS program is assisting its members to integrate more closely with the ASEAN region and, through this, with the rest of the world. As a program based on market rather than institutional integration, the GMS is promoting both regionalism and multilateralism. The subregional public goods provided through the program are spilling over to become not only regional but also global.

Next we examined the relationship between regionalism and multilateralism. If members pursue open regionalism and offer their trade and other preferences to nonmembers on a nondiscriminatory basis, then this is consistent with the principles and objectives of multilateralism. For the original ASEAN members, it has actually hastened the speed at which these countries have moved towards their goal of free and open trade because of the ambitious liberalization program that AFTA has committed them to. The newer ASEAN members should follow suit if they are going to maximize the benefits from the overall liberalization program as well as minimize the costs associated with trade diversion and trade, production, and investment deflection.

Even if the newer members decide not to go this route, there are other ways in which regionalism is promoting multilateralism. Increasing integration with the original ASEAN countries will provide the GMS economies with a conduit to the outside world because the original members conduct most of their trade and investment extra-regionally. The strategic location of the GMS also provides opportunities for integration beyond the region. Location between the burgeoning economies of the PRC and India in particular presents great potential to boost trade, tourism, and investment. Finally, since both subregionalism and regionalism can actually contribute to multilateralism, is there still any basis for countries such as Lao PDR and Viet Nam to pursue WTO membership? The answer is still a definite yes, although the net impact will now be necessarily smaller given the benefits that subregionalism and regionalism have delivered. Perhaps the most significant benefit to Lao PDR and Viet Nam from WTO membership may now be in the form of demonstration effects.

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