Conclusion

Most countries in East Asia are currently pursuing a three-tier trade policy of multilateralism, regionalism, and bilateralism, with regionalism and bilateralism initiatives becoming increasingly dominant. Thankfully, in spite of the effects of the global financial and economic crisis, governments in the region have not succumbed too much to protectionist pressures from vested groups, although there are reports of murky protectionism in stimulus packages and bailouts of struggling firms and industries (Baldwin and Evenett 2009). With pressures to rebalance growth strategies, there is also a growing emphasis on redirecting export demand from Europe and North America towards regional and domestic demand.

This paper focuses on regional trade policy and architecture and does not analyze the wider aspects of regional integration. Policy priorities should focus on the following:

• A speedy conclusion of the Doha Round. East Asia, more than any other region in the world, is heavily dependent on a healthy and open world trading environment. Countries in Asia, particularly PRC, India, and Japan, will have to ensure that the Doha Round achieves at least a modest success, as the round cannot afford to fail.
• Promotion of a large integrated and dynamic regional market. This requires a coherent regional trade policy and support for regional investments and regional infrastructure links. An integrated regional market can be realized by hastening the progress of the ASEAN Economic Community and by early establishment of a region-wide FTA in East Asia. For the latter, CEPEA is preferable to EAFTA but it would be more difficult to achieve. Hence, a phased approach is recommended, with the establishment of EAFTA to be followed by CEPEA. Either option would require addressing the incoherence and inconsistency of multiple and overlapping FTAs in provisions, commitments, exclusions, and rules of origin and standards. A region-wide FTA should be of high quality and WTO consistent. To prevent a split down the Pacific, parallel negotiations could be launched for an expanded TPP, leading eventually to an APEC-wide FTA.
• Adequate provision of support for the poorer and less competitive economies so that they can also benefit from an integrated market through better supply capabilities. This would require investments and technical and financial assistance from the more developed economies, as well as from international and regional organizations.
• Trade possibilities are constrained by the lack of trade financing during the current crisis and by an inadequate linking infrastructure. International and regional organizations as well as private sector resources should be tapped to ensure adequate trade finance. Investments in physical infrastructure (road, rail, seaport, and airport) and logistics and telecommunications networks should be sped up through the development of infrastructure funds, and through investment liberalization and investor protection to elicit private sector support.
• The adoption of common FTA templates. Plurilateral and bilateral FTAs will continue to proliferate, whatever the Doha Round outcome. However, adopting best practices and common templates will help to minimize the costs and maximize the benefits of multiple and overlapping FTAs. Countries could also undertake domestic structural and economic reforms to ensure that their less competitive sectors and groups became more globally competitive.

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