East Asian Trade and Financial Integration: New Issues (review)

East Asian Trade and Financial Integration: New Issues. Edited by Peter Drysdale and Kenichi Ishigaki. Canberra: Asia-Pacific Press, Australian National University, 2002. Pp. xv + 240. The volume under review presents a collection of essays on new issues in trade and financial integration in East Asia from an Australian and Japanese perspective. The major conclusions of each of these essays were drawn through a joint research project conducted by the Research Institute for Economics and Business Administration (RIEBA), Kobe University, Japan and the Australia-Japan Research Centre (AJRC) at the Asia Pacific School of Economics and Management at the Australian National University, Canberra. The book has ten chapters divided into five sections, each on a different theme related to the overall objective of analysing the emergence of regionalism in East Asia, the role of the AsiaPacific Economic Co-operation (APEC) and its future and current efforts at financial integration. Section I of the book provides an Introduction and Overview of the other chapters in the book and analyses the agenda for regional trade and financial integration in East Asia. The editors observe that traditional preferential Free Trade Agreements (FTAs) do not facilitate deeper market integration, and with a new World Trade Organization (WTO) round being started, there exists scope for enhancing multilateralism, that can also help these economies achieve a goal of free trade by 2010 according to the Bogor Declaration. Closer bilateral economic partnerships currently being considered in some economies, viz. Singapore and Japan, that go well beyond tariff reduction and address issues of investment and services liberalization, as well as trade facilitation measures, may be useful towards attaining this goal, as it does not constrain the countries within the traditional framework of FTAs. The editors contend that the best approach to regional trade liberalization is APEC-wide. Deepening of policy dialogues on financial and monetary co-operation and encouragement for evolving of forums for discussing these issues would be essential prerequisites for financial and monetary integration in East Asia. Section II on Regionalism and Regional Integration consists of two chapters. Chapter 2 on "Old Issues in New Regionalism" by Findlay explores the pros and cons of regionalism using theoretical and empirical evidence in the existing literature, in the context of new wave of regionalism in East Asia. He analyses the issues involved in negotiating regional trade agreements and its impact on multilateralism. He observes from the literature that net welfare effects for an economy engaging in regionalism are uncertain, and that existing regional trading arrangements should promote, not impede, multilateral efforts at liberalizing world trade under the auspices of the WTO. Chapter 3 on "Regional Integration in Asia and Latin America" by Hosono and Nishijima attempts to analyse the forces behind the proliferation of inter-regional and intra-regional FTAs in Latin American economies and the prospects for bilateral FTAs between Asia and Latin America. In this context, the chapter analyses the significance of the proposed JapanMexico FTA and the Japan-Chile FTA. The chapter highlights that the experience of Latin American countries, especially Mexico and Chile in forming bilateral FTAs, can provide important lessons for similar initiatives being contemplated in East Asia. Section III of the book focuses on APEC and subregional trading arrangements, and also consists of two chapters. Chapter 4 on "Subregional Trading Arrangements: Managing Diversity" by Elek focuses on the role of subregional fora, such as APEC, in managing the diversity of its members and its moves to form regional trading arrangements. He details the policy issues involved in the proliferation of subregional trade agreements in Asia. The author asserts correctly that in order to minimize the strain on the APEC process and to help it to focus on options for creating new economic partnership, it is indeed desirable to have a set of guiding principles for the upcoming subregional trading arrangements. These arrangements could be ASEAN Economic Bulletin 99 Vol. 20, No. 1, April 2003 compatible with and could set useful precedents for achieving a vision of open trade and investment within APEC as observed in the Bogor Declaration. Chapter 5 by Lee analyses the welfare implications of regional free trade agreements through a "general equilibrium evaluation of the Japan-Singapore free trade...