Whither Free Trade Agreements? Proliferation, Evaluation and Multilateralization (review)

ASEAN Economic Bulletin Vol. 21, No. 3 (2004), pp. 330-39 ISSN 0217-4472 BOOK REVIEWS Whither Free Trade Agreements? Proliferation, Evaluation and Multilateralization. Edited by Jiro Okamoto. IDE Development Perspective Series no. 2. Tokyo: Institute of Developing Economies (IDE), Japan External Trade Organization (JETRO), 2003. Pp. 414. This volume is the outcome of an IDE Research Project analysing the motives, incentives and objectives behind the proliferation of free trade agreements (FTAs) among the Asia-Pacific economies. The volume uses a good mix of theoretical and institutional analysis of global trade and supplements it with detailed case studies to answer the complex questions on FTAs, the reasons for their proliferation, and the extent to which they can be made consistent with the multilateral trading system. In particular, this is one of the few books that delve into the concept of multilateralization of FTAs and tries to analyse the extent to which Asia-Pacific economies can design FTAs that can possibly be "multilateralized". The book consists of thirteen chapters divided over three sections. While the first section provides the theoretical and institutional perspectives on the subject, the second section, which constitutes the most important contribution of the book, consists of detailed case studies on the motives of the FTA and objectives of eight individual Asia-Pacific economies, viz. the United States, Mexico, Chile, Japan, Thailand, Malaysia, Australia, and New Zealand. The last section synthesizes the observations from these studies to conclude by posing important questions for future research on this hitherto unexplored area of the multilateralization of FTAs. Section I of the book first focuses on the review of the theoretical literature on FTAs and its impact on multilateralism. It also devotes significant focus on the institutional background on FTAs by detailing on the concepts of most favoured nation (MFN) treatment and reciprocity and its incorporation in the GATTTWTO framework. In particular, the chapter by Yanai indicates that the GATTVWTO is unable to assure diffused reciprocity in trade, without delays, and this has provided a strong institutional impetus for the proliferation of bilateral FTAs. The next chapter by Oyane applies international political economic theories to explain the proliferation of FTAs in the Asia-Pacific region. He refers to the three theories of neorealism, neoliberalism and constructivism to argue his case. Section II, focusing on the case studies, offers diverse perspectives by the Asia-Pacific economies on the rationale for entering into an FTA. Although these motives could be broadly demarcated into strategic and economic factors, for many cases the distinction appears to be blurred, since many of the economic motives for entering into FTAs also have a political angle to it. It is quite clear from these studies that domestic and international concerns needs to be balanced while taking an FTA decision. In the context of ASEAN FTAs, the book's major contribution is in the area of the two case studies on Malaysia and Thailand by Sanae Suzuki ASEAN Economic Bulletin 330 Vol. 21, No. 3, December 2004 and Fumio Nagai respectively, who detail the historical background on trade policies of these two countries and the reasons due to which both these countries now seem to be increasingly jumping on to the FTA bandwagon, the latter much rapidly than the former. The chapter by Nagai on Thailand's FTAs clearly highlights that Thailand has resorted to bilateralism primarily as it has been frustrated with progress in trade liberalization at the regional and multilateral levels. It indicates that while FTA proposals were thought of since the year 2000, it has been much more aggressively pursued when the Thaksin government took office in 2001. Sanae's chapter on Malaysia's FTAs brings home the point that Malaysia's outlook on FTAs has been different from that of Thailand, and that due to changes in its production structure and trade composition, Malaysia has hitherto not viewed FTAs as being beneficial for its economy. It also observes very important linkages between Malaysia's FTA policy and ASEAN diplomacy, and asserts that Malaysia is more likely to support ASEAN-wide FTA initiatives than bilateral ones, due to these complex linkages. The book, however, has not included Singapore as a country case study among ASEAN, which...