Asia Europe Journal (2003) 1: 183196

ASIA
EUROPE
JOURNAL
Springer-Verlag 2003

Sub-regionalism, regionalism,
trans-regionalism. Implications for economic
integration and international trade policies
Joongi Kim
Graduate School of International Studies, Yonsei University, Seoul, Korea

Abstract
This paper provides a summary of the various concerns surrounding
regionalism. First, it provides a brief review of regionalism with a general
explanation of what regionalism means, especially in terms of regional trade
agreements. Second, it discusses the various benefits that allegedly arise due to
regionalism. Third, in contrast, the disadvantages and problems associated
with regionalism are discussed. In conclusion, it seeks to explain the
implications of regionalism in terms of economic integration, international
trade policies and the future of AsiaEurope relations. It suggests that
regionalism is inexorably progressing, that in the end we will all tend to share
in its benefits and that countries particularly in Asia and Europe should
prepare themselves in light of these developments.

Introduction
Regionalism remains a controversial issue in our globalizing world. The speed
of economic integration has further placed the prospects of regional based
movements at the forefront of international policy circles. The forces of
regionalism are playing a critical role in shaping the international trade regime
that is emerging. Most of the countries in our world in fact are members of at
least one type of regional trade agreement whether it is a customs union, free
trade area or other type of preferential arrangement. In the end, however, the
lingering question remains as to whether the growth of these regional groups
helps or hinders the development of our world, the multilateral trading system
and its members.
The ongoing debates surrounding the potential benefits and ills of
regionalism revolve around a variety of issues. Is regionalism a good idea?
Who, if anyone, are the beneficiaries? Is regionalism-based trade policy
inevitable? What should developing countries do? What kind of effect will
regionalism have on Asia or Europe? How should we prepare ourselves if
international relations are largely influenced by regionalist concerns? How is
regionalism related to globalization?

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Background of regionalism
What is regionalism?
Based on such classical economic theories as comparative advantage, the neoclassical economist tells us that potentially all countries can benefit through
free and fair trade with each other.1 Evidence proves that unfettered trade will
help countries develop and will ultimately lead to economic growth. To this
end, countries have voluntarily agreed to follow an international trade regime
under the auspices of the General Agreement on Tariff and Trade (GATT) and
the World Trade Organization (WTO). The ultimate goal under this new
regime is to lower trade barriers on a multilateral basis for the mutual benefit
of all.
Trade-based regionalism has progressed for similar reasons on similar
lines. The primary difference being that regionalism occurs on a plurilateral or
bilateral basis of reducing trade barriers among countries within the same
region rather than on a multilateral level with all countries involved. The most
prominent form of regionalism remains the regional trade agreement (RTA).
Under an RTA, countries within the same region get together to grant each
other preferential benefits in terms of market access in an exclusive manner.
Countries proceed in this manner typically because they feel closer to
neighbouring countries and usually have higher trade volume within the same
region. Those countries outside the region that are not part of an RTA thus are
denied these preferential benefits.
RTAs are therefore one of the most conspicuous special exceptions to one
of the cornerstone principles of the WTO, the granting of Most Favoured
Nation (MFN) status to member countries. Under MFN, all member countries
within the WTO are supposed to be treated the same in a non-discriminatory
fashion.2 But, under a RTA this dynamic changes. For instance, suppose
Mexico charges a tariff rate of 10% for roses. Then under MFN it must charge
all WTO member countries the same rate of 10%. But, because Mexico signed
the North American Free Trade Agreement (NAFTA) with Canada and the U.S,
it can grant a preferential rate to roses from Canada or the U.S. for less than the
10% rate.3
Nevertheless, it should be noted that once an RTA is established the total
amount of intra-RTA trade flows that are subject to preferential treatment are
not as large or immediate as might be expected for a variety of reasons. First,
many tariffs are already MFN-bound at zero. For instance, among the Quad
countries consisting of Canada, E.U., Japan and the U.S. the share of imports
entering under bound MFN zero rates already ranges from about 25% for Japan
to somewhat over 40% for the E.U.. In addition, as one might expect most
RTAs tend to exclude the most sensitive sectors such as agriculture, which
minimizes the potential preferential benefits. Some countries even choose to
give up free-trade treatment because the MFN duty is less than the cost of
1

David Ricardo (1817) On the Principles of Political Economy and Taxation

Art. I, General Agreement on Tariffs and Trade 1994, Apr. 15, 1994, Marrakesh Agreement
Establishing the World Trade Organization, Annex 1A in THE LEGAL TEXTS, 33 ILM 1154
(1994) [GATT 1994]
3
North American Free Trade Agreement, Dec. 17, 1992, 32 I.L.M. 296 and 32 I.L.M. 605 (1993)
2

Sub-regionalism, regionalism, trans-regionalism

185

Fig. 1. RTAs notified to the GATT/WTO (19482002)

complying with the burdensome rules of origin and other administrative

requirements. Finally, most RTAs include a transition period of generally up to
ten years for the phasing in of tariff reductions on more sensitive products and
delays any actual effects for a considerable time.
All in all, regionalism is considered to be preferable to multilateralism in
political terms. A government that is part of an RTA arguably has more control
over the distribution of gains among sectors, and can more easily protect less
competitive industries. When regional blocs are relatively less institutionalised,
and nations can negotiate specific terms by sector or issue, preferential trade
arrangements can be more easily utilized politically. From a political
standpoint, therefore many countries link the economic restructuring process
to a broader scheme of regional integration.
In economic terms, however, multilateralism is argued to be the optimal
path toward maximum efficiency and economic growth. Regionalism therefore
becomes an unnecessary distortion. One of the critical issues that generate
considerable interest from an economic perspective of course is whether RTAs
lead to a dynamic time-path or not. In this context, the question focuses on
whether the welfare costs imposed on non-members of RTAs cause fractures
within a large region or do they encourage a further conglomeration of
disparate blocs thus leading to a gradual elimination of barriers. If a dynamic
time-path can found to exist through regionalism that promotes convergence
and harmonization, this could overcome the economic waste that is perceived
to exist.
Trends of regionalism
As of March 2002, 168 RTAs are known to be in force throughout the world.4
From a historic standpoint, the first wave of regionalism occurred in the 1950s
and was ignited by the creation of the European Communities in 1957. At the
time, however, it did not expand beyond the bounds of Europe. In fact, it is
4

http://www.wto.org

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Joongi Kim

Map 1. Participation in RTAs in force as of March 2002; Boonekamp, p. 14

significant to note that most RTAs have been concluded in the past 10 years.
Since the establishment of the WTO in January 1995, for instance, a 125 new
RTAs have been notified to the WTO, at an average of 15 notifications every
year. Proliferation of RTAs has proceeded on an explosive level since then.
This contrasts sharply with an average of less than three notifications per year
during the entire four and half decades of the GATT-period before 1995. The
network of RTAs interconnecting the globe in fact is now highly diversified
with many countries being members of several agreements at the same time. In
terms of geographic distribution and based upon historical origins, RTAs still
can be traced back to Europe. Nearly 60% of the RTAs notified to the WTO
that are in force at the end of 2000, for instance, were concluded among
European countries.
The leading RTAs of our time include such well known arrangements as the
European Union (EU), the European Free Trade Association (EFTA), the North
American Free Trade Agreement (NAFTA), the Southern Common Market
(MERCOSUR)5, the Association of Southeast Asian Nations (ASEAN), Free
Trade Area (AFTA)6, and the Common Market of Eastern and Southern Africa
(COMESA)7 and many others.
A wide variation can be found in the percentage of trade that countries
derive from those that are fellow RTA partners and those that are not. Another
important fact is that RTAs are not a phenomenon limited to developed
countries. Overall, it should be noted that most developing countries
participate in RTAs. RTAs concluded among developing countries in fact
account for about 3040% of the total RTAs estimated to be currently in force.
In previous rounds, developing countries attempted integration almost
exclusively with other developing countries. In more current negotiations,
5

Treaty Establishing a Common Market, Mar. 26, 1991, Argentina, Brazil, Paraguay, Uruguay,
30 I.L.M. 1041
6
Agreement on the Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN
Free Trade Area (AFTA), Jan. 28, 1992, art. 9, 31 I.L.M. 513, 520 (1992)
7
http://www.comesa.int/backgrnd/backindex.htm

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187

Map 2. Projected participation in RTAs in 2007; Boonekamp, p. 15

FTAs are also being proposed between developing and developed countries.
This is clearly a new dimension. Jordan and the U.S., Mexico and the E.U., the
Former Yugoslavia Republic of Macedonia (FYROM) and EU are some leading
examples.
At the same time even among developing countries, regional experiences
differ considerably. East and Southeast Asia and Latin America for instance,
differ considerably when compared to the approach taken by Africa. Countries
on the African continent when pursuing regional initiatives have tended to
focus on the establishment of customs unions or common markets, aggregating a large number of countries over long transition periods that often last as
long as 20-30 years. Relatively, they do not have a wide network of bilateral
RTAs. Countries in East and Southeast Asia instead, have, at least until recently
sought much more limited objectives usually in the form of free trade areas.
Latin American countries on the other hand seem to have chosen a rather more
mixed approach in their preferential trade arrangements with several customs
unions and plurilateral regional initiatives in formation, but concomitantly
backed-up by an extensive network of bilateral RTAs.
Geographical distance need not lead to insignificant amounts of trade or the
establishment of RTAs. In the case of Africa and South Asia, for instance, they
export 95% of their goods outside their regions. In the Western hemisphere,
trade of most Latin American countries is very diversified as well. Excluding
Mexico, roughly 55% of Latin Americas exports go to regions other than the
Western hemisphere. This suggests that preferential trade agreements can
transcend geographical location. Some examples would be Mexico-Israel,
Canada-Chile, and Korea-Chile.8

8
Until recently, Korea had the dubious distinction of being the only WTO member country
in the world that was not part of an RTA, but finally signed an RTA with Chile on February 15,
2003.

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Joongi Kim

Free trade agreement

Free Trade Agreements or free-trade areas under the GATT/WTO are
specifically understood to mean a group of two or more customs territories in
which the duties and other restrictive regulations of commerce are substantially eliminated.9 As of March 2002, the most common category of RTA is by
far the free trade agreement (FTA), accounting for over 70% of all RTAs.
Among these, approximately half of all free trade agreements are bilateral
agreements between two countries. Free trade agreements therefore represent a
more preliminary stage of regionalism relative to customs unions.
The trend towards the conclusion of free trade agreements, which require a
lesser degree of integration and are faster to conclude, has intensified in recent
years. FTAs have thus been driving the expansive growth of RTAs as a whole
since the establishment of the WTO in 1995. The greatest concentration of these
free trade agreements originated and remains in Europe. Overall, experts even
predict that this concentration and consolidation of RTAs in Europe will
continue over the next five years, rather than a net expansion of larger blocs
occurring.10 More recently, it should be noted that FTAs are also being
concluded between developed and developing countries on a NorthSouth
basis beyond the traditional NorthNorth or SouthSouth paradigms. Perhaps,
the most successful and prominent NorthSouth FTA would be considered
NAFTA.
Free trade agreements usually have their own dispute settlement procedures. Hence, the RTAs dispute settlement process can be viewed as being
either duplicative to the WTO dispute settlement process or supportive in that
if settled early it can relieve the overloaded administrative burden at the WTO.
Another problem that is cited is that dispute settlement bodies established
under RTAs frequently split upon the nationality of the members, thus
fragmenting the potential for dispute resolution.
Customs unions
In terms of RTAs, customs unions go a step further than free trade agreements
and not only require substantial reduction of tariffs internally among member
countries but also provide for the establishment of a common external tariff
and harmonization of trade policy vis-a`-vis non-member countries.11 The preeminent example of customs unions in our world remains the European Union
and to some extent MECOSUR as established between several Latin American
countries. A customs union requires a common external tariff and, given
GATT bindings on most tariffs, ensures that all tariffs come down to the lowest
level prevailing in the union at the time of its formation. Member countries
thus have to substantially liberalize their trade regimes to reach a common
external tariff. In other words, in a customs union such as the EU a product

Art. XXIV, para. 8(b). GATT 1994

Clemens Boonekamp, Regional Trade Integration Under Transformation, Seminar on
Regionalism and the WTO, WTO Secretariat, Geneva, Apr. 26, 2002, p. 6
11
Art. XXIV, para. 8(a). GATT 1994
10

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189

such as perfume that comes from a non-member country outside the bloc will
be charged the same tariff rate no matter which E.U. country imports it.12
As a result, because of this additional process of establishing a common
external tariff with all countries that trade with the bloc, customs unions
arrangements naturally often take much longer to negotiate. They also
frequently have long implementation phases relative to FTAs. Overall, customs
union agreements account for approximately 9% of all RTAs. The process,
therefore, can be viewed as a much more advanced stage of economic
integration that more closely approximates the desired multilateral approach
to trade liberalization. From this perspective, some suggest that to promote
multilateralism, FTAs should be restricted as much as possible and countries
should be encouraged to adopt only customs unions.
Investment treaties
Another form of regionalism can be found in investment treaties. Under a
typical Investment treaty, investments of nationals and companies from either
member country mutually receive the better of national treatment or mostfavoured-nation (MFN) treatment. This is granted both at the establishment
stage of the investment and in subsequent stages. Under a treaty, investments
are guaranteed freedom from performance requirements such as requirements
to use local products or to export local goods. Hence, investment treaties are
not only negotiated on a bilateral or plurilateral basis among several parties
but they focus solely on investments and not only on the trading of goods for
instance.
Within investment treaties, most of them also allow sectoral exceptions to
national and MFN treatment. Exceptions are typically designed to protect
politically sensitive interests and to accommodate the derogations from
national treatment and MFN treatment in domestic law. Exceptions typically
can include for instance such sectors as air transportation, ocean and coastal
shipping, banking, insurance, energy and power production. Except for
ownership of property, MFN exceptions are based on reciprocity provisions in
government laws and regulations.
Investment treaties of course pay particular attention to the regulation of
expropriation by the home country. Expropriations for instance must occur
only in accordance with international legal standards. In other words, they
must occur for a public purpose in a non-discriminatory manner under due
process of law. Payment of prompt, adequate, and effective compensation must
be granted in return for the expropriation. With regard to repatriation,
investments are guaranteed the unrestricted transfer of funds in a freely
convertible currency. With regard to disputes, nationals and companies, in
investment disputes with the host government, have access to binding
international arbitration, without first resorting to domestic courts.

12
Of course the E.U. has integrated further and most member countries have even
established a European Monetary Union with not only a single currency, but also more
significantly a single monetary policy determined by the European Central Bank

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Given the similarity of issues and purpose, investment treaties while a

slightly different breed, also represent a form of burgeoning regionalism.
Bilateral investment treaties (BITs) act as a catalyst for mutual cooperation for
instance and sometimes precede many bilateral free trade agreements.

Merits of regionalism
Trade creation
One of the frequently cited gains from RTAs potentially comes from the effects
of trade creation. Trade creation is said to occur when a country with the
comparative advantage in a particular product is included within a particular
RTA. For instance, if Brazil has a comparative advantage in leather products
and forms an RTA with Chile and Argentina, Chile and Argentina will lower
their tariff barriers associated with leather products due to the RTA. Trade
creation is said to occur because of the RTA since Brazil will therefore be able
to capitalize on its competitive leather products based upon expanded exports
to Chile and Argentina. In this manner, regional preferential trade agreements
promote the interests of trade liberalization. The effects of trade creation are
perceive to be greater than any contrary effects because countries will tend to
establish RTAs and trade far more with countries that have a greater
comparative advantage.
Building blocks for multilateralism
As history demonstrates, multilateral trade negotiations themselves are a
daunting task that can take years to evolve. These prospects have grown more
challenging especially given the rapid increase in the membership of the WTO.
Since the Kennedy Round that concluded in 1967, almost 100 countries, for
instance, have joined the GATT/WTO system. Multiply this by the number of
goods, services and issues subject to negotiation and the practical difficulties
that arise are endless. It is thus suggested that a division of the world into
trading blocs such as Europe, the Americas, and Asia is a more efficient
method to ultimately achieve multilateral free trade. Under this framework,
negotiations for trade liberalization can proceed far more easily and quickly
when conducted among three parties, for instance, rather than through the
cacophony of 150 different trade representatives each with their own agenda
and interests. It is far more simple and efficient.
Regional agreements can also allegedly proceed on a bilateral or plurilateral
basis and accelerate and provide the momentum to deepen trade liberalization.
Many believe that that complex policy issues such as services, investment,
intellectual property protection, competition policy, technical standards and
government procurement can better be resolved among a limited circle of likeminded friends rather than a diverse multitude of different countries. RTAs
can act to stimulate growth and demand for extra-regional exports for those
that belong to the bloc.
From a different perspective, regional-based preferential agreements might
help attract inward-looking regimes to the multilateral trading system. Many

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countries face considerable domestic political recalcitrance against free trade

initiatives. These places might feel more comfortable negotiating RTAs with
regional neighbours than with remote nations. It might be far more politically
palatable, persuasive and economically smoother to proceed with countries of
the same region where much greater degree of familiarity and hence
predictability exists. Countries will therefore be more willing to cede their
political sovereignty in this case. Once these inward-looking countries can
overcome this initial intransigence it could naturally help them open the door
to more full-fledged multilateral participation.
In addition to the potential reduction traditional tariff barriers, the
proliferation of non-tariff barriers in the developed world has also made
regional integration an attractive policy option for many countries. Non-tariff
barriers are much more difficult to address, and thus by reaching an
understanding on tariff issues, countries can then proceed to deeper
integration. Long an opponent of regionalism, countries such as the United
States itself has begun to espouse the regionalist approach and remain some of
the most prominent converts to the overall benefit of RTAs as building blocks
to multilateral trade liberalization.
Enhances cooperation and security
Economic integration through regionalism can be viewed as another means to
enhance international cooperation. In the former Soviet Union, for example,
political disintegration has been replaced by regional economic integration and
serves as an important link in maintaining trade and relations among the
various republics. Currently, Russia, Kazakhstan, Belarus, Kyrgyzstan, and
Tajikistan are members of a customs union now named the Eurasian Economic
Community (EURASEC), which was signed in 2000. The more intertwined
countries become through vast networks of trade, the more mutually
dependent they become and the more they will seek to preserve peace and
security. Thus, in terms of international relations, political instability is
frequently generated by regional conflicts and rivalries between neighbouring
countries based upon differences in religion, history and culture. By promoting
regional stability first, economic based regional integration can provide a
crucial means for countries to lay down their arms and cooperate together for
mutual prosperity. This could be one of the most essential steps on the road to
multilateral free trade policies.

Demerits of regionalism
Trade diversion
In contrast to trade creation, however, trade diversion can just as equally
occur. Trade diversion will happen when the country with the comparative
advantage is denied this competitive status. In other words, as with the
previous example, if Brazil has a comparative advantage in leather products
but Chile and Argentina form an RTA between themselves, trade diversion
might occur if Chile begins to buy leather from Argentina instead of from

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Brazil. This would occur, for instance, if Argentinean leather is imported tarifffree into Chile as a result of the RTA but Brazilian leather is still charged a
considerable tariff that would artificially make them more expensive. Brazil will
therefore be unable to realize gains from its competitive leather products
whereas inefficient Argentinean producers claim the benefits.
This type of trade diversion runs counter to the general free trade and
efficiency principles. It distorts the efficient allocation of resources. The
inefficient producer within the RTA is artificially benefiting at the expense of
the efficient producer outside of the RTA. It should be added that in terms of
weighing the potential gains from trade creation versus the potential loses from
trade diversion that economists have not been able to conclusively prove the
relative benefits of regionalism-based trade creation. The attraction of
regionalism is supposed to lie outside the trade creation effects.
Of course, it is also argued that the additional gains from FTAs that are
generated through trade creation are exaggerated because tariff rates on a
whole have dramatically declined. Since just after World War II, for instance,
average tariff rates have dropped from 40% to less than 4% after the Uruguay
Rounds in 1994. Similarly, the prospects for intra-regional trade expansion are
not as a good as imagined because of the similarity of natural endowments of
countries within a given region. Usually coming from the same geographical
regions, they do not have sufficient differences to benefit each other.
Deepens factionalism
Regionalism can also be viewed as a direct threat to multilateralism. Trade
liberalization might occur in a piecemeal fashion through RTAs, but without a
coordinated effort by all, it will become a losing proposition in the end. The
few trading blocs that emerge from regionalism will become more intransigent
to compromise. The larger a bloc becomes the more vested interests it has to
represent, which makes it that much more difficult to reach a consensus. The
larger a bloc the more difficult it is to negotiate on behalf of the entire bloc.
Countries in a RTA are less conducive to deeper integration as a whole. The EU
is cited as an example but they are exceptional outliers because they share a
unique symmetry in terms of size and resources, and historical and political
considerations.
Furthermore, although considered a public good, free trade inherently
suffers from the usual free-rider problem, which is only exacerbated by the
forces of regionalism. Countries that are be lured to join RTAs will have little
incentive to unilaterally push the RTA to expand. The larger the RTA becomes
the more it will seek to extract concessions from new parties.
Some countries as in those in Africa and Central Asia maintain two or more
overlapping plurilateral RTAs at the same time. In addition to the difficulty of
sustaining membership in two or more overlapping plurilateral RTAs, this
could lead to the consolidation of RTAs and rationalization among participants
who may be forced to align themselves with one or other regional grouping
against their natural inclinations. Similarly, on a foreign policy level,
regionalism leads countries to play favourites among their trading partners.
Those that are excluded are abandoned and it therefore reduces international
relations to a mutually self-destructive factionalism.

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Even when developing countries and developed countries sign an RTA the
major economic powers tend to dominate the bloc. All in all, therefore
regionalism only fractionalises our world. It makes it more difficult to establish
a mutually cooperative multilateral trading environment.
Negative effects related with globalization
Despite the promised fruit it offers, globalization still carries much baggage
and still bears many controversial thorns. Globalization, many believe, widens
the gap between the rich and poor, not only among countries, but also for
those within a given state. It allows multinational companies to utilize their
economies of scale to exploit weaker competitors. It also creates a dangerous
dependent environment for many countries. In our zero-sum world, it is
argued that efficiency gains to the winners mean loss of welfare and job
security for the losers. From these perspectives, regionalism merely operates as
another means to expedite the process and exacerbate the ills of globalization.
By accelerating the trade liberalization process, regionalism further precipitates the harsh realities of globalization. The stark contrast between winner and
losers of globalization merely worsen. Of course, this perspective denies that
comparative advantages can be realized and that absolute advantages will
prevail.

Slippery slope of exceptions

Preferential trade agreements represent a second-best option. The ultimate
goal remains trade liberalization for all countries on a global basis. Yet, RTAs
are the most conspicuous exception to one of the most important WTO
obligation of MFN. If multilateral trade liberalization is our ultimate goal, then
regional-based approaches merely delays this inevitable process. It exacts an
unnecessary transaction cost because it acts as detour on the way. The
dedication of resources to the negotiation and maintenance of agreements at
the regional level may obviously divert attention from negotiations that should
clearly proceed at the multilateral level.
Similarly, the WTO is already filled, or some would consider riddled, with
exceptions beginning from the minute to the more controversial issues such as
security, the environment, health, conservation and agriculture. RTAs grant a
comprehensive exception from MFN covering all goods and services between
the member countries involved. RTAs just add another expansive exception to
general WTO obligations, weakening the stature and authority of the WTO and
the commitment to multilateral problem solving as a result.
Transaction costs
Preferential trade agreements generate a host of unnecessary transaction costs.
First, because companies will seek to qualify for the benefits that are granted to
countries within a RTA the administration of preferential rules of origin
becomes burdensome and complex. Differing rules of origin among different

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countries for example creates a maze of criteria for the granting of origin that
raises the transaction costs trade. Similarly, membership in a number of
different RTAs for a given country can result in the duplication and
maintenance of tariff schedules for each preferential partner with different
phase-out periods.

Conclusion
Implications for economic integration, international trade policies
and the future of AsiaEurope relations
Against this background, WTO Members at the most recent Fourth Ministerial
Conference that was held in Doha in November 2001 summarized their
collective view on RTAs. First, they stressed their commitment to the WTO as
the unique forum for global trade rule making and liberalization. At the same
time, however, they also recognized that regional trade agreements can play
an important role in promoting the liberalization and expansion of trade and
in fostering development. 13 Consequently, they also stressed the need for a
harmonious relationship between the multilateral and regional processes. They
agreed that despite some problems RTAs overall benefit the international
trading system.
All in all, regionalism appears here to stay even though empirical studies
indicate that results of these RTAs might be inconclusive.14 In seeking to
determine what a snap shot of the future will entail for Asia and Europe
relations, it is unclear in the short term. In fact, the immediate effects of
regionalism upon Asian and Europe relations in the future at the moment
appear remote.
Within in Asia, for instance, the focus in terms of RTAs has so far been
more inward looking. For instance, by the early 2000, more than 20 RTAs have
been proposed among the various members of Asia Pacific Economic
Cooperation Process (APEC). Free trade agreements have been enacted
between New Zealand and Singapore, Japan and Singapore, SAPTA.15 The open
regionalism typically associated with the Asia Pacific Economic Cooperation
(APEC) appears to be counteracted by a drive towards preferential trade
initiatives. Geographical distance itself does not appear to be a significant
disincentive for East Asia. The countries in Asia Pacific thus have the lowest
percentages of relative trade with RTA partner countries.16 This situation most
likely stems from the tremendous volume of trans-Pacific trade by countries in
the Asian region. For instance, East Asia exports more than 65% of its goods to
destinations outside East Asia.
13

WTO Ministerial declaration WT/MIN(01)/DEC/1, para 4 (Nov. 20, 2001)

Gilber, John, Robert Schollay, Bijit Bora, Assessing Regional Trading Arrangements in the
Asia-Pacific, Policy Issues in International Trade and Commodities, Study Series No. 15,
UNCTAD (2001), p. 30
15
SAPTA consists of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka,
South Asian Association for Regional Cooperation (SAARC) Preferential Trading Arrangement
16
Boonekamp, para.24
14

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195

As might be expected, European countries on the other hand not only

participate in the greatest number of RTAs but they also derive around 60 to
80% of their imports from RTA partners. This suggests that Europe is more
focused on concentrating and expanding RTAs within their continental region
for the time being. This deep regionalism-based integration and focus in itself
will keep them at bay for a considerable time.
Thus, from a macro-perspective it appears that regionalism is progressing
in Asia and Europe on a more continental basis within their respective regions.
Bilateral and plurilateral RTAs might be pursued between some countries but
they would most likely not be considerable. In the long run, once these
continental blocs consolidate they will approach each other with Asia more
likely being the initiators. They should be able to make substantive progress at
this later stage and eventually their interaction should promote multilateral
economic integration.

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