Book Title: Trade Policy in the Asia-Pacific: The Role of Ideas, Interests, and Domestic Institutions (The Political

Economy of the Asia Pacific) by Vinod K. Aggarwal and Seungjoo Lee

Trade Policy in the Asia-Pacific: The Role of Ideas, Interests, and Domestic Institutions (The Political Economy of the Asia Pacific) is a book authored by Vinod Aggarwal and Seungjoo Lee. The book is an investment augmented book that analyses recent developments in East Asian countries explaining the countries pursuit for economical institutionalization. There are discussions on trade agreements including bilateral and multilateral agreements. The book is keen to discuss political and economic factors that affect the region both locally, regionally and in international perspectives. Such factors such as the financial crisis in Asia end of cold war and the Sino-Japanese rivalry that is on the rise.

However, it is evident that there is lack of adequate attention to efforts by individual government agencies in terms of economic strategies, as well as those offered by NGOs, labour unions and business groups across the Asia-Pacific. There has been failure in the past by most studies to characterise different trade arrangements, for most lump bilateral cords to multilateral cords, and the transregional agreements are lumped with agreements within the Asia-Pacific region.

In order to provide an insight into the cross-national variance, the authors have paid great attention to the efforts which researchers have to put in while addressing domestic politics in the East Asian countries, and the role the United States has in the subnational trades in the region. There is some intensive attention to strategies adopted between East Asia and American in trading in terms and of country and regional trade specialists. This is done through addressing domestic bargaining game, an approach that focuses on interplay of

interests, ideas and domestic institutions within the context of broader international shifts.

There is attention to the role of subnational actors in lobbying domestic politics, from governmental point of view through regional perspectives. The evolution of interest over time, as well as interests, gives the book a historical understanding of trends in the AsiaPacific region. The book is resourceful to a broad group of people including scholars in the Asia-Pacific, policy makers who are concerned with international trade, trade between the Asia-Pacific and the United States, as well as people interested in understanding the rich trade institutional landscape that has been on the rise in Asia-Pacific.

Chapter to Chapter Review

The first chapter of the book is titled, The Domestic political economy of preferential trade agreements in the Asia-Pacific. In the chapter, the book identifies major preferential trade agreements by three key players in the region including Japan, China and South Korea. The Sino-Japanese competition is evident in the order of agreements. China was the first country of the three to enter in an agreement with ten ASEAN in February 2003 countries followed by Japan in October of the same year. South Korea entered into agreements in 2006. Other countries that have been consulted for agreements include the United States, Australia, India and New Zealand. The major agreements identified include East Asia Summit, Free Trade Area of the Asia Pacific (FTAAP), Asia Pacific Economic Cooperation (APEC) and the Trans-Pacific Strategic Economic Partnership (TTP). In the second chapter, the book discusses about the domestic political economy in china preferential trade agreements. The emergence of China as a powerhouse in the region has made domestic politics in the country so influential in the region with preferential trade

agreements being adversely affected. With different political system from the ones in Japan and South Korea, Chinas domestic politics have an importance to Chinese foreign policy. The book observes that political economy policies are transitional, with little representational of regional interests in the Chinese political system. This puts the needs of the locals in that there have been little domestic quarrels in the past after the Chinese government turned to PTAs, while the locals like farmers are hardly represented in the political system. There has been little protest from the regional neighbours especially after the 2000s when China joined WTO thereby compounding the impact on global and regional integration. This puts China in a position to play regionalism game in the ranks of Japan and South Korea. The book addresses the politics of Japan and the influence they have on regional foreign Economic Policies in the third chapter. Party politics take centre stage in defining economic policies endorsed by the Japanese government. Liberalization as supported by the democrats in the country affects the interaction of regional and international environment. There has been serious impediments to economic policies due to different perspectives held by differing economic policy reformers and security policy reformers, thereby affecting trade agreements both at the lo al and international level. South Korea is also a major player in the Asia-Pacific region and its influence in the region is discussed in the South Koreas political dynamics of Regionalism: A Comparative Study of Korea-Japan FTA and Korea-U.S. FTA. The impact of Korea-Japan FTA (KJFTA) was influential in the region due to the substantial liberalization it gave to both countries as mandated by WTO agreements signed by the two countries. Based on past political tensions between the two countries, the agreements were especially necessary in ensuring coherence with WTO system. The book has given special attention to the South Korea- US FTA that was first signed in 2006, and aims at enhancing trade between the United States and South Korea by elimination of 95 per cent of tariffs of goods traded by each nation and the creation

of protective policies for multinational financial services. This will mean outsourcing is eased in South Korea for American companies thereby opening up the South Korean service market. The book addresses the United States and Asian Regionalism, especially politics of reactive leadership in chapter five. The chapter explains implications of reactive leadership to US trade and the economic policies for the Asian regionalism evolution. This is done by outlining three major sections where an overview of traditional approaches of the United States to regionalism is addressed, post war planners in the US favoured regionalism at first but preferences for pacific partners motivated multilateralism and bilateral trade due to distrust against Japan. The chapter also analyses the evolving responses of the US to the Asia regionalism to the post-cold war period where the US embraced APEC and ASEAN Region Forum (ARF). The third section analysis the US efforts towards supporting regionalism in the region in the recent past. In the next chapter, the book highlights Singapores domestic politics on bilateral free trade agreements, the enlightened self-interest to promote East Asia Regionalism in the new Millennium. The book identifies Singapore as a major natural and ardent advocate and supporter of free trade based on the total international trade that is three and half times the GDP of Singapore. Singapore is largely involved with multilateral forums including WTO, APEC, and other frameworks that support liberalization of international trade. There has been consistent efforts by Singapore liberalize trade as evidenced by different strategies adopted to boost trade. The political strategies and calculations for FTA has been analysed with the potential impact of the same on East Asia Regionalism being analysed. The book goes further to show how the FTAs act by Singapore are blocking block to economic cooperation in the region and at international levels and how that is a political strategy by Singapore on regional framework as from 2000.

The last chapter in the book analyses the evolving trade strategies in the Asia-Pacific region. Different countries in the region have changed tactics in pertains to trade in the region. With the proliferation of bilateral trade agreements, besides multilateral accords, the book shows the importance of examining strategies used by different countries especially to policy makers and scholars. The dynamics of trade policies formation and agreements negotiations are analysed with special emphasis on bilateral FTAs and national trade policies. The book is critical and unique in analysing economic benefits of different trade accords so that the evaluation of the accords is brought about as well as the consideration of specific policies. The book summarises with a perspective that predicts the trajectory in trade for the AsiaPacific region based on policies in the region. Evaluation Although the book is keen to identify special strategies taken in different countries in the Asia-Pacific in enhancing regional integration there is failure to categorize the strategies in terms of the terms of trading agreements adopted. Different countries have taken different agreements for both the bilateral and multilateral trade policies in their respective countries that have resulted in differentiation in terms of different countries experiencing different economic development levels. For instance, the although the Asia- Pacific has generally been seen to offered different opportunities for investments, the rates and levels of risks and benefits for investment have differed from country to country. This has been as a result of different policies at domestic levels not at the regional or international level. The book has analyzed different domestic policies in terms of economic and political strategies adopted by different countries, but there is failure to identify some unique countries that have done better than others.

Singapore for instance, has not been ranked as one of the best economies in the world, neither is it the dominating economic power house in the region. However, the country has adopted policies that has enabled it emerge as the best investment hub in the region. There have been consistent policies by the government to ensure domestic economic growth through innovation and enhancing policies that have allowed foreign investments and investments in manufacturing especially information technology. South Korea is also a major player in the Asia-Pacific region and its influence in the region is discussed in the South Koreas political dynamics of Regionalism: A Comparative Study of Korea-Japan FTA and Korea-U.S. FTA. The impact of Korea-Japan FTA (KJFTA) was influential in the region due to the substantial liberalization it gave to both countries as mandated by WTO agreements signed by the two countries. Based on past political tensions between the two countries, the agreements were especially necessary in ensuring coherence with WTO system. The book has given special attention to the South Korea- US FTA that was first signed in 2006, and aims at enhancing trade between the United States and South Korea by elimination of 95 per cent of tariffs of goods traded by each nation and the creation of protective policies for multinational financial services. This will mean outsourcing is eased in South Korea for American companies thereby opening up the South Korean service market. The book addresses the United States and Asian Regionalism, especially politics of reactive leadership in chapter five. The chapter explains implications of reactive leadership to US trade and the economic policies for the Asian regionalism evolution. This is done by outlining three major sections where an overview of traditional approaches of the United States to regionalism is addressed, post war planners in the US favoured regionalism at first but preferences for pacific partners motivated multilateralism and bilateral trade due to distrust against Japan. The chapter also analyses the evolving responses of the US to the

Journal for Review: Asia-Pacific Development Journal, Vol 11 No. 1 issued on June 2004. Title of Article for Review: The Political Economy of Trade Liberation by Linda Low. The main objective of the article is to reinforce the importance of regional, bilateral and multilateral free trade arrangement s in trade liberalization as well as showing the importance of free trade in multilateral framework. (Low 2004) there is attention on prevailing trends and development especially in Asia-Pacific in meeting this objective, through analyzing related investment participation in the region and other factors that affect free trade liberalization that affect trade flow and overall economic integration. The author furthers goes deep to look at stocktaking levels and modalities in the region through the interpretation of geopolitical and economic nuances that have an impact on trade policies in the region. In doing this, domestic policies in some Asia-Pacific countries and their impact on foreign economic policies are analyzed as well as how they are affected by global economy. The author has divided his work in different sections, whereby the first section establishes different trends and developments in free trade liberalization, the second section has given attention to foreign economy policies and global economy while the third section analyzes the issues that affect Asia-Pacific countries critically analyzing on the challenges involved. This precedes the conclusion in the last section where policy implications and expectations are developed. Trade policy that is based on development has its roots in an attempt to have openness in ensuring economic growth and efficiency. It has support on ideologies that simple and open trade regimes have some means of reducing problems in governance through the reduction of

chances of discretionary policy and corruption in developing countries. There are numerous benefits of an open trade policy to all sectors that affect a country and it results to increased economic development and transparency that benefits both the private and public sector. Although the formation of some international bodies that have had intents to ensure open trade including, United Nations Conference on Trade and Development UNCTAD, General Agreement on Tariffs and Trade GATT, and World Trade Organization WTO, there has been little improvement emanating from these bodies. There has been a backlash to anti-globalization caused by foreign direct investment FDI and transnational corporations TNCs. The world has become industrialized because of seamless cross-border activities that have seen movement of resources and markets from one place to another leading to democratization of finance. This has also benefited from Information and Communication Technology ICT and knowledge based economy KBE. The financial structures and institutions involved in globalization have been a negative impact emerging economies in most developing countries affecting government policies in a major way. Neoliberalism has affected governments in East Asia as was seen in bad governance that led to the Asia Crisis that hit the region in 1997. Although there is great intertwining between globalization and global capitalism, economic cooperation, investment facilitation and integration that result in multilateral, regional and multilateral trade are subsets of liberalization. Free trade and multilateralism are consistent and supersede all other subset arrangements in multilateralism. The author addresses multilateralism by defining the approach as an approach through which international institutions, that include the United Nations, the GATT, WTO, IMF and all bodies created after the Second World War with an aim of operating as guardian angels to international trade have the merit of wide encompassing representation. Low identifies the

weaknesses in such representation in that numerical representation and the bargaining power are evidently heterogeneous in nature in terms of structural representation of multilateral institutions. This is based on the influence of Organization for Economic Cooperation and Development OECD that has Group of Five G5 as the major key players especially the United States. Lack of representation of developing countries in the WTO has a major backdrop for in Asia only Japan is present with one vote according to the one country one vote criteria used. In terms of regionalism, the author views that the European Union has taken regional economic integration to the highest levels, leading the way for other regional entities including the Free Trade of the Americas FTAA, that was a great motivation for the formation of Association of Southeast Asian Nations ASEAN that began in 1967. ASEAN was formed against a backdrop of regional security and was upgraded to preferential trading arrangement PTA in 1977 before becoming the ASEAN Free Trade Area AFTA in 1993. These regional bodies were badly affected by the Asia financial crisis that made them lost momentum for countries were deeply engaged in domestic issues. The author identifies several regional Integrations that have been formed in the region since the 1980s including, Economic and Social Commission for Asia and the Pacific, ESCAP, the South Asian Association for regional Development SAARC, the South Asian Preferential Trade Area SAPTA, the Economic Cooperation Organization ECO, and the Asia Pacific Economic Cooperation APEC that were mainly integration bodies for economic development in Asia Pacific. Besides these, the author also identifies major integration with other countries from the Indian Oceanic, Europe and United States stating clearly the countries involve and the purposes they have in ensuring economic development and growth.

There is identification of different strategies and approaches to regionalism that include Government- to Government integration, private sector economic integration and regional networking for production for most Asian Countries. There are two major cross-regional partnerships in the region. The first is the one adopted before the crisis of 1997b while the second is the one adopted after the crisis. Both have intensive government participation in terms of political and economic participation in policy development. The old regionalism is characterized by liberal market integration, sub-regionalism, interregionalism and corporate integration. In the new regionalism there are emphases on security-economic nexus, largely because of the financial crisis in 1997, whereby regional management, financial integration and economic integration have consequential roles in the integration. There has been the integration of East Asia, North-East and South East Asia countries in the integration for the financial and economic integration. There has been emphasis on practical solutions instead of dwelling on ideological and theoretical frameworks for regional mechanisms. Changes in geo-economic trends have been influential in the formation of ASEAN plus China, Japan and South Korea the ASEAN plus three, although the integration is yet to achieve free trade area as of yet. Changing geo-economic and geopolitical trends that has affected security connotation in the region and has affected policies stipulated by WTO and new trade rules. With increased geo-economic size and shape has led to closely knit economies that have closer proximity in terms of trading and transactions costs, have increased levels of trade and economic integration. Most Asia-Pacific economies are adversely affected by ASEAN plus

three cooperation that incorporates Japan and China. Low however observes that even Australia has been motivated to move closer to East Asia due to the integration. There are several factors that have motivated integration in Asia, major among them being the importance to keep up with the fast pace in economic growth in most of the Asia countries and slow progress in multilevel integration. Since the Asian crisis, Asian countries have been on a consistent trend to identify themselves with progress, and after the rejection of Asia Monetary Fund by the US, the ASEAN plus three have consistently increased their integration in order to ensure that there is independence in terms of economic progress in the region. There is an increased trend in private sector activity in the region whereby new regionalism has efforts to guard political economy and security in the region. In having trade liberalization, countries in the Asia-Pacific aim at observing WTO rules and regulations and at the same time ensure that there is liberalization in trade. Regional trading arrangements have helped in fostering developing as stipulated by the Doha ministerial Declaration as evidenced by the 12.5 percent growth recorded in 2000 in global trade. In the wake of new regionalism, bilateral trade has prospered with like-minded partners joining hands in ensuring trade and liberalization of their respective economies. This includes such integrations as the Japan-Singapore Economic partnerships agreement and other agreements signed between countries in Asia-Pacific region. The author identifies major approaches some countries to have bilateral trade with Asian countries. This includes Australia that has approached Japan and South Korea, Canada that has approached China and Hong Kong, New Zealand and China. There is integration between US and Singapore with other countries including Malaysia, Thailand and Philippines showing

major interest. There have been rewards of free trade agreements from US to ASEAN and other south East Asian countries. Other integration includes the Pacific-Three free trade agreement between Singapore, New Zealand and Chile, that unites the Pacific, Asia and Latin America. The major countries in the region that have been involved in numerous integration include China, India, Japan and Singapore. While China and India are highly favored by their population and growing economies, Singapore and Japan have relied on stabilized economies and improving technological advances that have favored the two. Japan, Singapore and South Korea are the major countries involved in bilateral trade based on the trade volumes. While there have been serious problems with the Japanese politicalsocial development in the past decade, there has been tremendous improvement of bilateral trade in the region with trade and regional arrangements forming the basis for multilateral negotiation stuck deadlock. At first, Singapore approached Japan the South Korea followed. The integration has resulted in health competition in the region with Japan accommodating the competition in its open regulatory system that has shielded market access in the past. Different policies are observed in such agreements including competition policy, investment codes for foreigners, product standards, financial systems liberalization, dumping and anti-dumping policies as well as human resources development policies for bilateral trade. Singapore has also been involved in major bilateral trade agreement s where economic management for free trade has been observed to make as efficient as possible. There have been the efforts by the government to reinvent its policies from the public to private policies in order to accelerate the rate of development in its economy. Although privatization has had its own major impacts on the economy of Singapore, it is evident, and however, that

Singapore has become a follower rather than being an innovator. There is need to encourage innovation in its citizen in order for Singapore to realize maximum benefits from integrations. It is important to note, however, although Low is pessimistic of the trend and the future of Singapore future, the country has emerged as one of the best investments hubs in recent years. The government has since then improved its policies in order to accommodate more beneficial agreements that have seen the growth of the economy into a hub to be modeled by other countries in Asia-Pacific. This has been the result of pursuit of free trade agreements with other countries from a domestic industrial restructuring program that has changed the overall foreign economic policy with special attention to trade policies. There has been adoption of policies that aim at integrating more innovation in its citizens through nurturing of technoprenuers and reducing costs for competitiveness in region erodes. Competition from other ASEAN countries and and other newly industrialized economies has been beneficial in ensuring that the right policies have been put in place in Singapore. With increased reduced business costs in the region, and major competition from other OECD countries such as China, has led to improved manufacturing policies in the country that have met challenges in the process of their adoption including regional drag. Foreign policies in the country are also affecting by competition in the South East and North East Asia. This has led to a one-on-one partnership with all OECD countries in Asia and India clearly avoiding subordinated partnerships. This includes trade arrangements with Japan, New Zealand Australia, US and European Free Trade Association EFTA. These are arrangements are such that they do not contradict to ASEAN commitments thereby national trade liberalization is hardly impeded by these agreements.

Being cited as the pace setter in bilateral agreements in the region, Singapore has led most ASEAN countries in engaging themselves in bilateral trade that enhances liberalizations of the economies. The author is however quick to observe impeding dangers emanating from the engagements in that there is a high probability that some rules will not be observed especially the ones set by WTO, under free bilateral trade agreements. The balance of geopolitical, geo-economic and other policies to observe has been the hardest part of these agreements as evidenced by bilateral trade with such countries as Jordan, South Korea and India by Singapore. The ASEAN-China bilateral trade for instance was a major impediment for an agreement that would have resulted in Singapore-China bilateral trade agreement. The author has also analyzed the challenges and crisis that face the region in terms of regionalism and partnerships that aim at liberating the economies in the region. For instance, there is the discussion of the Doha conference and its implications on several partnerships in the countries in the region. The modalities stipulated by WTO for instance have serious restrictions to foreign and trade ministers of respective countries that limit them while making agreements other countries for the sake of integration. There is special attention to integration in countries in the region and those in the Europe, America and other major regions in the globe. Based on these restrictions and stipulations, Low observes that although liberalization is necessary for development it is not the only way out to ensure development in different countries in the Asia-Pacific. Trade liberalization is an important tool in ensuring growth and development in economies but no sufficient due to market interventions and resource allocation that affect consumer welfare and the facilitation of trade operations.

There is an increased trend in private sector activity in the region whereby new regionalism has efforts to guard political economy and security in the region. In having trade liberalization, countries in the Asia-Pacific aim at observing WTO rules and regulations and at the same time ensure that there is liberalization in trade. Regional trading arrangements have helped in fostering developing as stipulated by the Doha ministerial Declaration as evidenced by the 12.5 percent growth recorded in 2000 in global trade. In the wake of new regionalism, bilateral trade has prospered with like-minded partners joining hands in ensuring trade and liberalization of their respective economies. This includes such integrations as the Japan-Singapore Economic partnerships agreement and other agreements signed between countries in Asia-Pacific region. The author identifies major approaches some countries to have bilateral trade with Asian countries. This includes Australia that has approached Japan and South Korea, Canada that has approached China and Hong Kong, New Zealand and China. There is integration between US and Singapore with other countries including Malaysia, Thailand and Philippines showing major interest. There have been rewards of free trade agreements from US to ASEAN and other south East Asian countries The author identifies major approaches some countries to have bilateral trade with Asian countries. This includes Australia that has approached Japan and South Korea, Canada that has approached China and Hong Kong, New Zealand and China. There is integration between US and Singapore with other countries including Malaysia, Thailand and Philippines showing major interest. There have been rewards of free trade agreements from US to ASEAN and other south East Asian countries. Other integration includes the Pacific-Three free trade agreement between Singapore, New Zealand and Chile, that unites the Pacific, Asia and Latin America. The major countries in the

region that have been involved in numerous integration include China, India, Japan and Singapore. While China and India are highly favored by their population and growing economies, Singapore and Japan have relied on stabilized economies and improving technological advances that have favored the two. There are several factors that have motivated integration in Asia, major among them being the importance to keep up with the fast pace in economic growth in most of the Asia countries and slow progress in multilevel integration. Since the Asian crisis, Asian countries have been on a consistent trend to identify themselves with progress, and after the rejection of Asia Monetary Fund by the US, the ASEAN plus three have consistently increased their integration in order to ensure that there is independence in terms of economic progress in the region. There is an increased trend in private sector activity in the region whereby new regionalism has efforts to guard political economy and security in the region. In having trade liberalization, countries in the Asia-Pacific aim at observing WTO rules and regulations and at the same time ensure that there is liberalization in trade. Regional trading arrangements have helped in fostering developing as stipulated by the Doha ministerial Declaration as evidenced by the 12.5 percent growth recorded in 2000 in global trade. In the wake of new regionalism, bilateral trade has prospered with like-minded partners joining hands in ensuring trade and liberalization of their respective economies. This includes such integrations as the Japan-Singapore Economic partnerships agreement and other agreements signed between countries in Asia-Pacific region.

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Katada, Saori. 2008. Cross Regional Trade Agreements: Understanding Permeated Regionalism in East Asia. New York: Routledge

Low, L. 2004. The Political Economy of Trade Liberation, Asia-Pacific Development Journal, Vol 11 No. 1 Mimura, N. 2008. Asia-Pacific Coasts and Their Management: States of Environment. New York: Springer Ramesh, M. 2004. Social Policy in East and Southeast Asia: Education, Health, Housing and Income Maintenance. London: Routledge Shiller, R. 2009. A Bounce? Indeed. A Boom? Not Yet. Economic View, New York Times, October 11, 2009

Vinod K. Aggarwal, V. & Lee, S. 2010. Trade Policy in the Asia-Pacific: The Role of Ideas, Interests, and Domestic Institutions. New York: Springer