Bilateral and Regional Trade Agreements in Asia: A Skeptic’s View

Abstract

While some commentators credit bilateral and regional free trade agreements (RTAs) for increasing regional trade and per capita GDP in Asia, this chapter contends that the role of RTAs in expanding regional trade in Asia has been overstated and exaggerated. Put simply, this chapter demonstrates that while it is true that the growth of RTAs occurred in the same time period as increased regional trade and per capita GDP growth, there is no significant causal relationship between the events. Taken further, this chapter asserts that intra-regional trade and per capita GDP in Asia would be far higher with the broadening of scope and coverage in Asian RTAs. Such a conclusion is reached through the evaluation of a comprehensive selection of intra-Asian RTAs - with specific reference to the utilization rates of the RTAs - which reveals the biggest drawbacks to such agreements are the connected issues of focusing almost exclusively on the liberalization of goods while at the same time providing for only modest liberalization in the sector. In this regard, liberalization efforts are severely hampered and potential gains from the RTA curtailed.