Working Paper: CEPR ID: DP5561
Authors: Richard Baldwin
Abstract: The paper argues that East Asian regionalism is fragile since (i) each nation's industrial competitiveness depends on the smooth functioning of 'Factory Asia' - in particular on intra-regional trade; (ii) the unilateral tariff-cutting that created 'Factory Asia' is not subject to WTO discipline (bindings); (iii) there is no 'top-level management' to substitute for WTO discipline, i.e. to ensure that bilateral trade tensions - tensions that are inevitable in East Asia - do not spillover into region-wide problems due to lack of cooperation and communication. This paper argues that the window of opportunity for East Asian 'vision' was missed; what East Asia needs now is 'management' not vision. East Asia should launch a 'New East Asian Regional Management Effort' with a reinforced ASEAN+3 being the most likely candidate for the job. The first priority should be to bind the region's unilateral tariff cuts in the WTO.
Keywords: East Asia; Management not Vision; Noodle Bowl; Regionalism
JEL Codes: F1; F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Industrial competitiveness (L16) | Smooth functioning of Factory Asia (L23) |
| Smooth functioning of Factory Asia (L23) | Intraregional trade (F14) |
| Unilateral tariff cuts (F13) | Factory Asia not bound by WTO rules (F13) |
| Factory Asia not bound by WTO rules (F13) | Trade stability (F31) |
| Absence of top-level management (M54) | Bilateral trade tensions (F19) |
| Absence of top-level management (M54) | Broader regional issues (R11) |