Asia Regional Integration Center

The Overseas Development Institute (ODI), an independent think tank on international development, organized a public event on “The Future of the World Trading System” on 22 July 2011. It was held at the ODI headquarters in London and streamed live online. The event aimed to investigate key factors that shape the future world trading system by discussing issues relevant to the Doha Round, the so-called “Plan B” agreement, the effect of widespread FTA proliferation, and the future role of the World Trade Organization (WTO). Event materials can be accessed here.

This first RTG Co-chairs report—Aid for Trade in the Asia–Pacific: Its Role in Trade-Driven Growth—takes stock of the Asia–Pacific experience and identifies the way forward for the WTO Aid for Trade Initiative in the region. Aid for Trade offers the opportunity to close the gap between the “two faces of Asia". The report shows that a regional approach backed by national strategies will ensure that available assistance is used most effectively for maximum benefit.It also shows that we must continue to seek additional concessional finance for well-designed projects and programs with high rates of return. Aid for Trade must also combine concessional finance with less concessional assistance where appropriate. See also Aid for Trade for the Asia-Pacific website.  

Amitav Acharya proposes a new framework to investigate the effect of regional institutions in the socialization (i.e. internalization of group norms by newcomers) of new members.  Called Type III internalization, it represents a middle ground between Type I and Type II internalization. The impact of institutional norms such as 'open regionalism' and 'cooperative security' transmitted through institutions such as the Association of Southeast Asian Nations (ASEAN), Asia-Pacific Economic Cooperation, and the ASEAN Regional Forum on Viet Nam, India, and the People's Republic of China attests to the existence of a Type III internalization. Read more.     

Ganeshan Wignaraja analyses the link between commercial policies and exports through a comparative analysis of the Asian giants—the People’s Republic of China (PRC) and India. While the PRC has surged ahead of India to dominate world manufactured exports, India has acquired competitive capabilities in skill-intensive services. Critical issues that still to be resolved include how the giants will respond to the risk of protectionism, manage real exchange rates, promote the use of FTAs among businesses, and increase spending on infrastructure as well as research and development. Read more.

C. Randall Henning compares six regional economic crises over the last four decades and the institution building—or decay—that followed. The analysis concludes that five conditions are especially important in generating a constructive regional response: (i) a significant degree of regional economic interdependence; (ii) an independent secretariat or intergovernmental body charged with cooperation; (iii) webs of interlocking economic agreements; and, as elements of the multilateral context, (iv) conflict with the relevant international organization (such as the International Monetary Fund [IMF]); and (v) the support of the United States. Read more.

Richard Baldwin employs feedback mechanisms to organize Europe’s postwar integration narrative and then draws lessons for today’s integration of East Asia. The paper suggests that the spontaneous cooperation that created “Factory Asia” has not been codified. One starting point for Asian regional institutions would be to institutionalize the spontaneous cooperation that already exists on trade, services, and investment. New, creative thinking is needed on the sort of soft-law commitments and new modes of cooperation that would make this work with limited sovereignty pooling. Read more.

In this paper, Jayant Menon and Anna Melendez examine the challenges that remain which limit the potential of the Greater Mekong Subregion (GMS) to reap further gains from trade and investment. Over the coming years, these countries will have to implement numerous ASEAN+1 bilateral free trade agreements. To minimize the administrative burden and maximize economic benefits, these countries should multilateralize their trade preferences, thereby avoiding trade diversion and deflection, and remaining open to global trade.  Read more.

In this paper, Cyn-Young Park and Jong-Wha Lee show an increasing degree of financial integration in emerging Asian markets using both quantity- and price-based measures. However, the region’s equity markets are integrated more globally than regionally, while its local currency bond markets remain generally segmented. A case can be made for further regional integration of financial markets, as financial integration at the regional level brings benefit from allocation efficiency and risk diversification while containing the risk of financial contagion.  Read more.