Until the late 1990s China, Japan, and South Korea (hereafter Korea), the three major economies in East Asia, stood out as the only major economies without regional trade arrangements (RTAs) in the world. In very recent years, however, the three countries have signed bilateral/plurilateral trade arrangements with many countries or groups of countries.

The negotiation and implementation of preferential trade agreements has gained momentum in recent years. Given the range of agreements being simultaneously negotiated and implemented, there is potential for significant, and perhaps unanticipated, interactions between them. In this chapter, a dynamic global trade model is used to focus on illustrative examples from Asia and the Pacific, a region that has been particularly active in pursuing preferential trade agreements. First, the focus is on a number of bilateral “hub-and-spoke” agreements, with China as the “hub”.

Trade in services in India has been growing rapidly since beginning of the last decade, following significant domestic liberalization on one hand, and access to a growing overseas market for services, on the other hand. By not only growing more rapidly than the country’s merchandise exports, India’s services export grew much faster than that recorded by the world during the past decade and a half. India’s services trade currently constitutes about 32 per cent of the country’s total trade...

(MARKHUB publication)

The impact of trade liberalization on growth and employment is a much debated and controversial issue. In theory, trade liberalization results in productivity gains through increased competition, efficiency, innovation and acquisition of new technology. Trade policy works by inducing substitution effects in the production and consumption of goods and services through changes in price. These factors, in turn, influence the level and composition of exports and imports.

In line with trends in the other economies, South Asia has been actively engaged in trade liberalization during the past decade, both on a unilateral and a regional basis.

Trade in services is a rapidly growing area of international trade. Cross-border trade in services represents about 20 per cent of total world exports and in the past 10 years, has been growing at around 7 per cent in United States dollar terms, slightly faster than merchandised trade (WTO, 2007). However, significant restrictions exist that limit flows of world and Asia-Pacific Economic Cooperation (APEC) services trade.

The formation of international production networks is widely recognized as one of the most important growth drivers in East Asia and South-East Asia. A global value chain (GVC) and associated production networks are emerging as the organizing framework for production, investment and trade in an expanding range of product groups such as garments, agro-industry, furniture, automobiles and automotive parts, consumer electronics, telecommunications, and information and communications technology (ICT) as well as various services.

Free trade agreements (FTAs) have gained increasing global popularity. Although East Asia has lagged behind other regions in concluding FTAs, the 1990s saw a marked change in considering formal regional cooperation treaties in East Asia.1 One of the leading factors that led to the emergence of such heightened interest is the rapid growth of intraregional trade. In turn, an important new development that has contributed to the expansion of intra-East Asian trade is the international exchange of intermediate goods, which includes parts and components rather than final goods.

The past quarter of a century has witnessed among many countries across the development spectrum an unprecedented level of activity in the process of trade liberalization. In many respects, this most recent phase of global integration among economies stands out in comparison to all other phases that have occurred in the past few centuries.1 Most notably, for the first time more than 180 States have engaged in the process of integrating their economies with those of their partners.

One of the most striking features of global economic development over the past few decades has been the rise to prominence of Asia in international trade. Between 1975 and 2005, the ratio of world trade to world gross domestic product (GDP) increased from 0.33 to 0.54, while for East Asia in the same period the figures climbed from 0.21 to as much as 0.86.1 The figures reflect the fact that an increasing share of what is produced in a country is exported, while at the same time a rising share of what is being processed or consumed is imported.