Economists agree that protectionism can be a disaster and that international trade works.
Faced with the integration of the three North American economies into the North American Free Trade Agreement (NAFTA) and most of Europe into the European Union (EU), the nations of East Asia have moved gradually in recent years towards the development of a regional free trade bloc of their own. Some see the logical result as a comprehensive East Asian Free Trade Agreement (EAFTA).
Prospective Members of EAFTA
Ten ASEAN nations could combine with three more northern neighbors.
Japan has proposed the creation of an EAFTA that would consist of Japan, the People's Republic of China (PRC), the Republic of Korea (South Korea) and the 10 countries of the Association of Southeast Asian Nations (ASEAN). The ASEAN nations include: Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Burma (Myanmar), Cambodia, Laos and Vietnam.
Japan's Goals
Japan has suffered from a long period of recession and deflation since the 1990s and into the new century. It had begun a tentative recovery in the middle part of the 2000s, only to fall into recession again due to the global credit crunch of 2007 and 2008. Throughout the first decade of the 21st century, many Japanese politicians and academics became increasingly convinced that a loosening of trade restrictions between Japan and the other East Asian nations involved in the proposal would provide a welcome stimulus.
The Special Case of Taiwan
In the spring and summer of 2010, EAFTA played an important role in political developments in Taiwan. At this time, the Taiwanese were engaged in a disagreement over whether to ratify an Economic Cooperation Framework Agreement (ECFA) with mainland China. Taiwan is not one of the entities included in the plan for EAFTA. The Taiwanese were concerned that the EAFTA could provide a way for the People's Republic to freeze them out of the region's trade.
A Double-edged Blade
ECFA advocates reasoned that refusing the new degree of co-operation would make it more likely that the People's Republic of China (PRC) would move to isolate Taiwan within EAFTA. Opponents of quick ratification of ECFA reasoned, on the other hand, that the PRC needs the ECFA, so Taiwan should not be too eager to agree but instead use the ECFA as a a bargaining chip to prevent EAFTA-related isolation.
Driving Forces
Among the driving forces behind regional trade liberalization are the examples of the North American and European free trade zones. These examples are seen by many in East Asia as successful, internally, but as impediments to their own nations' export industries.
Re-working the Map
Two professors of economics who contributed to a recent anthology on East Asian regional issues, Kazuhiro Igawa and Bonggil Kim, wrote that NAFTA and the EU are the dominant trade agreements in the "map of the world." They expressed their desire for a more optimal map, one that would have "one more large [free trade agreement] concentration in East Asia." Such sentiments, and the dynamic they express, lead other scholars to worry that three large, competing trade blocs could raise barriers with one another and undermine the global free trade that the World Trade Organization was created to facilitate.
