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The Evolution of APEC and ASEM: Implications of the New East Asian Bilateralism

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The traditional institutional equilibrium in East Asia—the embrace of the WTO at the multilateral level and a focus on market-driven, informal integration at the sub-multilateral level—is under heavy strain. Increasingly, East Asian countries are pursuing greater institutionalisation at the sub-multilateral level, weaving a web of preferential arrangements in response to similar strategies pursued by the US and the EU. This article examines the likely path of trading arrangements in Northeast Asia, its implications for East Asia and the future of APEC and ASEM. We propose an institutional bargaining game approach, focusing on goods, countries' individual bargaining situations and the fit with existing arrangements, and allowing an exploration of the evolution of trading arrangements in East Asia. An East Asian trading bloc has both benign and pernicious elements, depending on the ideas and beliefs held by regional actors. The contribution of a prospective East Asian bloc to APEC and ASEM primarily depends on the balance of interests between the US and the EU concerning East Asia. In view of the tremendous political and economic uncertainty in the global economy, the path to freer trade in Northeast Asia, East Asia and the world system is likely to be a bumpy one.


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