Vinod K. Aggarwal

Professor, Political ScienceUniversity of California / Berkeley

Award Information

Abe Fellowship 2007

Professor and Director, Political Science/ Berkeley APEC Study CenterUniversity of California / Berkeley

Toward a New Trade Architecture in the Asia-Pacific

The institutional architecture of the global trading system is in flux, with the Doha Development Round of the World Trade Organization (WTO) teetering on the brink of collapse. For Asia-Pacific countries, one response has been to pursue trade talks and formal negotiations at the bilateral and minilateral level. Preferential trade agreements (PTAs) now abound. In addition, there is growing discussion of broader accords such as ASEAN plus 3 (involving China, Japan, and South Korea) as well as ASEAN plus 6 that would include India, New Zealand, and Australia. These arrangements join existing interregional fora such as the Asia-Europe Meeting (ASEM) and Asia-Pacific Economic Cooperation (APEC) groups. What economic and political factors are driving the proliferation of different types of trade arrangements in the Asia-Pacific? How are these accords likely to evolve over time? And what impact will they have on the global trading system? Recent developments make these questions especially compelling. These include China’s rapid rise, Japan’s difficulties in pursuing PTAs, the expiration of the U.S. president’s Trade Promotion Authority, and India’s growing ties to East Asia. In addition, the European Union’s (EU) has shifted away from ASEM and turned to negotiation of PTAs with S. Korea, ASEAN, and India. This project explores these developments to examine likely changes in the organization of the Asia-Pacific, and links to key players such as the EU. China’s growth has led American, European, and Japanese firms to reorganize their production patterns. And increasingly, South Korea and ASEAN countries, among others, are focusing on the China market. Given China’s dependence on the U.S. and EU market, there is little reason to believe we are headed for a closed East Asian bloc. Yet at the same time, a dramatic restructuring of trade arrangements in the Asia-Pacific may be in store as China plays a bigger role in PTAs, the U.S. plays a lesser one, and other players change their trade strategies. Through an analysis of dynamics within the broad Asian region and links to the U.S. and E.U., I address these crucial theoretical and policy issues. Using a structured focused comparison of key countries’ strategies, I employ an institutional bargaining game approach to identify key impetuses for change and then consider countries’ responses. The factors I focus on are their: 1) international position, defined by overall power and economic competitiveness in trade; (2) the makeup of their domestic coalitions, reflecting domestic and transnational pressure groups; and (3) elite beliefs about trade arrangements. Countries bargain based on their preferences, possibly leading to the creation of new forms or modifications of existing trade arrangements. To undertake this research, I will draw on primary and secondary sources, and conduct interviews in the region with key policymakers and business groups. These issues speak directly to all three of the themes of the research agenda of the Abe Fellowship program. They will affect global relations, relations between developed and developing countries, and U.S.-Japan relations and are likely to be key issues for the global political economy of the 21st century.