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The London School of Economics and Political Science a Step Toward East Asian Regionalism? Comparing the Negotiation Approaches

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The London School of Economics and Political Science a Step Toward East Asian Regionalism? Comparing the Negotiation Approaches The London School of Economics and Political Science A Step Toward East Asian Regionalism? Comparing the Negotiation Approaches of South Korea and Japan in Their Preferential Trade Agreements with ASEAN Sohyun Lee A thesis submitted to the Department of International Relations of the London School of Economics for the degree of Doctor of Philosophy, London, October 2017 Declaration I certify that the thesis I have presented for examination for the PhD degree of the London School of Economics and Political Science is solely my own work other than where I have clearly indicated that it is the work of others (in which case the extent of any work carried out jointly by me and any other person is clearly identified in it). The copyright of this thesis rests with the author. Quotation from it is permitted, provided that full acknowledgement is made. This thesis may not be reproduced without my prior written consent. I warrant that this authorization does not, to the best of my belief, infringe the rights of any third party. I declare that my thesis consists of 76029 words. Statement of use of third party for editorial help I can confirm that my thesis was copy edited for conventions of language, spelling and grammar by Jennifer Ljungberg. 2 Acknowledgements This project would not have been possible without the help of my supervisor, Professor Stephen Woolcock. He has always been patient and supportive of my studies, and he has provided me with the best possible guidance throughout the PhD process. I am deeply indebted to Professor Shujiro Urata and Noriyuki Mita Sensei at Waseda University. They guided me to conduct a fruitful research and introduced me to FTA experts in Japan. I am grateful to Professor William Callahan for his four years of seminar in the Asia–Pacific region and for providing me with academic advice as my research panel. I thank Professor James Ashley Morrison for providing me with constructive feedback as my advisor and my research panel. I also thank Professor Ramon Pacheco Pardo and Professor Maria Garcia for offering their invaluable insights as my thesis examiners. I appreciate all the help the Department’s administrative staff provided, especially Gabrielle, who has always been extremely supportive on all PhD-related issues. I thank Korea University Asiatic Research Center for providing me an opportunity as a visiting fellow for my field research. I also thank the Graduate School of International Studies at Seoul National University and Professor Dukgeun Ahn for encouraging my participation to the FTA Practitioner Program. I also deeply appreciate the time and knowledge my interviewees generously shared with me out of pure academic enthusiasm. Because of them, this thesis was made possible as a collection of living experiences. I am also grateful to professors Yun-hwan Kim, Moon-sung Kang, Robert Bates, Dwight H. Perkins, and Hyun-Chin Lim for their support. I thank my fellow students in IPE seminars, Asia–Pacific seminars and Urata Zemi. Their comments were truly constructive and essential in the development of this thesis. I am indebted to my PhD friends Valeria, William, Heidi, Sunny, So Jeong, Janis, Kyungryul, Doyoung, and all others, for providing me with feedback on my research and encouraging me to keep going. I would like to pay my deepest gratitude to the Kwanjeong Educational Foundation and Mr Jong Hwan Lee for their financial support. They believed in my studies and my passion throughout this six-year journey in my graduate studies, first for my master’s degree at Harvard University and then for my PhD degree here at LSE. This project also owes a debt to my beloved family. My mom, dad and grandmother have always believed in me in all circumstances and have provided me with endless support. I especially thank my brother, Dr Jeonghyun Lee, for providing me with critical comments and sharing his experience in academia. I also thank my cat, Jaru, for keeping me fit throughout my last year of this PhD, walking by my side along the Court Place Gardens. I thank my life partner and best friend, Sanghun, for providing me with most constructive comments and endless emotional support. Lastly, I dedicate this thesis to my late grandfather. 3 Abstract In the early 2000s, Korea and Japan competitively initiated their preferential trade agreements (PTAs) with the Association of Southeast Asian Nations (ASEAN) in response to the unexpected progress of the China–ASEAN Free Trade Agreement (FTA) negotiations. In contrast with China, Korea and Japan initially preferred to negotiate PTAs with individual Southeast Asian countries, rather than with ASEAN. In 2003, however, Korea redirected its strategy and began the Korea–ASEAN FTA. Japan continued to emphasise a bilateral approach to negotiations but sought harmonisation of the individual PTAs through the ASEAN–Japan Comprehensive Economic Partnership. Sharing common international political and economic challenges, why did Korea and Japan take diverging negotiation paths? This research investigates the factors that shaped Korea and Japan’s respective negotiation methods with ASEAN by focusing on the interplay of domestic interests, institutions and ideas. The research findings suggest that Korea and Japan initially preferred bilateral PTAs because of their efficiency and to minimise the backlash of the agricultural sector. Japan had a greater incentive to promote bilateral strategy than Korea, not only to counter China’s move, but also to utilise its diplomatic leverages against ASEAN. The direct causes of the two countries’ divergence, however, came from ideas and institutions. The influence of ideas became evident when Korea’s and Japan’s initial emphasis on the East Asia-based PTAs began to head toward the different directions. Japan was path-dependent of its initial step-by-step strategy focused in East Asia. In contrast, Korea accommodated the new ideas that aimed at cross-regional PTAs, making the Korea-ASEAN FTA a stepping stone for cross-regional PTAs rather than East Asia-based PTAs. Institutional factors account for the supply side of PTA decision-making processes by demonstrating how the intra-democracy variations, combined by bureaucracy discretion, empowered relevant decision-makers, which led to the reversal of negotiation progresses between Korea and Japan. The empirical research findings significantly contribute to the international political economy literature by testing the applicability of the domestic level analysis. They provide an alternative perspective to the existing debate on the compatibility of bilateralism and regionalism in East Asia and thus to the political economy of trade policy in the region. The findings also shed light on the country-specific factors shaping the economic regionalism of East Asia. 4 Contents List of Tables ........................................................................................................................ 8 List of Figures ...................................................................................................................... 8 List of Abbreviations ............................................................................................................ 9 Chapter 1 Introduction ........................................................................................................ 13 1.1 Introduction ..................................................................................................... 13 1.2 Background: Bilateralism and Regionalism in East Asia .................................. 17 1.2.1 The Rise of PTAs in East Asia and the Emergence of ASEAN+1 PTAs ... 17 1.2.2 The Competitive Nature of PTAs with ASEAN on the Part of China, Japan and Korea ......................................................................................................... 21 1.3 Research Design .............................................................................................. 25 1.3.1 Hypothesis ............................................................................................... 25 1.3.2 Research Method ..................................................................................... 27 1.3.3 Case Selection: Korea and Japan .............................................................. 32 1.3.4 The Externalities: Responses of ASEAN .................................................. 35 1.4 Structure of the Thesis ..................................................................................... 37 Chapter 2 Literature Review of East Asian Regionalism and ASEAN+1 PTAs ................... 40 2.1 Introduction ..................................................................................................... 40 2.2 The Development of East Asian Regionalism .................................................. 42 2.3 The New Bilateralism Versus Regionalism Debate .......................................... 46 2.4 Driving Factors of the KAFTA and AJCEP Negotiations ................................. 50 2.4.1 Intra-regional and Cross-regional Power Competition. ............................. 50 2.4.2 Economic Factors: Trade Creation and Trade Diversion Effects ............... 53 2.5 The KAFTA and AJCEP Negotiations ............................................................. 56 2.6 Conclusion ....................................................................................................... 62 Chapter 3 An Analytical Framework ................................................................................... 64 3.1 Introduction ....................................................................................................
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