A World Trade Organization for the 21St Century: the Asian Perspective

A World Trade Organization for the 21st Century Baldwin Richard the 21st Century for Organization Trade A World ‘This unique compilation of essays addresses a core political economy question: how do market forces and trade regulation interact? Its fresh Asian perspective offers a much-needed contribution to our understanding of how treaty-based regional and bilateral economic integration is driven by the Factory Asia phenomenon. The authors EDITED BY also compellingly show where the World Trade Organization could fit in. An informative read for scholars and experts alike.’ Richard Baldwin • Masahiro Kawai Manfred Elsig, University of Bern, Switzerland • Ganeshan Wignaraja Masahiro Kawai Kawai Masahiro The global financial crisis exposed great shortcomings in the global economic architecture, generating extensive international debate about possible remedies for these deficiencies. Postwar global architecture was guided by major developed economies, centered around the IMF, the GATT, and the World Bank. Today, the balance of economic power is shifting toward emerging economies. A World Trade Global governance and economic policy must reflect this shift. The world trading system, led by the World Trade Organization (WTO), is under pressure to evolve and address 21st-century trade issues. Meanwhile, economically salient Asia has built Organization for the deep supply chains over decades, whilst experimenting with mega-regional trade agreements • and economic policies to sustain growth amid a fragile economy. The Asian-led Regional Ganeshan Wignaraja Comprehensive Economic Partnership (RCEP) and the United States-led Trans-Pacific Strategic Economic Partnership (TPP) are competing to set standards for Asia’s trade and supply chains. With 21st Century contributions from prominent Asian and international trade experts, this book critically examines key changes occurring in the world trading system and explores policy implications for Asia. Lessons from the Asian experience offer new approaches and economic policies to sustain growth, The Asian Perspective presenting the WTO as forum for action to improve global and regional trade governance in the 21st century. Policy makers will benefit from the expert knowledge and policy lessons presented in this book, and development economists and researchers will profit from its critical examination of the world trading system. Undergraduate and postgraduate students interested in development, development economics, international development, and related fields will find this essential supplementary reading. Richard Baldwin is Professor of International Economics at the Graduate Institute of International and Development Studies, Geneva, Switzerland, Masahiro Kawai is Project Professor at the Graduate School of Public Policy, University of Tokyo, Japan and Ganeshan Wignaraja is Director of Research at the Asian Development Bank Institute, Tokyo, Japan. ADBI Series on Asian Economic Integration and Cooperation CONTACT Andy Driver JOB NO 1464 DATE SENT 17.09.14 TITLE A World Trade Organization for the 21st Century EDITOR Caroline Cornish TEL 07944 643920 PRODUCTION CONTROLLER Ilsa Williamson ORDER 52368 SPINE BULK 28mm JACKET SIZE Royal PPC 234mm x 156mm COLOURS CMYK EMAIL [email protected] PLEASE NOTE Colours on printed laser proofs may differ slightly to those viewed on PDFs due to the nature of laser printing compared to the colour values seen on screen. A World Trade Organization for the 21st Century ADBI SERIES ON ASIAN ECONOMIC INTEGRATION AND COOPERATION Previous titles published in association with ADBI include: Infrastructure and Trade in Asia Edited by Douglas H. Brooks and Jayant Menon Infrastructure’s Role in Lowering Asia’s Trade Costs Building for Trade Edited by Douglas H. Brooks and David Hummels Trade Facilitation and Regional Cooperation in Asia Edited by Douglas H. Brooks and Susan F. Stone Managing Capital Flows The Search for a Framework Edited by Masahiro Kawai and Mario B. Lamberte The Asian Tsunami Aid and Reconstruction after a Disaster Edited by Sisira Jayasuriya and Peter McCawley Asia’s Free Trade Agreements How is Business Responding? Edited by Masahiro Kawai and Ganeshan Wignaraja Monetary and Currency Policy Management in Asia Edited by Masahiro Kawai, Peter J. Morgan and Shinji Takagi Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia Edited by Masahiro Kawai, David G. Mayes and Peter J. Morgan Infrastructure for Asian Connectivity Edited by Biswa Nath Bhattacharyay, Masahiro Kawai and Rajat M. Nag A World Trade Organization for the 21st Century The Asian Perspective Edited by Richard Baldwin, Masahiro Kawai and Ganeshan Wignaraja The Asian Development Bank Institute (ADBI), located in Tokyo, is the think tank of the Asian Development Bank (ADB). ADBI’s mission is to identify effective development strategies and improve development management in ADB’s developing member countries. ADBI has an extensive network of partners in the Asia and Pacific region and globally. ADBI’s activities are aligned with ADB’s strategic focus, which includes poverty reduction and inclusive economic growth, the environment, regional cooperation and integration, infrastructure development, middle-income countries, and private sector development and operations. A World Trade Organization for the 21st Century The Asian Perspective Edited by Richard Baldwin Professor of International Economics, Graduate Institute of International and Development Studies, Geneva, Switzerland Masahiro Kawai Project Professor, Graduate School of Public Policy, University of Tokyo, Japan Ganeshan Wignaraja Director of Research, Asian Development Bank Institute, Tokyo, Japan Edward Elgar Cheltenham, UK • Northampton, MA, USA © Asian Development Bank Institute 2014 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2014941551 This book is available electronically in the ElgarOnline.com Economics Subject Collection, E-ISBN 978 1 78347 928 3 ISBN 978 1 78347 927 6 Typeset by Servis Filmsetting Ltd, Stockport, Cheshire Printed and bound in Great Britain by T.J. International Ltd, Padstow Contents List of contributors vii Foreword by Pascal Lamy ix Preface xiii List of abbreviations xiv 1 Introduction and overview 1 Richard Baldwin, Masahiro Kawai and Ganeshan Wignaraja 2 WTO 2.0: governance of global supply- chain trade 12 Richard Baldwin 3 Trade in value added: concept, development, and an East Asian perspective 48 Satoshi Inomata 4 Joining the supply chain: a firm- level perspective 71 Ganeshan Wignaraja 5 Effective industrial policies and global value chains 110 Patrick Low and Julia Tijaja 6 Mapping crisis- era protectionism in the Asia and Pacific region 130 Simon J. Evenett 7 Exchange rate policy and regional trade agreements: a case of conflicted interests? 157 Victor Pontines and Richard Pomfret 8 Policy challenges posed by Asian free trade agreements: a review of the evidence 182 Masahiro Kawai and Ganeshan Wignaraja 9 Constructing and multilateralizing the Regional Comprehensive Economic Partnership: an Asian perspective 239 Shujiro Urata v vi A World Trade Organization for the 21st century 10 The ASEAN Economic Community: progress, challenges, and prospects 269 Siow Yue Chia 11 The future of the World Trade Organization 316 Biswajit Dhar 12 Plurilateral agreements: a viable alternative to the World Trade Organization? 361 Michitaka Nakatomi 13 The role of foreign direct investment flows and a possible multilateral agreement 403 Yunling Zhang and Rongyan Wang Index 421 Contributors Richard Baldwin is Professor of International Economics at the Graduate Institute of International and Development Studies, Geneva, Switzerland. Siow Yue Chia is Senior Research Fellow at the Singapore Institute of International Affairs. Biswajit Dhar is Director General of the Research and Information System for Developing Countries and Professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India. Simon J. Evenett is Professor of International Trade and Economic Development, University of St Gallen, Switzerland. Satoshi Inomata is Chief Senior Researcher at the Institute of Developing Economies (IDE- JETRO), Chiba, Japan. Masahiro Kawai is Project Professor at the Graduate School of Public Policy, University of Tokyo. He was formerly Dean and CEO of the Asian Development Bank Institute, Tokyo, Japan. Patrick Low is Vice President of Research at the Fung Global Institute, Hong Kong, China. Michitaka Nakatomi is Consulting Fellow at the Research Institute of Economy, Trade and Industry, Tokyo, Japan. Richard Pomfret is Professor, School of Economics, University of Adelaide, Australia. Victor Pontines is Research Fellow at the Asian Development Bank Institute, Tokyo, Japan. Julia Tijaja is Assistant Director/Senior Economist at the ASEAN Integration Monitoring Office (AIMO) of the ASEAN Secretariat, Jakarta, Indonesia. She was formerly Research Analyst at the Fung Global Institute, Hong Kong, China. Shujiro Urata is Professor of Economics

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