Strange as it may seem, despite Figure 1 there is as yet no real regionalism in East Asia. Regionalism means preferential trade liberalization, or discriminatory trade liberalization, because preference is just another word for discrimination. By that definition, there is not yet any real regionalism in East Asia. The two most commercially important signed sets of arrangements—the ASEAN-PRC FTA and the ASEAN-Japan bilaterals—are supposed to be phased in over the next 5 years, but they have not yet undertaken any serious discriminatory tariff cutting. The only scheme that has been substantially implemented—AFTA—is not actually used (more on this below).
How was Factory Asia established without any real regionalism?
The answer to this question reveals many critical facts about the region and many aspects of East Asia’s trade relations that are highly unusual by global standards. In answering the question, it is useful to distinguish three phases of East Asia’s regionalism.
• Phase I: Rampant Unilateralism