Trading Agrements

Preferential Trading Arrangements

Asia generates the highest rate of economic growth in the world, which has created deep socio-economic and political changes. These geopolitical environment changes, growth of intra-regional business network, success of regionalism in other parts of the world, or the legacy of the world financial crisis has led to the current rush for the preferential trading agreements.

A notable feature in the recent rise of regionalism is that countries that favored the multilateral approach to trade liberalization including India, Singapore and Republic of Korea have joined RTA bandwagon.

Regionalism in Asia needs to be understood not just from economic perspective, but also through international power politics.

Regional trade agreements are important part on international trade, they operate beside multilateral agreements under the WTO. The link between regionalism and multilateralism are complex.

Birth of Regionalism and Bilateralism

As countries accelerated their liberalization process and integrated into the world economy, instabilities and imbalances increased both among and within countries, which affected the corporation among counties. This complex multilateral background has given rise to the regionalism which is the new international trend.

Regionalism was born as countries realigned development strategies towards exports. This regionalism framework gave more steady market access for countries rather than the competitive Multinational trade.

With the membership in WTO countries pursued a faster track to trade liberalization through the regional route. This regionalism took a new turn which was triggered by the 1997 financial crisis

Bilateral or Regional trade is preferred because:

• They allow faster market access compared to the slow multilateral WTO trade negotiations.

• Countries wanted to maximize their benefits through the first mover advantage. They want to get the maximum usage by signing an...