SUMMARY OF PRESENTATION AND Q&A SESSION
Organizer

Global Institute for Asian Regional Integration (GIARI),
Waseda University

Title

Look West: The Evolution of U.S. Trade Policy Toward
East Asia

Presenters and Discussants Vinod K. AGGARWAL, Professor and Director, Berkeley
APEC Study Center, University of California, Berkeley
Date

December 8, 2008

Location

Graduate School of Asia-Pacific Studies, Building No. 19,
Waseda University, Nishi-Waseda, Tokyo

Participants

In total about 30 participants including Shujiro URATA(Professor, Waseda University), Tsuneo AKAHA(Professor, Monterrey Institute of International Studies,visiting Professor, Waseda University), Chikako UEKI
(Professor, Waseda University), Takashi TERADA(Professor, Waseda University), Masato KAMIKUBO,(Research Fellow, GIARI), GIARI Research Assistants,and Students of Waseda University

Opening Remarks:
Professor Shujiro URATA welcomes the speaker, Professor AGGARWAL, and theparticipants.
Presentation: ‘Look West: The Evolution of US Trade Policy Toward East Asia’
In order to assess US trade policies toward East Asia, Professor Aggarwal proposes anew categorization mode of trade arrangements which is more suitable for scientificanalysis than the one stipulated in Article 24 of the GATT agreement. He classifies tradearrangements along three dimensions: actor scope, product scope and geographicaldistribution.
In the following, Professor Aggarwal looks at the evolution of US trade policies toward
East Asia over four periods of time: multiproduct multilateralism in the early post WorldWar II period; liberal protectionism from the mid-1950s until the early 1980s; building
blocs, regionalism from the 1980s until mid-1990s, and competitive liberalization from

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the mid-1990s to 2007. Each of these period’s policies is analyzed with regard to threesets of determinants: systemic, domestic and ideology/leadership.
Professor Aggarwal concludes that:- regionalism consists of a variety of different types of trading arrangements that may
have very different implications;- an open sectoral approach may look tempting, but it may undermine the coalition-for free trade;bilateralism is on the rise and poses dangers to the WTO and inter-regionalism;
an FTAAP at this point is a non-starter.

Question and Answer Session, MC: Shujiro URATA
Question (Professor URATA): Some scholars, for instance Bergsten, argue that APEC
helped to conclude the Uruguay round since the US could use it to pressure the EU togive up their resistance. Could it have been used to pressure parties to consent,
threatening to negotiate with other partners and prioritize other regions instead?
Answer: There is no evidence to Bergsten’s claim. I did not hear from any Europeans
who confirmed this claim. I rather think that the EU had an interregional strategy.
However, it failed and the resulting rise of bilateralism, while in the interest of big
multinational corporations, is harming small and medium-sized enterprises (SME).
Question (Professor TERADA): You mentioned the weak institutional structures ofAPEC. Do you think that APEC will be strengthened in the course of the next threeyears, when its meetings will be held in Singapore, Japan and the US?
Answer: In view of the current economic situation, say for instance the connection ofthe Korean-US FTA with the crisis of the US car industry, free-trade is not high indemand. APEC might need to address salient questions such as those related to thefinancial crisis instead. It is desirable that APEC gets more capacity, for instance tomake its own macro-economic analyses and conduct research on issues other thanFTAAP.
Question (Professor TERADA): The political structures of East Asian states aredifferent from North American and European ones. In Southeast Asia, for instance,

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governments seem to be less exposed to domestic lobbying against free-trade. We
should therefore see more enthusiasm to promote free-trade. What do you think about
this?
Answer: The natures of East Asian states are quite diverse. It is therefore difficult tomake a general statement.
Question (Professor AKAHA): How do you judge the fall-out of the US financialcrisis? Is there a consensus that the financial sector should be less privileged in thefuture?
Answer: As we see with the debate about financial support for the car industry, thequestion is currently being discussed. However, this is an old problem and should besolved through anticipatory regulation of the markets.
Question (Professor AKAHA): Does the financial crisis and its consequences weaken
US leadership in the Asia-Pacifc?
Answer: Yes, it shows that the US model of liberalization does not work. This reduces
the credibility of US economic policies.
Question (Professor UEKI): Assuming that the US economy continues to stay weak,
what could the US do, if there was an East Asian regional agreement to emerge?
Answer: The FTAAP could be useful. However, it does not make sense for the US toprevent the emergence East Asian institutions such as ASEAN+3, since the US isstrongly connected to the markets in East Asia, China in particular. It would even be odd
to see APEC as an instrument for this purpose.
Question (Mr. Lee): How do you see the correlation between free-trade and thegrowing disparity in income distribution? It seems that free-trade has the effect thatauthorities wield less control and are made less responsible for social inequalities. Howshould this issue be managed?
Answer: Domestic compensation of negative effects of free-trade is necessary toadvance trade liberalization (embedded liberalism). Otherwise trade liberalization will

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lose its domestic support.
Question (Ms. Mohammad): Taking the example of the Malaysian car industry, how
far should the protection of domestic industries go, and when should ISI policies beabolished?
Answer: It is one thing to subsidize an industry for some time; however, it needs tobecome internationally competitive at some point. This seems to be particularly difficult
with regard to the automotive industry since global competition is very strong. Thailand
chose a better strategy when it invited foreign automakers to invest in the country.

Closing Remarks by Professor Shujiro URATA

Summary by Christian WIRTH, PhD Candidate, GSAPS, Research Assistant, GIARI, Waseda University

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