Conclusion

Abstract

Regionalism, which includes any formal preferential trading arrangement between two or more countries, came late to Asia. Before the turn of the twenty-first century, there were few regional trading agreements in existence. While successful Asian economies by and large exploited the international marketplace effectively, they did so in the context of the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO) framework. However, regionalization, which we define as a market-led process of increasing economic interaction, has been building up momentum in Asia for decades, spurred by unilateral liberalization, market-oriented reforms, and successful economic growth that was consistently above the global average (with the exception of the Asian Crisis years, 1997–1998). Hence, formal preferential trading arrangements in the region, particularly in the form of free trade areas (FTAs), are being developed as a means of enhancing regionalism (“the flag following trade”) rather than the other way around, as was true of such agreements as colonial preferences or even the early years of European economic integration. In most of Asia, regionalism is being used as part of the overall process of economic reform to buttress the outward-oriented development strategies of the region’s economies.