ASEAN+3/+6 or TPP? Pathways Towards East Asian FTA Consolidation. Ganeshan Wignaraja Principal Economist Asian Development Bank [email protected] Washington, D.C. February 2011. Messages. Asia’s trade rebounding; regional integration picking up
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(GDP growth rate, % per year)
Note: 2010 and 2011 data are forecasts. Developing Asia refers to 44 developing member economies of the Asian Development Bank and Brunei Darussalam, an unclassified regional member
Sources: ADB, Asian Development Outlook 2010 (September 2010 Update); Asia Economic Monitor (December 2010)
(Number of concluded FTAs by country)**
49 FTAs in effect
Source: ADB’s Asia Regional Integration Center (ARIC) FTA Database (www.aric.adb.org), data as of January 2011.
Note: *East Asia refers to the 10 ASEAN countries, PRC, Hong Kong,China, Japan, Korea, Taipei,China.
**Concluded FTAs include those that are in effect and those that have been signed but are not yet in effect.
Firm size: Users in all five countries are significantly larger than the non-users
Ownership: Users in Japan & Thailand have significantly higher share of foreign equity than non-users
Age of firm: Users in Thailand & Philippines are significantly older than non-users
Awareness of FTA provisions: Users in Japan, Singapore, PRC, and Thailand are significantly more knowledgeable of FTA provisions that affect their business than non-users
Responsiveness to FTAs: Users in all five countries are significantly more likely to have changed business plans in response to FTAs
Notes: * Findings based on t-tests between samples of users and non-users of FTA preferences excluding Korea.
Only findings with significant differences between the two groups are shown.
* excludes Korea
(% of responding firms)
(% of responding firms that reported multiple ROOs add to costs)
Only 20.1% of firms find multiple ROOs costly to business.
Increase market access for goods, services, skills and technology.
Increase market size – specialization and economies and scale.
Easier FDI flows by MNCs and technology transfer.
Simpler tariff schedules, rules and standards.
Offer an insurance against protectionist sentiments that pose a risk to Asia’s trade and recovery.
Change in income compared to 2017 baseline, %
CEPEATotal Gains: 260 $BN
EAFTA Total Gains: 214 $BN
ASEAN-PRC Total Gains: 82 $BN
Source: Kawai and Wignaraja (2009) ), estimated from CGE model in Francois and Wignaraja (2008).
Note: *TPP 11 = Brunei, Chile, New Zealand, Singapore, Viet Nam, Malaysia, Peru, Australia, USA, Japan, Korea
Source: Wignaraja and Mirza (forthcoming)
Any region-wide FTA – series of linked agreements with variable coverage of members and issues.
For now, 2 competing processes
ASEAN + 3 or +6
Trans Pacific Partnership (TPP) agreement
For ASEAN+3/+6 FTA, a PRC-Japan-Korea FTA needed and connected with ASEAN+1 FTAs.
TPP – early step towards APEC-wide FTA, but will unlikely include a US-PRC FTA
Biggest challenge lies in political will and geopolitical considerations in moving forward on ASEAN+3/+6 and TPP.
Different reasons make either ASEAN+3/+6 or TPP more attractive.
Whichever taken, integration should be deepened and domestic reforms pursued.
A harmonious region will likely see convergence between two processes as building blocks– win-win for Asia-Pacific Community.
Selected References effect
1. Masahiro Kawai and Ganeshan Wignaraja (eds. 2011) Asia’s Free Trade Agreements: How is Business Responding? Cheltenham (UK) Edward Elgar .
Read-only PDF of is available at:
2. Masahiro Kawai and Ganeshan Wignaraja, (2011), “Asian FTAs: Trends, Prospects and Challenges”, Journal of Asian Economics, February.
3. Masahiro Kawai and Ganeshan Wignaraja, (2010), Free Trade Agreements in East Asia: A Way Toward Trade Liberalization?: http://www.adb.org/documents/briefs/ADB-Briefs-2010-1-Free-Trade-Agreements.pdf
Masahiro Kawai effect
Dean and CEO, ADBI
OREI - ADB