DP5561 Managing the Noodle Bowl: The Fragility of East Asian Regionalism

Author(s): Richard Baldwin

Publication Date: March 2006

Keyword(s): regionalism , East Asia , noodle bowl , management not vision

JEL(s): F1 , F13 , F15

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP5561.asp

The paper argues that East Asian regionalism is fragile since (i) each nation's industrial competitiveness depends on the smooth functioning of 'Factory Asia' - in particular on intra-regional trade; (ii) the unilateral tariff-cutting that created 'Factory Asia' is not subject to WTO discipline (bindings); (iii) there is no 'top-level management' to substitute for WTO discipline, i.e. to ensure that bilateral trade tensions - tensions that are inevitable in East Asia - do not spillover into region-wide problems due to lack of cooperation and communication. This paper argues that the window of opportunity for East Asian 'vision' was missed; what East Asia needs now is 'management' not vision. East Asia should launch a 'New East Asian Regional Management Effort' with a reinforced ASEAN+3 being the most likely candidate for the job. The first priority should be to bind the region's unilateral tariff cuts in the WTO.