Subject Index. Asian economies: GDP growth rates ( ) ; moves toward economic integration, See also East Asian countries

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1 Subject Index AFTA. See ASEAN Free Trade Area (AFTA) Agricultural sector: protection and liberalization in Mexico, 29-35; protection in NAFTA countries, 52; rice production and marketing in Japan, , See also Common Agricultural Policy (CAP) American Rice Millers Association, 7, APEC. See Asia Pacific Economic Cooperation (APEC) ASEAN Concord (1976), 285 ASEAN Free Trade Area (AFTA), 6,276, ; compared to NAFTA, 296; trade under Common Effective Preferential Tariffs, Asian economies: GDP growth rates ( ) ; moves toward economic integration, See also East Asian countries Asia Pacific Economic Cooperation (APEC): commitment to free and open trade, 203; cooperation programs, ; criticism of, 206-7; expectations for, 103; factors influencing emergence of, 5-6,218-19; free trade initiative, 21; Manila Action Plans, ; as move toward integration, 94-95; Nonbinding Investment Principles, 222; objectives based on Bogor commitment, 5.211; open regionalism in, ; Osaka Action Agenda, 205-7, , ; proposed FTA, 9; proposed liberalization program, ; response to proposed trade-related social policy, 79-81; role of ASEAN in, 285; scope of, 122 Association of Southeast Asian Nations (ASEAN): ASEAN Fund, Limited, 308-9; Common Effective Preferential Tariff (CEPT), ; currency arrangements in intra-asean trade, 306-8; deterrents to trade within, ; economic integration, 276; economies of, ; Finance Corporation, 308; growth triangle concept, 6; impact of, 303; initiatives of, ; Insurance Council, 309; intra-asean trade, ; political, strategic, and economic objectives, 285; Preferential Trading Area (1977), 287; present and future members, 275; Swap Arrangement, Balassa index of comparative advantage, Bank rates, local, 192t Bogor Declaration (1994): APEC Nonbinding Investment Principles, 222; cooperation concept, 212; related to free and open trade and investment, 5-6, 203,205,207 British Commonwealth trading bloc, , Brunei: as ASEAN member, 275; colonial ; intra-asean trade, 282, Business groups, Korea. See Chaebols, Korea 413

2 414 Subject Index Calculus of participation, or theory of clubs, Canada-U.S. Free Trade Agreement, 1 CAP. See Common Agricultural Policy (CAP) Capital flows: Asian capital markets, ; implications of capital inflows, , Capital markets: covered interest differential as measure of integration, ; effect of social policy concerns on, 87; integration in Pacific Basin, See also Credit; Interest rates: Investment Caribbean Basin Initiative (CBI), 9 CBI. See Caribbean Basin Initiative (CBI) CEPT. See Common Effective Preferential Tariff (CEPT) Chaebols, Korea: industrial policy for, ; in industrial structure, Chile, 9 CITES. See Convention on International Trade in Endangered Species (CITES) Coase theorem, 47 Collective action: benefits with public-good feature, 100; criticism of theory of, 101; in theory of clubs, 101 Common Agricultural Policy (CAP): protectionist effects of, 16, 374; reform (1992), Common Effective Preferential Tariff (CEPT), ASEAN, Comparative advantage: of many APEC member countries, 122; revealed comparative advantage (RCA) indexes, ; theory of changing, Confederacih de Trabajadores Mexicanos (CTM), 43 Convention on International Trade in Endangered Species (CITES), 64,73 Cooperation: APEC agenda, ; ASEAN banking and finance arrangements, 306-9; ASEAN Insurance Council, 309 Country size, in model of tariffs: in decision to join free trade area, 102, ; in Ricardian model of trade, 99, 106-9; in WTO, 116 Credit: Asian interbank and bank loan rates, ; Asia Pacific sources of, ; effect of capital inflows on, ; effect on economic activity, ; model with, ; risks in lending, Currency in intra-asean trade, Customs unions: cannot overlap, 11, 17; common external tariffs of, 11, 17.22; consis- tent with WTO rules, 2 1 ; differences from FTAs, 3; EEC initiative, ; incentives to form, 97-98, 100; potential for trade liberalization under, 18-19; as regional trading arrangements, 10; rules of origin in, Data sources: Asia Pacific capital market analysis, , 198; departure from standard gravity model, ; for FDI, ; gravity model of existing intraregional trade bias, 125; of trade bias in implicit trading blocs, 125, 127, ; for trade policy formation model, Deregulation as response to globalization, Developing countries: actions related to traderelated social policy, 78-81; industrial development in, 338; US. tariff preferences to, 9 EAEC. See East Asian Economic Caucus (EAEC) East Asian countries: open multilateral trading system for, ; subregional economic zones, or growth triangles, East Asian Economic Caucus (EAEC), proposed, 94-95, 103, 116 Economic integration: APEC as move toward, 94-95; ASEAN nations, 276; Asian economies' moves toward, 94-95; capital markets in East Asia, ; East Asia and ASEAN, ; globalization with, ; reciprocal trade agreements as, 11-13; regional integration consistent with multilateral liberalization, 206; social policy with, 59-60; stages in symmetric tariff bloc model, 95-98; subregional growth triangles, , ; welfare levels with, Economic performance: ASEAN nations, 275; Asia-West Pacific economies ( ), 91-93; relation to environment and trade policies, Economies of scale: definition of, ; estimates of Korean firm, Economies of scope: definition of, ; estimates of Korean firm, 327,329-34; with globalization, EFTA. See European Free Trade Association (EFTA) Elites, Mexico: effect of NAFTA on new export elites, 50-54; during fiscal crisis,

3 415 Subject Index 25-26; new private export elite and foreign investors, 26,48-50; trade preemption game of old manufacturing elites, 26,44-47; weakening of old group of, Eminent Persons Group (EPG): advocacy of APEC dispute mediation service, 222; recommendations for APEC, ; views on APEC, 203 Environmental issues: considered along with trade policy, 60-62; differences in policies, 58; in GA7T provisions, 69; relation to growth and trade, European Coal and Steel Community, 149, 212 European Community (EC): extraregional trade (1958, 1979), 16; second enlargement of former EEC ( ), European Economic Community (EEC), or Common Market: regional exchange rate mechanism and internal market of,,141-42; trade among original six members, ; trade with EFTA members ( ), ; trading pattern and volume with larger membership ( ), See also European Community (EC) European free trade agreements: with addition of members ( ). 154; EEC and EFTA trade ( ) European Free Trade Association (EFTA): initiation of free trade area (1965), 151; intramember trade ( ), ; trade pattern and volume ( ). 5, ; trade with EEC members ( ), 5, European Payments Union, 149 European Union (EU): effects as preferential trading area, 5; harmonization of social policies in, 60; intraregional European trade, 16-17; labor policies in, 77-78; as regional preferential trading arrangement, 1-2, 10, 16 Expansion path subadditivity concept, Korea, 330, Exports: of Korea to APEC countries, ; link to FDI, ; in Mexico with liberalization, FDI. See Foreign direct investment (FDI) Firms: behavioral patterns of, ; economies of scale in multiproduct firms (Stigler), 316; economies of scope and scale (Baumol, Panzar, Willig), ; success of small- and medium-sized, 338. See also Chaebols, Korea Food Agency, Japan, 402 Food Control Law, Japan, Foreign direct investment (FDI): to ASEAN nations, , 336; Korean overseas, ; in Mexico, 37, 39-41; in trading bloc environment, Free-rider issue, 101 Free trade agreements (FTAs): Common Effective Preferential Tariff of ASEAN Free Trade Area, ; to form ASEAN free trade area, 286; hub and spoke system, 19; potential for and problems of overlapping, 9, 17-20; proposed North Atlantic and APEC, 9; reciprocal, 11-13; regional aspects of, 10; rules of origin under, 3, 17-18; tariffs of individual countries under, 3, 11. See also European free trade agreements; European Free Trade Association (EFTA); European Union (EU) Free trade areas: ASEAN Free Trade Area (AFTA), 276, ; calculus of participation in formation of, ; conditions for improved welfare with, 120; incentives to form, 97-98, 100; symmetric and asymmetric, General Agreement on Tariffs and Trade (GATT): Article 1 liberalization areas, 206; Article 24 tariff strategy restrictions, 102, 116, 123, ; conflict of U.S. Super 301 provisions, 346; Mexico as member of, 28; nondiscrimination requirements and exceptions, 69; rulings related to environmental issues, 69-73; Uruguay Round, 80,206,297,37 1, Generalized System of Preferences (GSP), U.S. preferences to developing countries under, 9 Globalization: characterization of, , 334; definition of, 321; large- and smallscale production with, 322 Government role: in environment of globalization, ; in framework of Korean industrial policy, Gravity model: EEC and ERA trade patterns and volume ( ), ; EEC- EFTA model compared to other approaches and studies, ; firstdifference specification, , 166; in-

4 416 Subject Index Gravity model (continued) traregional trade bias and welfare, ; problems of, ; specified for third-country effects, 14-45; standard traditional specification, 144, Group behavior, small and large groups, Growth triangles: ASEAN integration with, 276; ASEAN region, , ; East Asia, See also Subregional economic zones (SREZs) Hub and spoke system, 19 Imports: of Korea from APEC countries, ; in Mexico with liberalization, Import substitution, Mexico, 26 Incentives: to form customs union or free trade area, 97-98; to join tariff bloc, Indonesia: as ASEAN member, 275; colonial ; interbank and loan rates, 179f; intra-asean trade, ; inward FDI, 282 Industrial cooperation schemes, ASEAN, ,308 Industrial organization: business groups (chaebols) in Korea, ; with globalization, ; Korea, ; Malaysia, 336 Industrial policy: ASEAN nations, ; characterization of Korean, ; Korean regulation of chaebols, , ; objective and role of, 337 Industrial sector: Fordist and post-fordist, 313,321; German Craft system, ; protection in NAFTA trade, Industry, multiproduct: competitive equilibrium of (Baumol, Panzar, Willig), ; firms within (Stigler), Information technology: economies of scope in global environment, 321; globalization with, ,341 Institutional Revolutionary Party (PRI), Mexico, Interest groups: elites in Mexico, 3, 44-47; environmental groups focus on trade policy, 61-62; Japanese rice farmers, See also Elites, Mexico Interest rates, International Labour Organisation (ILO) Ohlin Report (1956). 77 Investment: intra-asean, 282,284; potential in NAFTA trade for diversion, , 273; proposals to facilitate APEC trade and, See also Foreign direct investment (FDI) Japan: agricultural protection levels, ; cost of agricultural protection in, 375; domestic and border rice price differences, ; Food Control Law, ; interbank and loan rates, 177f; price of rice with proposed tariff reduction, ; rice farmers as interest group, ; rice production and marketing, , ; simulation analysis of Japan s tariff change policy on rice, , Korea: chaebols, role in industrial organization, ,322-27; effect of NAFTA trade on, ; export competition with Mexico, 225; firm economies of scale and scope, ; foreign direct investment, ; industrial structure, ; interbank and loan rates, 180f; trade flows with NAFIA members ( ), ; trade interdependence with NAFTA members, Labor standards: in multilateral trade negotiations, 74-78; WTO potential agenda for, 74 Lafay index of comparative advantage, Land reform, Mexico, 43 Long-Term Arrangement for Cotton Textiles, 347 Maastricht Treaty (1992): framework of, 141 ; Protocol on Social Policy, 77 Malaysia: as ASEAN member, 275; colonial ; industrial structure, 336; interbank and loan rates, 178f; intra- ASEAN trade, 282,290-96; inward FDI, 282, 336; leadership in proposed EAEC, 103 Manufacturing sector: effect in Mexico of liberalization, 37; protection and liberalization in Mexico, Markets: predictions in global environment,

5 417 Subject Index 314. See also Capital markets; Money market rates; Rice market, Japan MERCOSUR (Mercado Comun del Con0 Sur): members intentions to join NAFTA, 10; preferential arrangement, 2 Mexico: effect of NAFTA trade on, ; export competition with Korea, 225; financial bailout (1995), 27; interest groups with trade liberalization, 3; protection ( ), 28-31; reforms of de la Madrid administration, ; trade liberalization agenda, 3; using NAFTA as commitment device, Money market rates, 191t Montreal Protocol (1987), 62, 64, 73 Most-favored-nation (MFN) principle: implications of, 10; regionalism as departure from idea of, 121 Multi-Fiber Arrangement (MFA), 347 New Zealand: interbank and loan rates, 178f Nontariff barriers, 85, 358 North American Development Bank, North American Free Trade Agreement (NAFTA): as commitment device, 25-27; effect of, ; effect on Mexico s new export elite, ; formation, 1; Free Trade Commission, 52-53; harmonization of social policies in, 60; labor unions opposition to, 102; Mexican entry into, 3; proposed extension to Western Hemisphere, 1,224; side agreements, 3-4,52-53,60,77 North Atlantic Free Trade Area, proposed, 9 OECD nations, ASEAN trading partners, Ohlin Report (1956), 77 Omnibus Trade and Competitiveness Act (1988), United States: Super and Special Section 301 provisions, 346, 351 Open economic association (OEA): commitment of APEC to an, 205; definition and scope, 204,219 Optimal currency area theory, 115 Osaka Action Agenda, , Pacific Business Forum (PBF), Pacific Economic Cooperation Council (PECC): investment code proposal, 222; Trade Policy Forum, Pacific island economies, GDP growth rates ( ), Participation theory, 100 Partido de la Revoluci6n Democrltica (PRD), Mexico, 48 Partners for Progress proposal, 212,215 Philippines, the: as ASEAN member, 275; colonial ; interbank and loan rates, 179f; intra-asean trade, 282, ; inward FDI, 282 Preferential trading areas (PTAs): ASEAN Preferential Trading Area, 287; EU attempts to form, 1; reciprocal preferences, ; regional, 9; as step toward liberdizing multilateral trade, 10; Western Hemisphere, 1-2 Preferential trading arrangements: essential components of, 14-17; forms of, Privatization, Mexico, Productivity, Mexico, Protection: for agriculture in four economies ( ) ; Japan s food control system, 38041,389-92; Mexico ( ), 28-35; in sectors of NAFTA trade, ; in some rules of origin, 14-19; trade barriers in closed and open regional blocs, 125 PTAs. See Preferential trading areas (PTAs) Public goods theory, 100 Regionalism: ASEAN Common Effective Preferential Tariff (CEPT), ; characteristics of Asia-West Pacific countries, 91-95; social policy as rationale for, 86. See also ASEAN Free Trade Area (AFTA); Subregional economic zones (SREZs) Regionalism, open: APEC implementation of, ; definitions, , 135, 137; evidence in existing trading blocs, ; in implicit continental blocs, ; support for concept of, 219 Regulation: Asia Pacific capital markets, ; banking in less-developed countries, 174; of Korean chaebols, , ; NAFTA side agreements as, 3-4 Rice market, Japan: domestic and border rice price differences, ; monopoly, , ,402; with shift to proposed Uruguay Round tariff setting plan, ; traditional rice policy, Rules of origin (ROOs): change in tariff heading criterion (CTH), 15; in customs unions, 14-15; in NAFTA, ; prob-

6 418 Subject Index Rules of origin (continued) lems of overlap in FTAs, 3, 14-15, 17-19; protectionist features of some, 14-18; specified process criterion, 15; substantial transformation criterion, 15; value-added criterion, 15 Salinas administration, Mexico, Singapore: as ASEAN member, 275; colonial ; interbank and loan rates, 177f; intra-asean investment by, 282; intra- ASEAN trade, 282,290-96; inward FDI, 282 Social policy: APEC response to trade-related, 79-81; differences across countries, 57-60; Maastrict Treaty Protocol on, 77; regionalism as rationale for, See also Environmental issues SREZs. See Subregional economic zones (SREZS) Stockholm Convention (1960), 151 Subregional economic zones (SREZs), 6,298, Subsidies, Japan, Taiwan: bilateral trade arrangements with United States, ; interbank and loan rates, 18Of; preferential treatment of US. imports, ; tariff negotiations with United States, ; as US. trading partner, 346 Tariff rate, setting: effect on rice markets of proposed Uruguay Round rate reduction, ; simulation analysis of Japan s rate reduction policy, Tariffs: under ASEAN Common Effective Preferential Tariff agreement, ; country size in trading bloc model, 106-9; customs union common external, 11, 17,22; gradual elimination under NAFTA, 51-52; in Mexico with liberalization, 28-40; multilateral negotiations under GATT, 16; in nation s decision to join free trade area, 11, 102; optimal, ; optimal tariff bloc, 98-99; retention of individual country, 3, 11; summary of tariff bloc model results, 95-98; symmetric tariff bloc model, 95, 104-6; Taiwan-U.S. negotiations ( ), See also Protection TEAs. See Transitional economies of Asia (TEAs) Thailand: growth triangle participation, ; interbank and loan rates, 181f; intra- ASEAN trade, ; inward FDI, 282 Theory of clubs. See Calculus of participation, or theory of clubs; Free trade areas Trade: asymmetry in patterns of world, ; diversion away from Korea, 26 1 ; EEC and ERA ( ), ; effect of FDI in trading bloc environment, ; environment-related discriminatory restrictions, 62,66; European external, 16; intracontinental biases in, 129; intra-european Union, 16-17; preferences extended by United States, 9; production theory analysis of diversion, , , 273; proposals to facilitate APEC investment and, ; Ricardian tariff model of, 99, 106-9; summary of symmetric tariff bloc model, 95-98; symmetric tariff bloc model, 95, See also Protection Trade Act (1974), United States: investigation of Taiwan under Section 307 (1986), 349; Section 301 provisions for unilateral trade actions, 345,347 Trade agreements: reciprocal integration agreements (January 1995), 11-13; Taiwan-U.S. bilateral, 347. See also ASEAN Free Trade Area (AFTA); Canada-U.S. Free Trade Agreement; European free trade agreements; Free trade agreements; General Agreement on Tariffs and Trade (GATT); North American Free Trade Agreement (NAFTA); World Trade Organization (WTO) Trade Expansion Act (1962), United States, 348 Trade flows: Korea and NAFTA members ( ) ; U.S. use of voluntary export restraints to limit, Trade index, Mexico-U.S. intraindustry, 36 Trade liberalization: APEC commitment, ; APEC members voluntary, ; effect of interest group influence on, 40-50; Mexico ( ), 28-35; Mexico s agenda for, 3; Mexico s elite preemption game in instituting, 43-47; Mexico s path toward, 26-40; in Mexico under NAlTA, 50-54,56; under preferential trade agreements, 18-19; re-

7 419 Subject Index gional agreement unilateral, 123; sequence of Mexican, 40,42; within trading bloc, ; trading bloc unilateral, Trade policy: ASEAN Common Effective Preferential Tariff, ; changes in ASEAN, 278; environmental issues considered along with, 60-62; under GATT/ WTO environmental policy, 71-73; GA'lTiWTO labor standards, 74-79, 85; Mexican protection and liberalization (1970s), 28; relation to environmental issues and growth, 62-69; U.S. unilateral, 345 Trade policy formation model, , Trading arrangements, regional: in multilateral trading system, 1-2; preferential, See also Preferential trading areas (F'TAs); Regionalism Trading blocs: countries with dissimilar social policies in, 60; implicit continental, ; openness and intrabloc biases in existing and implicit, 137 Trading blocs, regional: incentives related to forming or joining, 4; openness, 4-5, 119; potential for conflict with, 10 Trading system, multilateral: East Asian stake in open, 20-21; growth of open, 1-2; labor standards in negotiations, 74-78; with most-favored-nation (MFN) concept, 10 Transitional economies of Asia (TEAS), 91, U.N. Conference on Environment and Development (UNCED), United States: bilateral trade arrangements with Taiwan, ; endorsement of preferential trading arrangements, 17, 22; opposition to proposed EAEC, 103, 116; tariff negotiations with Taiwan, ; trade preferences in CBI, 9; unilateral trade actions against Taiwan ( ), ; USTR under Section 301 of Trade Act (1974), 345, 347 Uruguay Round: agricultural negotiations, 371; General Agreement on Trade in Services (GATS), 297; proposed amendment to Agreement on Subsidies and Countervailing Measures, 80; tariff reduction plan (1995), ; trade liberalizations of, 206 Vietnam: as ASEAN member, 275; as member of ASEAN Free Trade Area (AFTA), 288 Voluntary export restraints (VERs), Welfare levels: with asymmetric free trade zones, ; before and after integration in symmetric tariff bloc model, 96-98; open and closed regional blocs, 125, ; of regional trading blocs, ; with symmetric free trade zones, ,120 World Environment Organization (WEO), proposed, 73 World Trade Organization (WTO): Committee on Trade and Environment, 72; environmental policy initiatives, 71-73, 89; notification of preferential trade agreement to, 2, 13; political support for, 21; proposed actions related to labor standards, ; small nonhegemon countries in Zapatistas, Mexico, 43