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, 380-86, 389-92. See also Common Agricultural Policy (CAP) American Rice Millers Association, 7, 371111 APEC. See Asia Pacific Economic Cooperation (APEC) ASEAN Concord (1976), 285 ASEAN Free Trade Area (AFTA), 6,276, 288-89; compared to NAFTA, 296; trade under Common Effective Preferential Tariffs, 289-96 Asian economies: GDP growth rates (1971-93). 91-93; moves toward economic integration, 94-95. See also East Asian countries Asia Pacific Economic Cooperation (APEC): commitment to free and open trade, 203; cooperation programs, 212-1 3; criticism of, 206-7; expectations for, 103; factors influencing emergence of, 5-6,218-19; free trade initiative, 21; Manila Action Plans, 216-17; as move toward integration, 94-95; Nonbinding Investment Principles, 222; objectives based on Bogor commitment, 5.211; open regionalism in, 121-22; Osaka Action Agenda, 205-7, 213-17, 219-22; proposed FTA, 9; proposed liberalization program, 207-10; 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), 289-96; currency arrangements in intra-asean trade, 306-8; deterrents to trade within, 296-97; economic integration, 276; economies of, 276-78; Finance Corporation, 308; growth triangle concept, 6; impact of, 303; initiatives of, 296-97; Insurance Council, 309; intra-asean trade, 278-81; political, strategic, and economic objectives, 285; Preferential Trading Area (1977), 287; present and future members, 275; Swap Arrangement, 306-7 Balassa index of comparative advantage, 243-45 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, 154-56, 158-59 Brunei: as ASEAN member, 275; colonial 300-303; intra-asean trade, 282, 290-96 Business groups, Korea. See Chaebols, Korea 413
414 Subject Index Calculus of participation, or theory of clubs, 99-103 Canada-U.S. Free Trade Agreement, 1 CAP. See Common Agricultural Policy (CAP) Capital flows: Asian capital markets, 169-72; implications of capital inflows, 183-85, 199-200 Capital markets: covered interest differential as measure of integration, 170-71; effect of social policy concerns on, 87; integration in Pacific Basin, 169-71. 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, 315-16; in industrial structure, 322-27 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), 374-75 Common Effective Preferential Tariff (CEPT), ASEAN, 289-96 Comparative advantage: of many APEC member countries, 122; revealed comparative advantage (RCA) indexes, 243-54; theory of changing, 62-64 Confederacih de Trabajadores Mexicanos (CTM), 43 Convention on International Trade in Endangered Species (CITES), 64,73 Cooperation: APEC agenda, 212-17; 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, 116-17; in Ricardian model of trade, 99, 106-9; in WTO, 116 Credit: Asian interbank and bank loan rates, 174-81; Asia Pacific sources of, 172-73; effect of capital inflows on, 183-85; effect on economic activity, 185-87; model with, 182-83; risks in lending, 188-90 Currency in intra-asean trade, 306-8 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, 141-42; incentives to form, 97-98, 100; potential for trade liberalization under, 18-19; as regional trading arrangements, 10; rules of origin in, 14-15 Data sources: Asia Pacific capital market analysis, 190-93, 198; departure from standard gravity model, 144-45; for FDI, 134-35; gravity model of existing intraregional trade bias, 125; of trade bias in implicit trading blocs, 125, 127, 129-30; for trade policy formation model, 364-65 Deregulation as response to globalization, 339-40 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, 20-2 1 ; subregional economic zones, or growth triangles, 298-99 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, 169-70; East Asia and ASEAN, 310-1 1; globalization with, 314-15; 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, 299-303, 311-12; welfare levels with, 96-98 Economic performance: ASEAN nations, 275; Asia-West Pacific economies (197 1-93), 91-93; relation to environment and trade policies, 62-69 Economies of scale: definition of, 316-17; estimates of Korean firm, 329-34 Economies of scope: definition of, 316-17; estimates of Korean firm, 327,329-34; with globalization, 341-42 EFTA. See European Free Trade Association (EFTA) Elites, Mexico: effect of NAFTA on new export elites, 50-54; during fiscal crisis,
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, 47-49 Eminent Persons Group (EPG): advocacy of APEC dispute mediation service, 222; recommendations for APEC, 22 1-22; 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, 62-69 European Coal and Steel Community, 149, 212 European Community (EC): extraregional trade (1958, 1979), 16; second enlargement of former EEC (1975-92), 157-60 European Economic Community (EEC), or Common Market: regional exchange rate mechanism and internal market of,,141-42; trade among original six members, 149-51; trade with EFTA members (1956-73), 150-53; trading pattern and volume with larger membership (1966-80), 154-57. See also European Community (EC) European free trade agreements: with addition of members (1966-80). 154; EEC and EFTA trade (1956-73). 149-54 European Free Trade Association (EFTA): initiation of free trade area (1965), 151; intramember trade (1956-73), 150-51; trade pattern and volume (1966-92). 5, 154-60; trade with EEC members (1956-73), 5, 150-53 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, 330,332-33 Exports: of Korea to APEC countries, 233-38; link to FDI, 135-36; in Mexico with liberalization, 31-40 FDI. See Foreign direct investment (FDI) Firms: behavioral patterns of, 327-29; economies of scale in multiproduct firms (Stigler), 316; economies of scope and scale (Baumol, Panzar, Willig), 316-17; success of small- and medium-sized, 338. See also Chaebols, Korea Food Agency, Japan, 402 Food Control Law, Japan, 380-81 Foreign direct investment (FDI): to ASEAN nations, 282-83, 336; Korean overseas, 238-41; in Mexico, 37, 39-41; in trading bloc environment, 134-37 Free-rider issue, 101 Free trade agreements (FTAs): Common Effective Preferential Tariff of ASEAN Free Trade Area, 289-96; 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, 288-89; calculus of participation in formation of, 99-103; conditions for improved welfare with, 120; incentives to form, 97-98, 100; symmetric and asymmetric, 110-1 1 General Agreement on Tariffs and Trade (GATT): Article 1 liberalization areas, 206; Article 24 tariff strategy restrictions, 102, 116, 123, 133-34; 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 1,376-77 Generalized System of Preferences (GSP), U.S. preferences to developing countries under, 9 Globalization: characterization of, 313-14, 334; definition of, 321; large- and smallscale production with, 322 Government role: in environment of globalization, 340-41; in framework of Korean industrial policy, 334-35 Gravity model: EEC and ERA trade patterns and volume (1956-92), 149-60; EEC- EFTA model compared to other approaches and studies, 160-62; firstdifference specification, 143-49, 166; in-
416 Subject Index Gravity model (continued) traregional trade bias and welfare, 124-29; problems of, 142-43; specified for third-country effects, 14-45; standard traditional specification, 144, 146-47 Group behavior, small and large groups, 100-101 Growth triangles: ASEAN integration with, 276; ASEAN region, 299-303, 311-12; East Asia, 298-99. See also Subregional economic zones (SREZs) Hub and spoke system, 19 Imports: of Korea from APEC countries, 233-38; in Mexico with liberalization, 31-40 Import substitution, Mexico, 26 Incentives: to form customs union or free trade area, 97-98; to join tariff bloc, 98-99 Indonesia: as ASEAN member, 275; colonial 299-303; interbank and loan rates, 179f; intra-asean trade, 290-96; inward FDI, 282 Industrial cooperation schemes, ASEAN, 287-88,308 Industrial organization: business groups (chaebols) in Korea, 315-16; with globalization, 320-21; Korea, 322-27; Malaysia, 336 Industrial policy: ASEAN nations, 277-78; characterization of Korean, 327-29.334; Korean regulation of chaebols, 3 15-16, 326-27; objective and role of, 337 Industrial sector: Fordist and post-fordist, 313,321; German Craft system, 313-14; protection in NAFTA trade, 256-61 Industry, multiproduct: competitive equilibrium of (Baumol, Panzar, Willig), 317-19; firms within (Stigler), 316-19 Information technology: economies of scope in global environment, 321; globalization with, 314-15,341 Institutional Revolutionary Party (PRI), Mexico, 42-43 Interest groups: elites in Mexico, 3, 44-47; environmental groups focus on trade policy, 61-62; Japanese rice farmers, 380-86. See also Elites, Mexico Interest rates, 170-74 International Labour Organisation (ILO) Ohlin Report (1956). 77 Investment: intra-asean, 282,284; potential in NAFTA trade for diversion, 259-61, 273; proposals to facilitate APEC trade and, 210-12. See also Foreign direct investment (FDI) Japan: agricultural protection levels, 372-74; cost of agricultural protection in, 375; domestic and border rice price differences, 394-96; Food Control Law, 380-8 1 ; interbank and loan rates, 177f; price of rice with proposed tariff reduction, 376-77; rice farmers as interest group, 380-86; rice production and marketing, 380-86, 389-92; simulation analysis of Japan s tariff change policy on rice, 386-93, 396-98 Korea: chaebols, role in industrial organization, 315-16,322-27; effect of NAFTA trade on, 241-61; export competition with Mexico, 225; firm economies of scale and scope, 327-34; foreign direct investment, 238-41; industrial structure, 322-27; interbank and loan rates, 180f; trade flows with NAFIA members (1975-93), 225-27; trade interdependence with NAFTA members, 227-29 Labor standards: in multilateral trade negotiations, 74-78; WTO potential agenda for, 74 Lafay index of comparative advantage, 245-54 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 299-303; 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, 28-35 Markets: predictions in global environment,
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, 241-61; export competition with Korea, 225; financial bailout (1995), 27; interest groups with trade liberalization, 3; protection (1980-94), 28-31; reforms of de la Madrid administration, 48-5 1; trade liberalization agenda, 3; using NAFTA as commitment device, 25-27 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, 52-53 North American Free Trade Agreement (NAFTA): as commitment device, 25-27; effect of, 241-61; effect on Mexico s new export elite, 50-5 1; 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, 278-79 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, 213-17,219-22 Pacific Business Forum (PBF), 221-22 Pacific Economic Cooperation Council (PECC): investment code proposal, 222; Trade Policy Forum, 210-11 Pacific island economies, GDP growth rates ( 197 1-93), 9 1-93 Participation theory, 100 Partido de la Revoluci6n Democrltica (PRD), Mexico, 48 Partners for Progress proposal, 212,215 Philippines, the: as ASEAN member, 275; colonial 300-303; interbank and loan rates, 179f; intra-asean trade, 282, 290-96; inward FDI, 282 Preferential trading areas (PTAs): ASEAN Preferential Trading Area, 287; EU attempts to form, 1; reciprocal preferences, 10-1 1; regional, 9; as step toward liberdizing multilateral trade, 10; Western Hemisphere, 1-2 Preferential trading arrangements: essential components of, 14-17; forms of, 10-11 Privatization, Mexico, 48-49 Productivity, Mexico, 37-38 Protection: for agriculture in four economies (1991-93). 372-73; Japan s food control system, 38041,389-92; Mexico (1970-94), 28-35; in sectors of NAFTA trade, 256-61.273-74; 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), 289-96; 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, 221-22; definitions, 119-24, 135, 137; evidence in existing trading blocs, 125-29; in implicit continental blocs, 129-34; support for concept of, 219 Regulation: Asia Pacific capital markets, 169-74; banking in less-developed countries, 174; of Korean chaebols, 315-16, 326-27; NAFTA side agreements as, 3-4 Rice market, Japan: domestic and border rice price differences, 394-96; monopoly, 380-86, 389-94,402; with shift to proposed Uruguay Round tariff setting plan, 389-94; traditional rice policy, 382-86 Rules of origin (ROOs): change in tariff heading criterion (CTH), 15; in customs unions, 14-15; in NAFTA, 273-74; prob-
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, 48-5 1 Singapore: as ASEAN member, 275; colonial 299-303; 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, 86-87. See also Environmental issues SREZs. See Subregional economic zones (SREZS) Stockholm Convention (1960), 151 Subregional economic zones (SREZs), 6,298, 311-12 Subsidies, Japan, 380-81 Taiwan: bilateral trade arrangements with United States, 347-53; interbank and loan rates, 18Of; preferential treatment of US. imports, 352-53; tariff negotiations with United States, 353-57; as US. trading partner, 346 Tariff rate, setting: effect on rice markets of proposed Uruguay Round rate reduction, 380-81; simulation analysis of Japan s rate reduction policy, 386-93 Tariffs: under ASEAN Common Effective Preferential Tariff agreement, 289-96; 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, 114-16; 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 (1978-89), 353-57. See also Protection TEAs. See Transitional economies of Asia (TEAs) Thailand: growth triangle participation, 300-303; interbank and loan rates, 181f; intra- ASEAN trade, 290-96; inward FDI, 282 Theory of clubs. See Calculus of participation, or theory of clubs; Free trade areas Trade: asymmetry in patterns of world, 11 1-14; diversion away from Korea, 26 1 ; EEC and ERA (1956-73), 150-53; effect of FDI in trading bloc environment, 134-37; 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, 254-56, 262-71, 273; proposals to facilitate APEC investment and, 210-12; Ricardian tariff model of, 99, 106-9; summary of symmetric tariff bloc model, 95-98; symmetric tariff bloc model, 95, 104-6. 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 (1975-93). 225-27; U.S. use of voluntary export restraints to limit, 347-48 Trade index, Mexico-U.S. intraindustry, 36 Trade liberalization: APEC commitment, 207-10; APEC members voluntary, 216-17; effect of interest group influence on, 40-50; Mexico (1980-94), 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-
419 Subject Index gional agreement unilateral, 123; sequence of Mexican, 40,42; within trading bloc, 139-40; trading bloc unilateral, 122-24 Trade policy: ASEAN Common Effective Preferential Tariff, 289-96; 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, 357-63, 367-68 Trading arrangements, regional: in multilateral trading system, 1-2; preferential, 9-10. See also Preferential trading areas (F'TAs); Regionalism Trading blocs: countries with dissimilar social policies in, 60; implicit continental, 129-34; 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, 93-94 U.N. Conference on Environment and Development (UNCED), 71.73 United States: bilateral trade arrangements with Taiwan, 347-53; endorsement of preferential trading arrangements, 17, 22; opposition to proposed EAEC, 103, 116; tariff negotiations with Taiwan, 353-57; trade preferences in CBI, 9; unilateral trade actions against Taiwan (1986-93), 347-50; 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), 376-77; trade liberalizations of, 206 Vietnam: as ASEAN member, 275; as member of ASEAN Free Trade Area (AFTA), 288 Voluntary export restraints (VERs), 347-48 Welfare levels: with asymmetric free trade zones, 110-1 1; before and after integration in symmetric tariff bloc model, 96-98; open and closed regional blocs, 125, 135-37; of regional trading blocs, 120-21; with symmetric free trade zones, 110-11,120 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, 74-78.89; small nonhegemon countries in. 116-17 Zapatistas, Mexico, 43