Vinod K. Aggarwal

THE DYNAMICS OF NEGOTIATED PROTECTIONISM

R ecent protectionism by the United States has principally taken the form of negotiated barriers to trade, such as voluntary export restraints. These barriers tend to evolve over time and to display three patterns, which we label institutionalized, temporary, and sporadic protectionism. Cartel theory and studies of the politics of protection suggest that the dynamics of negotiated protectionism will depend on three variables: the barriers to entry into an industry, the size of the domestic industry, and the exit barriers for domestic firms. Low barriers to entry will lead to institutionalized protectionism when the domestic industry is large and exit difficult; temporary protectionism results when the domestic industry is small and exit easy; and sporadic protectionism is likely when barriers to entry are high. Brief studies of U.S. protectionism in textiles and apparel, steel, footwear, televisions, and automobiles illustrate the value of this framework. T rade protectionism has often been thought of as a unilateral act by a sovereign state. Yet much protectionism during the 1970s and 1980s has, been negotiated rather than unilaterally imposed. Voluntary export restraints (VERs) and similar arrangements have become the preferred means by which the United States has sought to cartelize industrial sectors threatened by imports. Such negotiated protectionism has been particularly evident in five industries in the United States during part or all of the last quarter century. In textiles and apparel, steel, footwear, television sets, and autos, the United States has negotiated trade restrictions with numerous foreign exporters. While the U.S. government has occasionally provided unilateral measures of protection for small industries, all U.S. administrations since World War II have been reluctant to countenance general schemes of protection for major industries. Yet, beginning with the Eisenhower administrations negotiations in textiles in 1956, virtually every U.S. president has actively sought VERs for economically and politically sensitive industrial sectors.

The perils of consensus: How ASEAN's meta-regime undermines economic and environmental cooperation

ABSTRACT The member states of the Association of Southeast Asian Nations (ASEAN) have been frequently criticized for adhering to a long-standing norm of strict non-interference in each others domestic affairs, thereby hampering collective efforts to address regional problems. This article presents an analytical model of international institutions that shows how underlying norms and principles – the meta-regime – govern the rules and procedures of specific international regimes. It then applies this model to ASEANs trade and anti-haze regimes, demonstrating how ASEANs underlying meta-regime has frustrated attempts to liberalize trade and reduce air pollution. While ASEANs purview has extended well beyond its original security mandate and it has developed new rules and procedures to handle the new issues, its underlying norms and principles consistently limit its ability to handle regional problems. In the conclusion, we discuss how the ASEAN states might be able to foment cooperation in these issue areas without completely abandoning its foundational norms and principles.

Asia Pacific Crossroads: Regime Creation and the Future of APEC

Preface Contributors APEC: The Evolution of an Institution C. Morrison Analyzing Institutional Transformation in the Asia-Pacific V. Aggarwal PART I: ECONOMIC TRENDS Trade Patterns and Regimes in Asia and the Pacific P. Guerrieri Foreign Direct Investment and APEC S. Urata Intellectual Property and APEC S. La Croix PART II: DOMESTIC POLITICAL CONTEXT Australia and APEC J. Ravenhill The United States and APEC Regime-Building R. Baker Japans Approach to APEC and Regime Creation in the Asia-Pacific Y. Yamamoto and T. Kikuchi China and APEC Z. Yunling PART III: THE INSTITUTIONAL CONTEXT: NESTED INSTITUTIONS? Political-Military Dynamics and the Nesting of Regimes: An Analysis of APEC, the WTO, and Prospects for Cooperation in the Asia-Pacific J. Grieco Nesting NAFTA in APEC: The Political Economy of Open Subregionalism M. Cameron ASEAN and Institutional Nesting in the Asia-Pacific: Leading from behind in APEC M. Plummer PART IV: INSTITUTIONAL MODELS FOR APEC APEC and Regime Creation in the Asia Pacific: The OECD Model? S. Ostry European Integration and APEC: The Search for Institutional Blueprints C.Dupont The Future of APEC V. Aggarwal and C. Morrison Index

Asia’s New Institutional Architecture: Evolving Structures for Managing Trade, Financial, and Security Relations

During the Cold War, the Asian region consisted of three distinct subregions—Northeast, Southeast, and South Asia. Aside from the geographical constraints of the region itself, this subdivision of Asia was a product of culture, economics, history, and superpower rivalry. From one perspective, Asia remains too heterogeneous to permit the invocation of a distinct Asian identity. Southeast Asia is divided deeply along ethnic, linguistic, and religious lines. In Northeast Asia, the effects of Japanese colonialism and imperialism have left sharply diverging historical memories and interpretations. And conventional analysis has separated South Asia from its “East Asian” counterpart. Such divisions and heterogeneity have inhibited the emergence of a common Asian identity let alone broad-based, effective Asian institutions.2

Bilateral trade agreements in the Asia-Pacific : origins, evolution, and implications

PART I Theoretical framework and economic overview 1. Bilateral trade agreements in the Asia-Pacific by VINOD K. AGGARWAL 2. The political economy of the new Asia-Pacific bilateralism: benign, banal, or simply bad? by JOHN RAVENHILL 3. Bilateralism in the Asia-Pacific: an economic overview by FUKUNARI KIMURA PART II Case studies 4. Japan: a new move toward bilateral trade agreements by T.J. PEMPEL AND SHUJIRO URATA 5. US trade arrangements in the Asia-Pacific by RICHARD E. FEINBERG 6. Chinese trade bilateralism: politics still in command by ELAINE S. KWEI 7. From multilateralism to bilateralism? a shift in South Koreas trade strategy by MIN GYO KOO 8. Who rules the international economy? Taiwans daunting attempts at bilateralism by ROSELYN Y. HSUEH 9. Singapore trade bilateralism: a two track strategy by SEUNGJOO LEE 10. Why countries are so eager to establish bilateral free trade agreements: a case study of Thailand by KOZO KIYOTA 11. The reluctant bilateralist: Malaysias new trade strategy by YUMIKO OKAMOTO 12. Free trade beyond NAFTA: the economic and institutional rationale for Mexicos bilateral trade agenda by RALPH ESPACH PART III Conclusion 13. The evolution and implications of bilateral trade agreements in the Asia-Pacific by VINOD K. AGGARWAL AND MIN GYO KOO

Goods, Games, and Institutions

International institutions can help to overcome the problem of supplying goods that are difficult to restrict in terms of consumption. Yet the links between the characteristics of goods, the nature of strategic interaction between actors, and the effectiveness or need for international institutions have not been systematically treated. This article tries to remedy this gap by providing a systematic analysis of the problem of the provision of two types of goods—public goods and common pool resources (CPRs). It starts by examining the characteristics of these goods, and then derives some simple game structures that correspond to different assumptions about the costs and benefits of these goods and variations in actors’ capabilities. It then discusses the links between games and institutional solutions. In doing this, the authors are able to encompass previous analytical work and open up new avenues for empirical studies of collective action.

Building International Institutions in Asia-Pacific

In view of the ongoing difficulties in concluding the Uruguay Round of trade negotiations in the General Agreement on Tariff and Trade (GATT), both policymakers and scholars have increasingly turned their attention to institutional arrangements in the Asia-Pacific. Groups such as ASEAN, Pacific Economic Cooperation Council (PECC), Asia Pacific Economic Cooperation (APEC), and other such institutions have become a focus of considerable economic and political diplomacy. President Clintons support for a meeting of heads of states at the November 1993 Seattle APEC conference points to a possibly significant shift in the American locus of activity in trade and financial issues. This article draws on literature on international institutions to examine developments in two significant Asia-Pacific forums, PECC and APEC. Although hegemonic stability theory has often been used to examine institutional formation,1 I argue that other significant factors have and will affect developments in the Asia-Pacific region. Based on a theoretical framework that identifies the interaction between governance structures and economic transactions, I examine the incentives for, and impediments

Financial Crisis, 'New' Industrial Policy, and the Bite of Multilateral Trade Rules

The recent Great Recession has triggered substantial government intervention not all of it macroeconomic. This article presents evidence that the sectoral incidence and forms of government intervention appear to have changed from pre-crisis regularities. Once the commercial significance of a sector is taken into account, pre-crisis measures of trade policy intervention poorly predict the crisis-era sectoral incidence of discriminatory state measures imposed by Asian governments. Qualitative evidence focusing on three key countries in Asia China, Japan, and South Korea - is also marshaled to sustain the contention that Asian governments have used the recent economic crisis to reinvigorate industrial policies, targeting apparent growth poles and apparently environmentally friendly technologies and sectors. Implications for the expansion of World Trade Organization rules and their effectiveness are discussed.

The unraveling of the Multi-Fiber Arrangement, 1981: an examination of international regime change

As competition between newly industrializing and advanced industrialized countries has increased, trade protection has become a key issue. In textile and apparel trade, international regimes to regulate trade intervention have existed since the early 1960s. The 1981 renewal of the Multi-Fiber Arrangement poses two puzzles. First, why did countries choose to continue to manage conflict through an international regime rather than through some other arrangement? Second, why did the regime become weaker and more protectionist than in the past? An international structure approach suggests that regimes are wanted to prevent arrangements in larger systems from being undermined, to control the behavior of other countries, and to reduce information costs. Variation in regime strength can be explained by asymmetry in the distribution of capabilities in various systems. The nature of the regime is influenced by changes in international competition and by nesting. A domestic structure approach, on the other hand, focuses on the relationships between state and societal groups (the Commission and member states in the case of the EEC). The relative strength of groups affects national policies and the development and characteristics of regimes. A “processtracing” examination of international textile negotiations, emphasizing the response of decision makers to structural constraints and incentives, allows us to ascertain the relative influence of international and domestic structures on the negotiations and outcomes.

The Limits of Interregionalism: The EU and North America

Abstract The EU has been pursuing interregionalism as a key element in its commercial policy. This strategy has been manifested in agreements with Mercosur, East Asia and the Southern Mediterranean, among others. In the case of North America, however, the EU has developed a series of bilateral relationships with Canada, Mexico and the United States — rather than a region–to–region link. This article focuses on the role of sectoral interests, economic security competition and identity formation to examine why the EU has not developed an interregional relationship with North America. The evidence suggests that, of these factors, economic security competition appears to be the strongest factor preventing the formalisation of an EU–North American link. Moreover, the article demonstrates the importance of internal dynamics within counterpart regions as a key element in the analysis of interregional accords.