Why the Rush to Bilateral Free Trade Agreements in the AsiaPacific

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Why the Rush to Bilateral Free Trade Agreements
in the Asia-Pacific?

• Scott L. Kastner
  Soo Yeon Kim
• Department of Government and Politics
  Department of Government and Politics
• University of Maryland
  University of Maryland
• College Park, MD 20782
  College Park, MD 20782
• skastner_at_gvpt.umd.edu
  skim_at_gvpt.umd.edu

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Importance

• Bilateral FTAs and Bilateralism
• Asian Regionalism
• Weakening of Multilateralism
• Is the Asia-Pacific an Exception?

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Focus

• What are the trends in bilateral FTAs in the
  Asia-Pacific?
• What are the principal drivers behind this sudden
  interest in bilateral FTAs?
• National welfare
• Domestic politics
• Geopolitics

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Specific research question (1)

• What factors determine when and with whom Western
  Pacific countries pursue bilateral FTAs?
• (Are these similar to factors known to drive PTA
  formation more generally?)

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Research design

• Logit analysis.
• Unit of analysis dyad/year
• Sample all dyads involving W. Pacific countries,
  1992-2005.
• DV whether the two countries signed a bilateral
  FTA in a given year dyads drop out the year
  after signing.
• IVs lagged trade, several gravity model
  variables econ. growth openness joint
  democracy domestic veto-players affinity time
  (all time-varying variables lagged 1 year)

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Results (1)

• Most variables of interest not significantly
  correlated with bilateral FTA signings.
• Exceptions Domestic Constraints lagged trade.
  Openness weakly significant.

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Research question (2)

• Far more agreements have been proposed in the
  region than have been signed.
• Given that an FTA has been proposed between 2
  countries, what factors influence whether an
  agreement will be reached?
• Do these factors differ from those driving
  proposals?

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Research design and results (2)

• Two separate regressions examine correlates of
  proposed agreements, and determinants of signed
  agreements for those already proposed.
• Factors associated with proposed agreements
  lagged trade, common language, joint democracy,
  trade openness.
• Factors associated with signed agreements given
  proposal lagged trade (weakly significant)
  political constraints time since proposal.

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Future research

• Expand dataset to include countries in South
  Asia.
• Incorporate data on WTO disputes into analysis.
• Incorporate into analysis data that captures
  diffusion effects (such as of major trade
  partners signing PTAs).

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