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Contents Introduction

Since the mid 1990s, there has been a rise in awareness about East Asia a geographical entity and in East Asian regionalism. This is manifested in regional dialogues, specific bilateral and regional free trade agreements, and enhanced financial cooperation among East Asian countries. Because of great diversity in economics, history, and culture among the countries of this region, non economic factors as well as non-state actors have played important role in East Asian regional economic integration. Following the Asian financial crisis, the “flying geese” pattern of development has been replaced with one in which regional clusters form around each new technological breakthrough. Rapid changes in international and regional environment have necessitated drastic policy and structural changes among countries in East Asia. Specialization and division of labor based on comparative advantage resulted in strong linkages in regional trade which has been facilitated by strong investment flows. Establishment of regional institutions such as APEC, ASEAN and ASEAN + 3 has facilitated the market driven forces. East Asian regional integration faces not only economic but also security and political challenges. The latter include the importance of the US in the area, the traditional rivalry between China and Japan, and the potential role of smaller and medium-sized countries. In absence of an accepted regional benevolent great power, East Asian regionalism should be driven by issues and not by political power. Economically, it is critically important that development objectives for less developed economies and liberalization of trade and investment regimes are promoted based on market forces, and in a coherent and consistent manner, and are WTO consistent or WTO-Plus. By being WTO-consistent, the trading arrangements in the region can minimize or avoid the “spaghetti bowl” syndrome that may otherwise result from overlapping and duplication of bilateral trade arrangements.