Comment on “The Future of East Asia’s Trade: A Call for Better Globalization”

• Published date: 01 July 2018
• Author: Shujiro Urata
• DOI: http://doi.org/10.1111/aepr.12222
• Date: 01 July 2018

Comment on “The Future of East Asia’s

Trade: A Call for Better Globalization”

Shujiro URATA†

Waseda University

JEL codes: F1, F13, F15, F16, F6

Accepted: 3 April 2018

Pangestu et al. (2018) analyze the appropriate policies for East Asia in order to promote

trade in the new era of slow trade in the 21st century. They observe a contrast between

this new development and the earlier development of rapid trade growth, contributing to

high economic growth for East Asia. Pangestu et al. identify cyclical and structural factors

behind slow trade which include the decline in productivity and the maturation of global

value chains.

Although the impacts have not been realized yet, they are concerned with the nega-

tive impacts of grow ing protectionis m and policy uncertai nty. On growing prot ection-

ism, nontariff measures such as regulatory measures (technical and sanitary measures) as

well as more direct ly trade-related me asures such as quan titative restric tions are increas-

ing while tariff rates have declined. On policy uncertainty, in addition to the incidents

such as the USA withdrawal from the Trans-Pacific Partnership (TPP), which are mainly

due to political fac tors, Pangestu et al. con sider the potentia l retreat from the Worl d

Trade Organizatio n (WTO) multilate ral trading system an d its rules and discip lines a

major concern. They point out growing inequality as a factor contributing to emerging

protectionism.

Against the emerging unfavorable trading environment, Pangestu et al. provide various

policies for East Asia. First, East Asia should not retaliate against protectionist measures

imposed by its trading partners, in order to avoid trade wars. Second, East Asia should

take a leadership role in continuing the openness agenda. Specifically, now that the Com-

prehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a mega

regional agreement without the USA, is completed, The Regional Comprehensive Eco-

nomic Partnership (RCEP), another mega regional agreement comprising of 16 East Asian

countries, needs to be agreed upon. Besides, East Asia should strengthen its relationship

with the EU. Finally, Pangestu et al. argue the need for continuing unilateral structural

reforms in areas such as labor laws and designing and implementing effective policy

responses to counter some of the negative effects of globalization.

Pangestu et al. present a very goodanalysis of the current trading environment and make

very important and useful policy suggestions for East Asia. I agree with most, if not all of

†Correspondence: Shujiro Urata, Graduate School of Asia-Pacific Studies, Waseda University,

1-21-1 Nishiwaseda, Shinjuku, Tokyo 169-0051, Japan. Email: surata@waseda.jp

© 2018 Japan Center for Economic Research 241

doi: 10.1111/aepr.12222 Asian Economic Policy Review (2018) 13, 241–242