1
The forces driving the proliferation of free trade agreements (FTAs) in the Asia-Pacific
are well documented. Most analysts point to a few major explanations for this phenomenon: the
slow progress of liberalization efforts in Asia Pacific Economic Cooperation (APEC) and the
World Trade Organization (WTO); the demonstration effect provided by the perceived success of
preferential trade agreements in the Americas and Europe; the increased lobbying efforts of
Japanese and Korean firms disadvantaged by FTAs in the Americas; and the concerns among
East Asian governments about how to respond to the growing role of China in the regional and
global economies.
1
While China has focused its energies on creation of an FTA with the
Association of Southeast Asian Nations (ASEAN) as a whole, other East Asian nations have
opted to pursue the simultaneous negotiation of both bilateral and subregional FTAs.
Japan is a relative latecomer to preferential trade agreements that reduce barriers to trade
and investment between two, or among a small group of, nations. After a decade of pursuing
trade liberalization on a most favored nation basis through multilateral institutions at the regional
and global level, it began to explore the option of bilateral FTAs only in the late 1990s. Japan
sought a trade strategy that could bolster its leadership position in East Asia and help end
economic stagnation at home. Working to create an exclusive East Asian economic bloc was out
of the question owing to the complexity and time-consuming nature of the challenge as well as
the risk of alienating the United States. The chances of reinvigorating regional liberalization
through APEC also seemed slim following Japan’s rejection of binding trade liberalization in
APEC’s Early Voluntary Sectoral Liberalization (EVSL) talks during 1998. Seeing almost all
Asian-Pacific nations exploring the option of FTAs, and receiving a strong message from
Convention