China, India, and Regional Economic Integration in

©2006SingaporeYearBookofInternationalLawandContributorsCHINA,INDIA,ANDREGIONALECONOMICINTEGRATIONINASIA:THEPOLICYANDLEGALDIMENSIONSbyJIANGYUWANG*Traderegionalism,throughregionalcooperationandintegrationandintheformofregionaltradeagreements(R.T.As),isrisingglobally,althoughAsiahasjumpedonthebandwagononlyrecently.Asianeconomicintegrationisthesecond-bestapproachwhichAsiancountriesunfortunatelyhavetofollow.Intheprocessofintegration,ChinaandIndia,giventhesizeoftheirpopulations,aswellastheircentralstrategicpositionininternationalandregionalrelations,willinevitablyplayfundamentallyimpor,tant,andsometimesevendominating,roles.ThispaperarguesthatregionaleconomicintegrationinAsiashouldfirstofallseektoachievesub-regionalintegrationinEastAsiaandSouthAsia,whilelinkingupthetwosub-regionswithbilateralF.T.As,amongstwhichthemostimportantoneshouldbeaChina-IndiaF.T.A.Eventually,alltheF.T.Aswillbeconsolidatedintoonepan-AsianF.T.A.ChinaandIndiamusttaketheleadinpromotingAsianeconomicintegration.Theyareadvisedtoleadtheregioninthepracticeofopenregionalism(withwhateverAsianidentity)andconductdeeperintegration.Lastly,itissuggestedthatAsiancountriesshould,atthisstage,establishaninstitutiontodevelop(non-binding)commonprinciplesandguidelinesforthesub-regionalandbilateralF.T.As.I.INTRODUCTIONTOREGIONALECONOMICINTEGRATIONANDREGIONALISMA.TheConceptualDefinitionsRegionalism,regionalisation,regionaleconomicintegration,regionaleconomiccoopera-tion,regionaltradeagreements,freetradeagreements...,theseandothersimilartermsappearfrequentlyonnewspapers,academicarticles,andofficialdocumentswheninter-nationaltrade,investment,orfinanceisconcerned.Inessence,theyallrefertoonephenomenon:thecross-borderpreferentialeconomicinitiativesundertakenbynationalgovernmentsorprivatesectorsattheregionalorbilaterallevel,asopposedtomultilateralinitiativeswhichareconductedonthebasisofnon-discriminationundertheauspiceoftheWorldTradeOrganisation(WTO).'Althoughthesetermscanbeunderstoodlooselyandusedinterchangeably,itisimportantandusefultodistinguishonetermfromanotherconceptually.Winters,whendiscussingtheregionalismversusmultilateralismdebate,definesregionalismlooselyasanypolicydesignedtoreducetradebarriersbetweenasubsetofcountriesregardlessofwhetherthosecountriesareactuallycontiguousorevenclosetoeachother.2AccordingtoLamberte,*AssociateProfessor,SchoolofLaw,TheChineseUniversityofHongKong;S.J.D.andLL.M.(U.Penn);M.Jur(Oxon);LL.M.(Peking);LL.B.(ChinaUniversityofPoliticalScienceandLaw).ThispaperbenefitedfromcommentsofparticipantsintheinternationalsymposiumChina,India,andtheInternationalEconomicOrderheldon23-24June2006intheFacultyofLaw,NationalUniversityofSingapore.IamalsogratefultoMs.JoleneLin,editorofthisYearBookforherhelpfuleditorialsuggestionsandpatiencewithme.Alltheviews,errorsandomissionsaretheauthor'salone.Email:[e-mail],RegionalismversusMultilateralismWorldBankPolicyResearchWorkingPaper1687(WashingtonD.C.:TheWorldBank,1996).2Ibid.at2-3.(2006)10SYBIL269-305SINGAPOREYEARBOOKOFINTERNATIONALLAWregionalismreferstoformaleconomiccooperationandeconomicarrangementsofagroupofcountriesaimedatfacilitatingorenhancingregionalintegration.3Regionalismistobedistinguishedfromregionalisation,whichismarket-drivenintegration,spurredbyunilat-eralreformsinindividualeconomieswithinaparticularregion.4Literally,regionalisationalsoreferstotheactionsofbuildingregionalismthroughpublicand/orofficialefforts.AccordingtotheDictionaryofTradePolicytermsdevelopedbytheWTO,regionalismisdescribedasactionsbygovernmentstoliberaliseorfacilitatetradeonregionalbasis,sometimesthroughfree-tradeareasorcustomsunions.5Followingtheseinspirations,eco-nomicregionalismcanberoughlyunderstoodas(a)formaleconomiccooperativemeasures(b)undertakenbygovernments(c)tofacilitateregionaleconomicintegration(d)whichhoweverisnotnecessarilyconfinedtoageographicalregion.Putdifferently,regionalismcannowbebroadlycharacterisedasthetendencytowardsthecreationofpreferentialtradearrangementsbetweenanumberofcountrieslocatedinthesameorevendifferentregions,whichdiscriminateagainstthirdcountries.Thisnaturallyleadstothedefinitionofeconomicintegration.BelaBalassa,inhisseminalworkTheTheoryofEconomicIntegration,defineseconomicintegrationasaprocessandastateofaffairs:Regardedasaprocess,itencompassesmeasuresdesignedtoabolishdiscriminationbetweeneconomicunitsbelongingtodifferentnationalstates;viewedasastateofaffairs,itcanberepresentedbytheabsenceofvariousformsofdiscriminationbetweennationaleconomies.6Balassafurtherexplainsthedifferentformsofintegration:Economicintegration...cantakeseveralformsthatrepresentvaryingdegreesofinte-gration.Therearefree-tradearea,acustomsunion,acommonmarket,aneconomicunion,andcompleteeconomicintegration.Inafree-tradearea,tariffs(andquantita-tiverestrictions)betweentheparticipatingcountriesareabolished,buteachcountryretainsitsowntariffagainstnonmembers.Establishingacustomunioninvolves,besidesthesuppressionofdiscriminationinthefieldofcommoditymovementswithintheunion,theequalizationoftariffsintradewithnonmember