s have so far ignored this increasinglyimportant area of research. Theoretical research is almost non-existent in thearea of impact of unilateral, regional and multilateral liberalization in trade inservices and the relationship between them. The analysis of RIAs in servicesdoes require an extension of conventional theory. The instruments which givepreferences in trade in services to RIA members are different to those used intrade in goods. This has an impact over both product and factor mobility.Article V of the GATS lays down that where developing economies areconstituent members of an EIA, flexibility should be provided in meeting theconditions set out in Article 1, Paragraph 1, which relate to elimination of alldiscriminatory measures. Before this happens the level of development of themember country should be taken into consideration as well as the level ofdevelopment of the services sectors and sub-sectors. If all the members of anEIA are developing economies, ‘more favorable treatment may be granted tojuridical persons owned or controlled by natural persons of the parties to suchan agreement’. The Doha Communiqué reconfirmed the commitment of theGATS to furthering negotiations in trade in services, repeating the objective of‘promoting the economic growth of all trading partners and the developmentof the least developed countries’. It also reaffirmed the objectives of the GATSas stipulated in the Preamble, Article IV and Article XIX of the GATS.The Singapore issues, which include investment, competition and tradefacilitation-related issues, were in general addressed at the bilateral, regionaland multilateral levels. As regards anti-dumping measures, no pattern hasemerged so far and they have varied from RIA to RIA. It cannot be said thatRIAs initiated more ADMs against non-members because some of themprovided evidence to the contrary.
NOTES1.
2.
An indispensable condition for an emerging market economy is its sustained ability to attractcapital inflows from the global banks and securities markets. Other than the rapidendogenous growth endeavors and extensive macroeconomic and financial liberalizationand deregulation, respect of property rights and human rights are considered the basicprerequisites of becoming an emerging market economy. The national government mustoffer protection to property and human rights of both the citizens of the country and the nonresidents alike. See Das (2003a), Chapter 1 for greater details.The most notable one being Greece, which has been a member of the EU since 1981 and yetsubject to serious macroeconomic shortcomings. This shows that RIAs are not sufficient forsound policy and hence presumably not particularly good sources of credibility inthemselves. This outcome of an RIA has not attracted the attention of the developingeconomies so far.
1203.4.
5.6.
7.8.9.10.11.12.13.14.15.16.
17.18.
Regionalism in global tradeThe Uruguay Round, the most ambitious round of multilateral trade negotiations, waslaunched in September 1986 in Punta des Este, Uruguay.Rules of origin are the criteria used to define where a product was made. They are anessential part of trade rules because a number of policies discriminate between exportingcountries: quotas, preferential tariffs, anti-dumping actions, countervailing duty charged tocounter export subsidies, and so on. Rules of origin are also used to compile trade statistics,and for ‘made in’ labels that are attached to products. A great deal of time was spent on theROO during the Uruguay Round of multilateral trade negotiations. It resulted in anagreement on them which is a part of the GATT-1994. This first ever agreement on thesubject requires WTO members to ‘ensure that their rules of origin are transparent; that theydo not have restricting, distorting or disruptive effects on international trade; that they areadministered in a consistent, uniform, impartial and reasonable manner; and that they arebased on a positive standard. That is, they should state what does confer origin rather thanwhat does not’. RIAs either conform to the WTO rules in this regard, or formulate their owndeviations. These rules vary from RIA to RIA and may be similar, simpler, or more complexthan the WTO rules.Estimated by the WTO. Refer to Chapter 3, Section 5, p. 40 of the Annual Report 2002.As noted in Chapter 1, note 11, the Agreement on a Treaty on European Union was signedin Maastricht on 10 December 1991. It included a timetable for Economic and MonetaryUnion. On 1 January 1993, the European Single Market was completed. On 1 November1993, the Maastricht Treaty came into force, and the EEC became the European Union.A situation in which it is impossible to make someone better off without at the same timemaking someone else worse off is called Pareto optimal. However, if someone can be madebetter off without making someone else worse off then the situation is called Pareto superior.The membership of the Gulf Co-operation Council includes Bahrain, Kuwait, Oman, Qatar,Saudi Arabia, and the United Arab Emirates.These eight West African economies were Benin, Burkina Faso, Côte d’Ivoire, GuineaBissau, Mali, Niger, Senegal, and Togo.These six countries comprised Cameroon, Central African Republic, Congo, EquatorialGuinea, Gabon and Chad.The membership of the SACU comprised Botswana, Lesotho, Namibia, Swaziland, andSouth Africa.The objective was announced at the Fifth Extraordinary Summit of the Organization ofAfrican Unity (OAU) in March 2001.The membership of ASEAN comprised the following 10 countries in 2003: BruneiDarussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore,Thailand, and Vietnam. Cambodia was the last to join ASEAN (in 1999).The source of historical information and data in this section is WTO, particularly WTO(2002a), Section C.Robert B. Zoellick made these remarks to the US Senate urging them to approve the ‘fasttrack’ authority.In economics of international trade, the two expressions, namely, the ‘GATT-1947’ and the‘GATT 1994’, are frequently used. It is essential to be clear about the distinction betweenthe two. The latter is the revised version of the original GATT Agreement of 1947. The textof the GATT Agreement was significantly revised and amended during the Uruguay Roundand the new version was agreed upon in Marrakesh, Morocco. The GATT 1994 reflected theoutcome of the negotiations on issues relating to the interpretations of specific articles. In itsrenewed version, the GATT 1994 includes specific understandings with respect to GATTArticles, its obligations and provisions, plus the Marrakesh Protocol of GATT 1994.As the GATT was an accord, not an organization, its signatory governments were called thecontracting parties. The WTO is a treaty and an international organization, therefore, thesignatory governments are called members.The history of discrimination in tariff policy began in the nineteenth century. Althoughcommercial treaties since the sixteenth century had contained the most-favored-nation(MFN) pledge, it was not until the second half of the nineteenth century that its general usebecame the basis of international tariff policies.
RIAs and the global trading system19.
20.21.22.
23.24.25.26.27.28.29.30.
31.
32.
33.34.
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Paul A. Samuelson, noted economist and Nobel Laureate, was once challenged bymathematician Stanislaw Ulam to name one proposal in all Social Sciences that is both trueand non-trivial. It is said that Samuelson struggled for an answer for years. Eventually, hecame upon ‘comparative advantage’ as the answer to the challenge. That it was logically truewas not needed to be argued before a mathematician. That it is non-trivial is testified bythousands of important and intelligent men and women who have never been able to graspthe doctrine for themselves, or to believe it after it was explained to them.A detailed account of the multilateral framework vis-à-vis RIAs is available in WTO (1995).Seekers of greater details are referred to it. This section draws on this and various otherWTO documents.A term used to infer that a country that does not make any trade concessions, nonethelessprofits from tariff cuts and concessions made by other countries in negotiations under themost-favored-nation principle.Although there were numerous changes in the Articles of Agreement, the noteworthy onesincluded those in Article II regarding tariff schedules, in Article XVII regarding state tradingenterprises, in Article XXIV regarding regional trade agreements, in Article XXVIIIregarding modifications of tariff schedule, and in the area of balance of payments provisionscovered by Articles XII and XVIII. The GATT-1994 has superseded the GATT-1947. WhileGATT-1994 was a natural progression of multilateral trade regulations, it also enabledthe CPs to bypass the need to formally amend the original GATT-1947. By creating aGATT-1994 they agreed to create a Single Undertaking, applicable to all. This was apragmatic plan. All the members of the WTO only had to sign the GATT-1994, in lieu ofGATT-1947 together with all of its subsequent amendments (Milner and Read, 2002).See, for instance, McMillan (1993); Yi (1997); Bagwell and Staiger (1999) and Zissimosand Vines (2000).Bagwell and Staiger (2000) provide a survey of this literature.The General Council is the WTO’s day-to-day governing body.Delegations from Australia, Hong Kong SAR, Japan and Korea made the writtencontributions.The first three Ministerial Conferences of the WTO were: (1) in Singapore, held 9–13December 1996, (2) Geneva, held 18–20 May 1998 and (3) Seattle, held 30 November–3 December 1999.These meetings took place in a ‘Green Room’ next to the office of the Director-General ofthe WTO at the Centre William Rappard in Geneva, and were therefore referred to as ‘GreenRoom meetings’.Technically voting is possible but in practice it is limited solely to the times of newaccessions.The four members of the Quad comprise some of the largest trading economies of the world.Historically, they wielded enormous influence over the formation of multilateral tradepolicy. Together they accounted for 47.8 percent of the world merchandise exports in 2002.(See Appendix Table II.2, Annual Report 2002, World Trade Organization, p. 23).The General Council of the WTO had drawn lessons from the failure in Seattle and preparedan agenda that did not contain empty spaces with parentheses that are conventionallysubstituted for disagreeing on an agenda framework. An ambitious and comprehensiveagenda was prepared for the next round of MTNs, at Doha, Qatar. It contained some itemsthat could not have been on a risk-loving punter’s betting chit. Yet, the Fourth MinisterialConference was a success and it was followed by the launching of a new round ofMTNs.It is appropriate to define the term ‘commercial services’. In the fifth edition of the Balanceof Payments Manual of the WTO the definition of the commercial services categoryincludes: transport, travel, communications, construction, insurance, financial services,computer and information services, royalties and license fees, trade-related services, andpersonal, cultural and recreational services.Data compiled from UN and the WTO sources by Das (2001).According to the latest available data (2001), the US topped the WTO league table ofservices exports, accounting for 18.3 percent of the world’s total. It was followed by the UK
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35.
36.37.38.
Regionalism in global trade(7.5 percent), Germany (5.5 percent), France (5.5 percent), Japan (4.4 percent), and Italy(4.1 percent).The Singapore issues are (i) trade and foreign investment, (ii) trade and competition, (iii)transparency in government procurement, and (iv) trade facilitation. They are referred to asthe Singapore issues because they were raised for the first time by the industrial economiesduring the Singapore Ministerial Conference in 1996. These issues were never a part of theinternational trading system in the past. On the insistence of the industrial economies,particularly the EU, the US and Japan, the Doha Round of MINs included them fornegotiations, but the members had diverse positions on them and disagreed. They are widelyconsidered one of the principal reasons behind the failure of the Fifth Ministerial Conferenceof the World Trade Organization (WTO) held in Cancún, Mexico during 10–14 September2003.According to Heydon (2002), the precise number in 2000 was 1941.See Paragraphs 28 and 29 of the Ministerial Declaration of the Fourth MinisterialConference or the so-called Doha Ministerial Communiqué of 14 November 2001.Article XXIV of the GATT-1947 and the understanding on the interpretation of ArticleXXIV of the GATT-1994 relate to free trade areas and customs unions. They recognize thecontribution that RIAs may make to the expansion of world trade through ‘closerintegration’ between the parties to such agreements.
5. Regionalism in Asia-Pacific1. STRUCTURAL TRANSFORMATION OF THEASIA-PACIFIC REGIONAlthough approximately half of the trade is at present intra-regional,institutionalized regionalism was slow to put down its roots in Asia.1Relative to other regions, the Asia-Pacific region was slow and late in catchingon to the concept and phenomenon of regionalism. Asian policy makersignored the institutional form of the concept for a long time. Economic growthin Asia has a certain characteristic pattern to it. Following a brief flirtationwith the import-substituting industrialization strategy, over the precedingthree-and-a-half decades, the high performing Asian economies adoptedoutward-oriented strategies, promoting trade and foreign investment. Thisled to brisk expansion of intra-regional trade and investment. Asia-Pacificregionalism was essentially market-led and uninstitutionalized. Regionalproduction networks were the consequence of market-led economic dynamicsof the region. Large corporations, including transnationals, contributedto the growth of the pan-Asian industrialization process (Chapter 3,section 3).Some institutional arrangements followed market initiatives, albeit with asubstantial time lag. Some regional institutional initiatives were taken, whichare presently operating with varying degrees of success. We shall see thatempirical exercises, using a gravity model, concluded that East and SoutheastAsian economies clearly show certain inward bias among themselves.Although this does apply to all, the dynamic economies of the Asia-Pacificregion do seem to be natural trading partners.2 These regional initiatives notonly coexist with globalism but also serve as stepping stones to multilateralism.A large body of research is available proving that trade and outwardeconomic orientation were the principal forces behind rapid economic growthin Asia. This literature is too well known to be referred to here. Severalempirical studies have concluded that with rapid growth, the economicstructure of the newly industrialized Asian economies (NIAEs)3, the fourSoutheast Asian economies in the Association of Southeast Asian Nations(ASEAN-4),4 and the People’s Republic of China (hereinafter China)underwent substantial structural transformation, which had a direct bearing on123
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factor endowments. Growth, structural transformation and changing factorendowments naturally ushered in transformation in the manufacturing sector,followed by that in the services sector. The Heckscher–Ohlin theory supportsand provides an explanation for the resulting transformation in thecomparative advantage of different Asian economies and/or country groups(Das, 1998b). However, Asian economies did not record high (or low) trade inrelative and absolute terms only in certain product lines or sectors. Similarly,trade in these economies was not concentrated in just a few select sectors (Das,2000a). Another noteworthy observation in this regard is that there was nocharacteristic Asian export path or Asian export route and few generalizationscould be made in this regard for the region.
2. HIGH-PERFORMING ECONOMIC SUB-GROUPSThe successful sub-groups among Asian economies and their performance canbe divided in the following manner. Following Japan, the NIAEs were the firstand the most successful in export-led or trade-induced growth, followed by theASEAN-4 and subsequently China. By 2000, China had become the largestdeveloping-country exporter, accounting for 3.5 percent of global merchandise exports. Although global GDP growth rate decelerated from 4.7 percentin 2000 to 2.3 percent in 2001 and then recovered marginally in 2002(3.0 percent),5 China continued its rapid emergence as a highly successfultrading economy, and accounted for 4.7 percent of global merchandise exportsin 2002.6The long-term GDP growth rate of the South Asian economies was not onlyslow but they were also the last and the slowest to embark on export-led ortrade-induced growth path. An admixture of bilateral trade ties, neomercantilism policy stance, and liberalized and diversified multilateral traderegimes were the driving forces behind the emerging trade patterns in theregion. Market forces played a notable role in the developments of thesetrends. As the economies grew and the supply-side synergy gainedmomentum, Asian trade not only expanded rapidly, it also advanced ahead ofregional conventions like the ASEAN Free Trade Area (AFTA) and the AsiaPacific Economic Co-operation (APEC) forum. There was a steady growth inthe internal Asian markets and, therefore, intra-regional trade. The WTOleague tables of leading exporters for 2001 included China (6th), Hong KongSAR (10th), Korea (13th), Taiwan (14th), Singapore (15th), Malaysia (18th),Thailand (24th), and Indonesia (27th).7When the Asian crisis broke out in mid-1997, most successful Asianeconomies were carrying on as much as 50 percent of their total trade withthe other regional economies (refer to section 3). The only exception in this
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regard was Indonesia. Apart from this, only China saw the proportion of itsintra-regional trade share decline during the 1990s, essentially because itstrade share with the United States (US) expanded. Over the recent period,most of the successful exporters in Asia held or reduced their share of tradewith Japan, the dominant regional trader which accounted for 6.6 percent ofglobal exports in 2001. Although Japan’s significance as a regional tradepartner has declined over the years, in absolute terms it has expanded itsexports to the region. During the last decade and a half, the most rapid growthin trade opportunities came instead from the four NIAEs, as well as theASEAN-4.Lee and Roland-Holst (1998) showed that the market expansion that tookplace in Asia was both vertical and horizontal. First the NIAEs and then theother emerging-market economies of Asia fit into the lower tiers of complextrade hierarchies. This tendency was conspicuous in association with the largeflows of FDI into China and Southeast Asia. Over the preceding quartercentury, Japan, Taiwan and Korea have provided massive amounts of foreigndirect investment (FDI) to China and Southeast Asian economies, increasingtheir commitments in these markets in the process. Firms in these countrieshave built subsidiaries or partnerships in China and the Southeast Asianeconomies, which in turn export intermediate goods to the investor firms’home countries. These intermediate goods can be exported to the subsidiariesof the investing firms in other parts of the world. This kind of trade expansionis usually supported by complex commercial alliances in which the newpartners enjoy many growth externalities (Lee and Roland-Holst, 1998). Tradebetween China, Hong Kong SAR and Taiwan8 – together referred to as GreaterChina – is large and increasingly closely linked. China trades much moredirectly both intra-regionally and outside the region. Its trade dependence onHong Kong SAR has declined considerably since 1990, because its capabilityto trade directly has increased.
3. TRENDS IN INTRA-REGIONAL TRADE ANDINVESTMENTHistorically, intra-trade in Asia was well developed in the early decades of thetwentieth century. The share of intra-trade in total trade in Asia was 45.5percent in 1928 (WTO, 1995). In the late 1930s, during the Japanese imperialdomination, intra-regional trade in Asia was high. After 1931, the Japanesecolonial pattern of economic relations – which was nothing more thanexchanging raw materials for manufactured goods – gave way to buildingindependent industrial capacity outside Japan, essentially in China, Korea andTaiwan. This kind of economic relationship between Japan and Asian
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economies led to significant intra-regional investment as well as developmentof regional transportation and communications infrastructure networks.Development of production networks supported mutually reinforcing tradeand investment in Asia.9 Both Beasley (1987) and Sakakibara and Yamakawa(2003) have provided a graphic account of how a sophisticated set ofeconomic linkages between Japan and other Asian economies grew during thisperiod. Economic complementaries within the region underpinned a rapidexpansion of intra-regional trade and a decline of trade between Asia and therest of the world.When World War II ended, trade and investment patterns in Asia,particularly East Asia, were redirected toward the US. Economic linkages andintra-trade ties between Japan, Korea, China, and Taiwan were weakenedconsiderably in the aftermath of the war. Besides, the Chinese civil war had adevastating impact on the country’s trade which virtually collapsed. Japan alsoexperienced an abrupt redirection in its trade ties at the end of the war. Its tradewith Asia, both East and Southeast, fell from 73 percent of total trade in 1940to 31 percent in 1951 (Petri, 1994). Thus, the war broke down the old tradingpattern between Japan and Asia and a new, diversified pattern emerged. Itsconcentration on East Asia declined.American economic policy in Asia after the World War II worked counterto this trend and sought to reestablish and strengthen Japanese trade ties withthe regional economies so that the synergy could stimulate the regionaleconomies. The expectation was that a steady trade expansion would alsocontribute to political stability in the region. The legacies of pre-war economicrelationships in Asia and the post-war endeavors ensured that in the periodimmediately after the war – notwithstanding its ravages – intra-regional tradewas not seriously reduced. Although a sharp fall was to be expected, onaverage, intra-regional trade stabilized around 41 percent of all Asian tradebetween 1951 and 1958. It is noteworthy that this happened without anyinstitutional support.103.1 Market-Driven Regional Economic IntegrationAs set out above, East and Southeast Asian economies traditionally used toexport industrial raw materials to Japan and import intermediate and capitalgoods. Owing to remarkable supply-side developments in the Asianeconomies, there was a complete reversal in this trend during thecontemporary period. By the early 1990s, more than 60 percent of theirexports to Japan were manufactured goods. NIAEs’ exports to their ASEANneighbors also expanded. Exports among the NIAEs jumped to $22.4 billionor 10 percent of their total exports in 1988 from $5.9 billion or 5 percent oftheir total exports in 1986. NIAE exports to ASEAN countries rose from
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$6.4 billion in 1986 to $14.5 billion in 1998, or from 5 percent of the total to7 percent (Das, 1993).Likewise, ASEAN exports to NIAEs also rose from $8.2 billion or 21percent of the total to $15.5 billion or 24 percent over the 1986–88 period.Intra-ASEAN exports rose only in terms of value, from $1.5 billion to$2.3 billion during this period. The share of exports of individual ASEANeconomies in the internal market of the ASEAN remained constant and low at4 percent. Intra-trade started rising again in the late 1980s and early 1990s,reaching 49.7 percent in 1993 and 50.7 percent in 1997. In 1998, intra-tradedeclined to 44.6 percent of the total Asian trade (Das, 1993; WTO, 1995,1999). This decline was to be expected as regional economies werelanguishing due to the 1997-98 Asian crisis. In 1999, the five crisis-affectedAsian economies made a sharp V-shaped recovery and the regional growthrate improved from 1.0 percent in 1998 to 6.1 percent in 1999.11 The recoveryled to the return of intra-regional trade. Growing exports stimulated demandsfor each other’s imports and in turn stimulated GDP growth. During 2000,regional GDP growth rate was estimated at 6.9 percent (ADB, 2000). Thusintra-trade was a cause – and effect – of rapid growth in the region (TheEconomist, 2000a).Towards the end of the 1990s, when China was making concerted efforts tojoin the WTO, previously closed sectors for FDI were liberalized under WTOrequirements. This led to a surge in FDI in high-technology industries likesemiconductors and electronics from the other Asian economies that hadstrong high-technology bases. During the latter half of 2000, prices ofsemiconductor chips were on a downward trajectory. Severe competitivepressure was pushing Asian chipmakers to relocate to cheaper productionbases and areas with marketing potential. China seemed to meet both theconditions. Thus the pan-Asian wave of industrialization in high-technologyareas is continuing. Until 2000 the electronics industry in China met 86percent of its semiconductor needs by imports from Malaysia, the Philippines,Singapore and Thailand. In the latter half of 2000, China was attractingTaiwanese investment in new semiconductor capacity and building up itselectronic production facilities. Taiwanese venture capitalists launched severalinitiatives involving billions of dollars in building high-end wafer plants inChina, which in turn helped China in upgrading its industrial mix. In 2000, itwas projected that by 2003, China would have capacity to exportsemiconductors, which would put pressure on all current Asian semiconductorexporters to move up the value chain and be more competitive (CSFB, 2000).Asian economies were also endeavoring to provide mutual support forexchange rate stability. They put in place a variety of inter-governmentalmechanisms designed to provide cooperative support for exchange ratestability in the region. As early as 1972, ten Southeast Asian nations
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established the South East Asian Central Banks (SEACEN) Research andTraining Center, at Kuala Lumpur, Malaysia. Since then, the SEACEN hasbeen organizing training programs and hosting an annual meeting of the tencentral bank governors. Current membership of SEACEN is eleven.12 In 1991,these eleven Asian central banks established the Executives’ Meeting of EastAsia-Pacific Central Banks (EMEAP), which organized high-level meetingsand hosted working groups on financial markets, central bank operations, andprudential supervision.13 In 1995, the Hong Kong Monetary Authority(HKMA) and the central banks of Indonesia, Malaysia, and Thailandannounced repurchase agreements designed to provide mutual exchange ratesupport. Singapore, the Philippines and Japan subsequently joined thisnetwork. At the April 2000 meeting of the Asian Development Bank, inChiang Mai, Thailand, the ASEAN-Plus-Three14 countries agreed to establisha pan-Asian liquidity backstop – a so-called Asian Regional FinancialArrangement (ARFA) – to prevent future speculative crises in the region.Under the AFRA, the old $200 million network of repurchase agreements,where reserves were provided only against valuable collaterals, were replacedby a new network of swap agreements where central banks were simply goingto swap currencies. Under the ARFA, the Asian economies have freer accessto one another’s support (refer to section 7.5 also).3.2 Intra-Regional TradeIntra-regional trade increased to 47.0 percent of local trade in 1963, but againdeclined to around 41 percent all through the 1970s (WTO, 1995). The reasonbehind this decline was that the brisk real GDP growth in the NIAEs, andsubsequently in the Southeast Asian economies and pari passu rapid growthin export volume. Together these factors coalesced and these economies beganto establish strong trade linkages outside their region, particularly with the USmarket. More importantly, all these economies had adopted similar economicdevelopment paradigms and sought to achieve growth through the movementtoward higher value-added manufacturing production geared towards exportexpansion. This made is necessary for them to look for markets outside theregion. For many of these economies it increasingly meant the large USmarket.During the 1970s, a triangular production relationship developed betweenJapan, the NIAEs and the US, bringing the former two sets of economiescloser together. Japan supplied the necessary components and technology tothe NIAEs, which in turn produced and competitively marketed industrialproducts to the US market. After the Plaza Accord15 in September 1985, thecurrency value configuration changed. The dollar had reached a high againstthe yen in early 1985, which intensified imports from East and Southeast Asia
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into the US market, and Japan was able to maintain its exports even as itsproduction costs were rising vis-à-vis its Asian rivals (Bernard and Ravenhill,1995). The post-Plaza Accord appreciation of the yen was not initiallymatched by the appreciation of the other Asian currencies.Between 1985 and 1987, the yen appreciated by 40 percent (Das, 1996).Consequently, Asian exports to the US continued to expand, and pari passuJapanese exports to Asian markets also grew. The structure of regional tradeunderwent a radical transformation. The Plaza Accord contributed to a newdivision of labor in Asia as well as a greater shift of the regional productionlocus towards production networks16 (Bernard and Ravenhill, 1995; Das,1996). The regional economic dynamism was such that the division of laborin the region enlarged to include the ASEAN-4 economies and China morethan ever in the past. A wave of pan-Asian industrialization in hightechnology industries expanded into the ASEAN-4 and China. Theseeconomies had depreciated their currencies during this period. Consequently,not only did their exports to the US became more competitive but they alsoattracted more investments from Japan and the NIAEs. The ASEAN-4economies and China soon started developing as export platforms of their owninto the industrial-country markets. Closely related with the spatialenlargement of the triangular relations has been the shift from the firm ton