Since 2002, spurred into action partly as a reaction to the 1997 Asian Financial Crisis, partly as a response to stalled WTO talks, and partly as a result of other countries embrace of Free Trade Agreements (FTA), Japan has engaged in bilateral Preferential Trade Agreements with at least ten countries and the ASEAN bloc in pursuit of trade liberalization. Japan’s initial FTA focus centered on Southeast Asia, where many of its manufacturing and regional production networks are centered. Yet Japan has also been very careful to protect its politically sensitive domestic agricultural sector from foreign competition when engaging other countries in FTA negotiations.
Arthur Lord, adjunct fellow at Johns Hopkins Reischauer Center, recently released a monograph comparing the functional implementation of FTAs by the world’s three largest economies. His analysis focuses on the actions and interactions of the United States, Japan and China trade policies and the subsequent consequences for global trade norms, both for the present and the future. International trade revolves around accepted norms and rules, and as such can help build or challenge communities of ideas:
“Washington, Tokyo, and Beijing all seek to exert influence abroad, not through conquest of land but through shaping the rules of the global system.”
This detailed comparative analysis explores the similarities between the three states’ approaches to FTAs, including their use as a tool in pursuing economic and foreign policy goals. As such, the term “Free Trade Agreement” is a misnomer, as the correct title should be Preferential Trade Agreements. Looking to the future, Lord predicts that the use of FTA is “likely to increase once again.” Thus, it is prudent for policy makers to be cognizant of how FTAs can influence the emerging global order and how Japan can uniquely utilize its own influence in this arena.