Abstract: This chapter argues that bilateral agreements between countries like Japan and Korea are likely to have domino effects — they will encourage additional bilateral agreements. The result will be less an efficient network of trade than a pair of inefficient hub-and-spoke arrangements, where China and Japan serve as hubs and the other Asian countries (the ‘spokes’) trade disproportionately with the two centre countries. But the emergence of a two-hub or ‘bicycle’ system is not inevitable. Some strategies are presented to resist its development: creating a union of East Asian nations that extend duty-free treatment to one another's industrial exports; and agreement by Japan and Korea — the countries responsible for initiating this dynamic — to coordinate their subsequent trade negotiations with other Asian countries.

Keywords: bilateral agreements, Japan, Korea, China, trade,