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China, Asia, and the New World Economy$
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Barry Eichengreen, Yung Chul Park, and Charles Wyplosz

Print publication date: 2008

Print ISBN-13: 9780199235889

Published to Oxford Scholarship Online: May 2008

DOI: 10.1093/acprof:oso/9780199235889.001.0001

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The Spoke Trap: Hub‐and‐Spoke Bilateralism in East Asia

The Spoke Trap: Hub‐and‐Spoke Bilateralism in East Asia

Chapter:
(p.51) 3 The Spoke Trap: Hub‐and‐Spoke Bilateralism in East Asia
Source:
China, Asia, and the New World Economy
Author(s):

Richard E. Baldwin

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199235889.003.0003

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

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