Is There a Case for an East Asian Economic Community?

The paper undertakes a preliminary economic analysis of the recently proposed East Asian Economic Community. The proposal envisages that the core of the Economic Community would include the ten member countries of the ASEAN free trade area (AFTA) and the three North-East Asian economies, namely, Japan, Korea, and China. The Community is also expected to include subsidiary institutions relating to security and other regional concerns. A major motivation behind the proposal seems to be not only to increase mutual trade but also to construct a regional group of its own in a trading world increasingly dominated by large economic entities. The large volume of intra-trade in the Community can certainly sustain a free trade area. Currently, the region is in the grip of a trading agreement frenzy which can be curbed only by moving rapidly toward a unified trading community. The region’s substantial two-way trade with the West, however, raises some concerns about trade diversion but they do not seem insurmountable.