Asian Free Trade Zone

North America and Europe aren’t the only regions of the world that may have free trade zones. Backed by the economic powers of Japan and China, a new free trade zone is being explored. This zone would represent over half of the world’s population and about 25% of the world’s GDP, about $10 trillion.

This new zone could challenge the old spheres of the Western World. The U.S. and Canada were absent in the initial discussions despite close trade links with this region. Formal negotiation could begin in 2008 when the world is focused on China and the Olympics.

Japan, China, India, Australia, South Korea and New Zealand plus the 10 members of ASEAN in Southeast Asia make this sweet 16 a powerful bloc. Japan appears to be spearheading the discussions.

Preliminary research finds that the region’s total economic output could be bolstered by $215 billion initially, but much more later.

What are the potential hang-ups? The rivalry between Japan and China may be a concern. China has also backed a different version of the trade plan.

The collapse of the world trade talks and intraregional trade between the sixteen nations, which has increased to 56% versus 33% in 1984, are driving forces.

Pit Stop

Members of the ASEAN include: Malaysia, Singapore, Thailand, the Philippines, Indonesia, Brunei, Vietnam, Myanmar, Laos and Cambodia.

Next time we’ll take a look at the power of world trade blocs.

The Road Warrior of Agriculture

My e-mail address is: sullylab@vt.edu

Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.

To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.

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