Due to the failure of APEC’s trade liberalization and the current stalemate of the WTO Doha Round, East Asian countries have shifted their trade policy to bilateral or regional trade agreements in order to sustain their production networks. The proliferation of free trade agreements in the region has induced a harmful “noodle bowl” effect, which increases the business costs and makes East Asia less attractive to FDI. There are calls for forming a relatively beneficial region-wide FTA to exploit comparative advantages and avoid trade diversion. However, several political impediments have been identified under the theoretical framework of International Political Economy, which are expected to hinder the realization of such a comprehensive region-wide FTA: some ASEAN states’ fear of being marginalized by economically powerful Northeast Asian countries, the ongoing competition for leadership and the deepened mutual distrust between Japan and China, and the US pushing forward Trans-Pacific Partnership pact to contain China.
