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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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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 11 May 2021

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

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

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

Richard E. Baldwin

Oxford University Press

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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