Is Asia on the way to becoming a trading bloc? The question is asked, sometimes anxiously, especially by those who are themselves involved in trading blocs. Some see it as inevitable that Asia will follow the course that was set by Europe and is now being explored by America. Others still hope to avoid a division of the world into three contending blocs, with the loss of opportunities for growth which that implies. Others again fear that the less competitive economies of Europe and North America may form a defensive alliance against the more competitive ones in Asia, and the East- West struggle may be revived in a different form. What are the prospects? Which way are Asian countries heading? And what is most likely to determine their future course?

During the last decade or so, regionalism has regained momentum in the West. After slowing down in the 70s, the European integration movement revived in the 80s, under the leadership of France and Germany. The Single European Act set the direction, and laid the legal foundation for a further round of integration, extending from the economic into the political field. All internal barriers to trade were to be removed by 1993 so as to create a Single European Market. This was to be followed by the introduction of a Single European Currency, after the creation of a European Union. These plans were not fully realized. The reunification of Germany, and the reluctance of German tax-payers to meet the cost, led to heavy Government borrowing, which pushed up interest rates and the value of the D-mark. This severely disrupted the Exchange Rate Mechanism, and drove Britain out of it. Some Germans had second thoughts about a Single European Currency over which the Bundesbank would have less control than it had over the D-mark. Economic integration was proving as difficult to achieve as ever. Internal barriers to trade still existed, and the goal of a single currency was receding into the future.