Beginning in the mid-1990s, several Latin American countries embarked on policies of preferential trade with regional neighbors, the EU, and the United States. Through the effect on flows of FDI and trade, the influence of these PTAs extended beyond the region. Chapters 4 and 5 have shown how two important agreements were directly prompted by the discriminatory effects of NAFTA. Today, PTAs are a global phenomenon. Even countries in Asia-Pacific, the last region to hold out, have now fully embraced preferential trade agreements.
Japan, drawing on the experience of trade discrimination caused by NAFTA and the successful leveling of the playing field through the Japan–Mexico FTA, has emerged as one of the principal promoters of this development. NAFTA, as the first North–South PTA, set an example of how to facilitate the use of a developing country as export platform while raising costs for competitors. In this chapter, I argue that the Japan–Thailand and Japan–Malaysia FTAs, each officially referred to as an “economic partnership agreement” (EPA), have followed the same model, although several important differences in initial conditions and liberalization outcomes emerge.
In southeast Asia, the “contagion” of the Asian financial crisis forced countries to try to attract more FDI rather than volatile portfolio investment. The crisis thus boosted a process of investment liberalization that had got off to a slow start in the early 1990s, and gave further impetus to the development of the ASEAN Free Trade Area (AFTA) and the ASEAN Investment Area (AIA).