Comparing the negotiation approaches of South Korea and Japan in their preferential trade agreements with ASEAN

In the early 2000s, Korea and Japan competitively initiated their preferential trade agreements (PTAs) with the Association of Southeast Asian Nations (ASEAN) in response to the unexpected progress of the China–ASEAN Free Trade Agreement (FTA) negotiations. In contrast with China, Korea and Japan initially preferred to negotiate PTAs with individual Southeast Asian countries, rather than with ASEAN. In 2003, however, Korea redirected its strategy and began the Korea–ASEAN FTA. Japan continued to emphasise a bilateral approach to negotiations but sought harmonisation of the individual PTAs through the ASEAN–Japan Comprehensive Economic Partnership. Sharing common international political and economic challenges, why did Korea and Japan take diverging negotiation paths? This research investigates the factors that shaped Korea and Japan’s respective negotiation methods with ASEAN by focusing on the interplay of domestic interests, institutions and ideas. The research findings suggest that Korea and Japan initially preferred bilateral PTAs because of their efficiency and to minimise the backlash of the agricultural sector. Japan had a greater incentive to promote bilateral strategy than Korea, not only to counter China’s move, but also to utilise its diplomatic leverages against ASEAN. The direct causes of the two countries’ divergence, however, came from ideas and institutions. The influence of ideas became evident when Korea’s and Japan’s initial emphasis on the East Asia-based PTAs began to head toward the different directions. Japan was path-dependent of its initial step-by-step strategy focused in East Asia. In contrast, Korea accommodated the new ideas that aimed at cross-regional PTAs, making the Korea-ASEAN FTA a stepping stone for cross-regional PTAs rather than East Asia-based PTAs. Institutional factors account for the supply side of PTA decision-making processes by demonstrating how the intra-democracy variations, combined by bureaucracy discretion, empowered relevant decision-makers, which led to the reversal of negotiation progresses between Korea and Japan. The empirical research findings significantly contribute to the international political economy literature by testing the applicability of the domestic level analysis. They provide an alternative perspective to the existing debate on the compatibility of bilateralism and regionalism in East Asia and thus to the political economy of trade policy in the region. The findings also shed light on the country-specific factors shaping the economic regionalism of East Asia.