North-South vs. South-South FTAs: Trends, Compatibilities, and Ways Forward

The last decade has seen an unprecedented surge in free trade agreements (FTAs) in economically important Asia as a part of efforts to deepen Asian regionalism by centering on sophisticated regional production networks. South–South (S–S) agreements driven by economic giants—the People’s Republic of China (PRC) and India—are dominating Asian FTAs , amidst a recent flurry of Japan-led North–South (N–S) agreements. However, little attention has been devoted in Asian FTA literature to studying the evolution and anatomy of N–S and S–S FTAs. Furthermore, the extent to which N–S and S–S Asian FTAs are compatible with global rules and with each other remains unexplored. This paper offers some simple legal and economic criteria to facilitate empirical research. The empirical analysis of the criteria against actual practice in 61 concluded Asian FTAs shows that several incompatibilities exist between N–S and S–S FTAs in core areas including tariff liberalization, rules of origin, liberalization of services trade, compliance with World Trade Organization (WTO) notification requirements, and deep integration. Accordingly, some proposals—adopting voluntary good practice guidelines to improve FTA quality and consistency, consolidating bilateral FTAs into a region-wide FTA, and establishing a regional FTA advisory center to assist least developed countries—are offered to facilitate greater compatibility between N–S and S–S Asian FTAs.