Search

The Japanese government today is actively choosing to pursue its economic diplomacy through bilateral venues, multilateral frameworks, and even regional settings. For Japan specialists, these high-profile forum choices to pursue trade liberalization and dispute resolution across forums are unprecedented and contrary to all expectations. What combination of factors has led Japan to this juncture in its economic diplomacy? What elements specifically determine the Japanese government’s choice to pursue its economic diplomacy across forums? By invoking the model that we call, Scope-Flexibility tradeoff, the paper argues that trade liberalization and adjudication forums can be effectively characterized by two dimensions: scope and flexibility. Those two dimensions are not only applicable to all the negotiation forums from the WTO to the smallest of bilateral FTAs, but also have critical implications on states’ strategic, economic and political calculations. This study illustrates that, on the one hand, a multilateral forum encompasses greater scope than any other alternative forums both in terms of large gains from trade and reduced transaction costs through standardization of rules. Meanwhile, this forum tends to present disadvantages in the level of flexibility. On the other hand, bilateral forums, which fall significantly short in the scope dimension with their small market gains, and idiosyncratic rules, score high on flexibility as negotiation governments can exclude sectors, select issues, and above of all, choose suitable partners. The case of Japan illustrates that its government engages forum-shopping to maximize their political leverage both domestically and abroad. ..PAT.-Conference Proceeding [ABSTRACT FROM AUTHOR]

In the late 2000s, an increasing number of states have deviated from an exclusive focus on the GATT/WTO-centered multilateral system by establishing and then using alternative forums for trade liberalization. Although scholars have analyzed variances in “forum-setting” and “forum-shopping” across multilateral, regional/minilateral, and bilateral forums, we argue that to advance our understanding of deliberate strategies by states to construct and use alternative trade forums we need more a far more systematic consideration of the underlying dimensions within the forums that distinguish one from the other. From a range of dimensions in institutional design, we further argue that for purposes of state choices among trade forums, only two dimension are critical in terms of the underlying rules: the gains dimension, which determines the maximization of economic welfare; and the control dimension, which determines the minimization of political uncertainty both domestically and externally. Faced with these critical dimensions, rational states then position along what we call the gains-control tradeoff in line with their interests as conditions evolve and change. After clarifying the theoretical and causal mechanics of this general IPE explanation, we analyze its empirical validity by focusing on Japan’s forum choices. Our findings show that, at this stage, the Japanese government is building alternative forums in order primarily to increase control over political uncertainty, both internally and especially externally. ..PAT.-Conference Proceeding [ABSTRACT FROM AUTHOR]