Abstract
Deeper Northeast Asian integration is beneficial, overdue, and urgent. The region’s major economies risk being sidelined by big‐power politics and a deteriorating global trade environment. Together, they can become stronger and reap significant economic gains. But deeper integration will require bringing policies in line with rigorous norms and exposing sectors to greater competition. It will also depend on overcoming historical divisions. Whether all countries in Northeast Asia are ready for such changes is unclear, but the economic and political incentives continue to intensify. At this writing, the global economic and trade environment are deteriorating. In a recent report, the World Bank noted that “financing conditions have tightened, industrial production has moderated, and trade tensions remain elevated. The recovery in emerging market and developing economies has stalled, and some countries have experienced significant financial stress. Downside risks have increased, including the possibility of disorderly financial market movements and escalating trade disputes.” The outlook for trade and the global rules‐based system has been damaged by repeated cycles of tit‐for‐tat tariff wars between the United States and partners ranging from China to NAFTA and the European Union.This paper reviews the current structure of Northeast Asian economic relations and examines how cooperation within the region could address challenges emerging in the global environment. The first section reviews Northeast Asia’s economic and geopolitical assets. The second examines challenges to integration, from regional political divisions to global economic turmoil. The third reviews data on regional trading and investment relationships and the fourth describes the consequences of integration initiatives. The paper concludes with observations on how progress in Northeast Asia could also advance the stability of the global economy.