I found Rolf's paper very interesting but somewhat too wide-ranging. It covered global and regional issues. It dealt with issues on trade, investment, technology, even the monetary system, international migrations, as well as issues of culture and environment. Because it is so wideranging, I have more or less focused my attention and discussion largely on two broad areas. First, I would like to comment broadly on the trends of regionalism and its implications for AFTA, and second, the impact of China on AFTA and the future evolution of AFTA.

At the outset, I would like to emphasize that my comments represent only my own personal views and do not necessarily represent those of the institutions with which I am associated. Now, if one takes a longer-term historical and broader geographical perspective, one can describe the existing trend in regionalism, i.e. AFTA, Single European Market, NAFTA, as akin to a fragmentation process which I would call the trend towards regional economic Olympics. The GATT is the world Olympics and as the fragmentation of the global trading system proceeds, we are now gradually having European Olympics and American Olympics. In some sense, these are the natural responses to the dynamic challenge of Japan and the NIEs' market penetration in North America and Europe in the past 30 years. The response is a highly natural one because it basically implies that the consumers and voters are asserting their market bargaining power. Before, you can enter my market freely without giving any concession; now the consumer (and the voter) is exerting its market bargaining power by asking for investments to come in, to be located where the purchasing power is, and to generate more local content, employment and wages. And at the firm level, through restrictions on local content, rules of origin, competitive policies and others, the producers are attempting to tilt the strategic balance so as to ensure that the gains in trade are more appropriate to the host country and its firms as opposed to firms in the exporting countries.