The objective of this study is to derive the characteristics of internal trade and the patterns of bilateral trade in East Asia. The amount of trade between East Asian nations including Korea, China, Japan, and ASEAN has been increased drastically in recent years. This implies that East Asian economy is more integrated than before. However, East Asian economy is based on the very weak internal demand but heavily dependent upon the external demand. Thus, it is very sensitive to external shocks such as recent global financial crisis. This study explores the reasons for the development of East Asian internal markets to be limited by analyzing the internal trade structures and patterns of trade in East Asia. The trends of national and regional proportions of trade in each country are derived and then several characteristics of internal trade in East Asia are found. First, the proportion of internal trade in East Asia is increased greatly. Second, the internal trade is getting more dependent upon China but the role of Japan in East Asian internal trade is tapering off. Third, China’s dependence on internal trade, especially in exports, has been decreased recently. These findings can be explained by analyzing the trends of sectoral proportions and the relative importance of parts and components in internal trade. The manufacturing became the major sector in East Asian internal trade and among the manufacturing, especially the trade in machinery and transport equipment (SITC 7) including ICT products such as electrical machinery and parts (SITC 77), office machines and ADP machines (SITC 75), and telecommunication and sound equipment (SITC 76) is growing rapidly. In China’s imports from East Asian nations, the imports of electrical machinery and parts (SITC 77) are dominant but in exports to East Asian nations, the exports of other ICT products that consist of mostly final products are not smaller than the exports of SITC 77 which consists of mostly parts and components. In this study, the proportions of parts and components in bilateral trade between East Asian nations are derived by classifying the 5-digit products that belong to parts and components in SITC 7 and 8. The proportion of parts and components in imports of China from other East Asian nations is much greater than that of exports of China. This result implies that China plays a role as the producer of final products for external demand by importing parts and components from other East Asian nations. In contrast with China’s case, the proportion of parts and components in exports of Japan to other East Asian nations, especially to China, is much greater than that of imports of Japan. These results imply that East Asian internal trade is predetermined by vertical production networks based on production fragmentation between nations in East Asia. In this study, the index for determining the trade pattern in each disaggregated sector is derived for the major important bilateral trade in East Asia. By deriving the indexes for determining trade patterns in each industry, the following results are provided. First, in the bilateral trade between Korea and China, China and Japan, the vertical intra-industry trade is increased but the horizontal intra-industry trade is rare. Second, the inter-industry trade is dominantly present in the bilateral trade between China and ASEAN countries. Third, in the bilateral trade between Japan and ASEAN countries, the vertical intra-industry trade is dominant but the number of industries in which no trade is found is getting increased. But no meaningful result is found for pattern of trade in the bilateral trade between Korea and ASEAN nations. These results reflect the special features of trade structure in East Asia. From the results of trade patterns in bilateral trade between East Asian nations, it is clear that the vertical intra-industry trade or specialization based on production fragmentation between countries is deepened but the degree of market segmentation or the development of internal markets in East Asia is stagnated. The results of this study show that under current trade structure in East Asia, the East Asian economy should be hit hard by the process of rebalancing the global imbalances. Thus, in order to expand internal market and market segmentation, the internal trade will be highly liberalized to accelerate internal demand and market integration in East Asia.