Ryokichi HIRONO                                     East Asia Congress 2003

Professor Emeritus, Seikei University         ISIS Malaysia, K.L.

Tokyo, Japan                                                              4-6 August, 2003

 

 

 

BUILDING EAST ASIA INSITUTIONS AND THE EAST ASIA SUMMIT ROADMAP UNDER GLOBALISATION:

Japanese Perspectives

 

 

           During the last three decades leading up to mid-1990s, East Asia  comprising ASEAN-6, China, the Democratic People’s Republic of Korea (North Korea), the Republic of Korea (South Korea) and Japan, with the exception of North Korea, had in general sustained high rates of economic growth and undergone fundamental changes in terms of per capita income, economic structure, foreign trade composition and foreign capital participation.  Most of these countries had also made an enormous progress in the social dimensions of development as expressed in longevity, literacy, school enrollment and poverty reduction.  Political reforms of one kind or another had also followed these economic and social achievements, enabling its constituent countries with some exceptions to install multi-party system, realise in a varying degree freedom of the press, people’s participation in national, local and community decision-making processes and smooth changes in political leadership.

 

           Internally to East Asia, two extra-ordinary events have taken place since the mid-1990s.  One was the enlargement of the ASEAN-6 consisting of Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand to the ASEAN-10, bringing into the family Cambodia, Lao PDR, Myanmar and the Socialist Republic of Vietnam.  While contributing to the enlargement of the ASEAN market and the strengthening of the ASEAN’s bargaining position vis-à-vis the rest of the world, the enlarged ASEAN has brought in a series of new problems for them and other East Asian countries to grapple with.  They include among others the need for adjustments in intra- and extra-ASEAN trade, tariffs and investment rules, establishing mechanisms for narrowing the gap between the old ASEAN-6 and the new ASEAN-4 and reformulating ASEAN’s collective positions vis-à-vis the rest of the world in the light of the new ASEAN-4 having been more or less under the socialist political regime in transition to market-oriented economies.

          

           The other was the painful experiences of the Asian Financial Crisis of 1997-98 and the consequent negative economic growth which all of a sudden the ASEAN countries, Japan, South Korea, Taiwan and Hong Kong, SAR had to go through, with lingering effects still felt today.  It has been argued that behind the abrupt changes in the course of development of these East Asian economies since the mid-90s lay the increasing pressures of economic globalisation both promoted by the World Trade Organisation (WTO), successor to the General Agreement on Tariffs and Trade (GATT) in 1994 and assisted by International Monetary Fund (IMF) and the World Bank and the inability of these economies to adjust to the relentless challenges of globalisation particularly in the financial sectors.

 

           The painful experiences of the Asian Financial Crisis of 1997-98 and its aftermath generated pressures in East Asian economies an urgent need for domestic reforms in all sectors, not just limited to the financial sector in those particularly hard by the Crisis. The Crisis also pressured all the East Asian economies including the new four ASEAN members in the continental Southeast Asia to strengthen both intra- and extra-ASEAN regional cooperation.  Over the last three and a half decades a number of  institutions were established for promoting regional cooperation within and between the ASEAN-10 countries and other East Asian economies, ranging from the Summit (ASEAN Summit and ASEAN-Plus-Three – APT - Summit), Foreign, Economic, Finance and Education Ministers’ Meetings and so forth at the ASEAN and APT levels to the ASEAN Free Trade Area (AFTA), the ASEAN food and petroleum security programmes, the ASEAN foreign exchange, APT currency swap arrangements and ASEAN bond market development under the Chiang Mai Initiatives.

 

           In addition, in recent years bilateral free trade agreements have been already signed or under negotiation by individual ASEAN countries separately with APT countries such as China, Japan and South Korea as well as countries outside East Asia.  Also a number of initiatives have been taken by the Old ASEAN-6 to assist the New ASEAN-4 in order to close the wide gaps and in some cases the widening ones between the old and the new members of the ASEAN.  It is sincerely hoped that East Asian economies will hopefully be able through their respective domestic reforms during the first decade or two of the 21st century to make a smooth economic, social and political transformation under the increasing pressures of globalization.

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           Externally, three more equally serious events have emerged all in the late 1990s and the first decade of the 21st century, confronting the ASEAN-10 and other East Asian economies to look at themselves squarely and take necessary actions so as to remain either solidly united as ASEAN and/or remain competitive under an increasingly intensive global competition.  The first is the challenges of China’s continuing economic growth and its more “self-confident” economic policy toward the ASEAN, its Asian neighbours and even the rest of the world.  To deal with it, ASEAN went ahead in November 2002 in Phnom Penh to sign with China the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China, aiming to conclude ASEAN-China Free Trade Area by 2012.

 

           The second is the implications of India’s emergence as a major economic power in Asia and the Pacific area and its more “self-assertive” foreign policy toward the countries of South Asia and the ASEAN. To deal with this new issue more comprehensively, ASEAN countries in partnership with Australia, Canada, Japan, New Zealand and the United States, have long invited India to sit on an observer status in the ASEAN Post-Ministerial Conference (ASEAN-PMC) created in 1978 and also participate fully in the ASEAN Regional Forum (ARF), which was established in 1990, to maintain peace and security in Asia.  Thirdly, with the growing political instability in the Korean Peninsula emanating from North Korea with the threat of nuclear programmes developing  mass-destructive weapons, ASEAN countries invited North Korea to participate in ARF discussion, followed up by the most recent meeting of the ASEAN-Europe Meeting (ASEM) installed in 1996, in Dalian in July, 2003 which appealed to North Korea to cease any course of action which might threaten peace and security not only of the Korean Peninsula, but also of the whole East Asia and the rest of the world as well. The meeting also appealed to the cooperation of all governments concerned to make the Peninsula a nuclear-free zone, as proclaimed decades ago by ASEAN.

 

           Precipitated by the entry of the four new members to the ASEAN and the Asian Financial Crisis in 1997-98, all the first, the second and the third challenges have now inevitably given an impetus to the concept of the East Asian Economic Community, as proposed and recommended by the East Asia Study Group to the APT Summit in Phnom Penh in Cambodia last November, 2002.  The concept has long been proposed for action by this chair in the report of the Asia-Pacific Study Group submitted to the Cabinet Secretariat of the Japanese Government ever since the early 1980s as well as by Prime Minister Mahathir of Malaysia around the same time.  It is to be noted that under the leadership of Prime Minister Koizmi the Government of Japan has now begun its negotiation with ASEAN countries individually on the bilateral Comprehensive Economic Partnership (CEP), as already concluded and signed with Singapore, and collectively on Japan-ASEAN Comprehensive Economic Partnership (CEP).

 

           It is with a great sense of satisfaction and deep appreciation to the strong initiative of Prime Minister Mahathir that the first East Asia Congress has now been organized here in Kuala Lumpur, beautiful and environmentally friendly capital of Malaysia, to discuss the East Asia Institutions to accelerate the process of regional economic cooperation by consolidating the past policy and institutional achievements in East Asia and to draw an East Asia Summit Roadmap so that the tireless efforts by Prime Minister Mahathir and other Asian political leaders will become a reality not in the distant future and culminate in the inauguration of East Asia Community that will go far beyond the narrow confine of bilateral trade and investment cooperation and even ASEAN Free Trade Area, and extending into a solid institution in East Asia for regional economic, social, cultural and political cooperation which will be enormously beneficial to ASEAN-10 in promoting its intra- and extra-ASEAN cooperation.  It is vital that Japan, together with Malaysia and ASEAN as a whole should welcome the association of the two highly competitive giant economies of Asia, China and India, to be new partners under the WTO’s regime and to be a member of the proposed East Asia Community. This is all the more befitting to realize in the first decade of the 21st century in the light of the current trend toward greater regionalism seen in the enlarging European Union of 25 member states in 2004 and in the enlarging Free Trade Area of Americas in 2005.