Asian leaders trade ideas to build regional cooperation

May 29, 2006

Participating Asian leaders at the 12th International Conference on "The Future of Asia" last week in Tokyo competed to propose ideas on how an Asian Community should be formed.

Since the first meeting of the East Asia Summit of 16 nations in December last year, the dream of such a community has come closer to reality, and participants discussed their own scenarios on how it should develop and which nations it should include.

However, they cited Japan's worsening relations with China and South Korea as the main hurdle in creating such a framework, while adding that energy and environmental issues as well as economic gaps among Asian nations would arise as problems.

The annual event, organized by Nihon Keizai Shimbun Inc., took place on May 25 and 26.

Former Prime Minister Yasuhiro Nakasone, the first speaker at the conference, said that before creating an East Asian Community, countries in the region must first try to establish an economic cooperation organization to promote regional trade as well as economic and financial interchanges.

Nakasone said the envisaged organization should comprise 18 countries - the 10 members of the Association of Southeast Asian Nations (ASEAN) plus Japan, China, South Korea, Australia, New Zealand, India, the U.S. and Russia.

"It's important to include Russia in the group, given its abundant oil and gas reserves," Nakasone said, adding that embracing the U.S. would also be important because of its significant investment and security involvement in the region.

Regarding an East Asian Community, the former premier said, "It should be created as the organization's 'inner circle.'" He meant inner circle members would be ASEAN plus Japan, China and South Korea.

He said the 18-member organization should promote, among other things, cooperation among member nations' central banks, the establishment of a regional free-trade system and tie-ups among regional industries through the use of information technology.

For his part, Malaysian Prime Minister Abdullah Badawi urged each country in the region to devise concrete measures with an eye toward realizing an East Asian Community. "We are also well behind in realizing our initiative to build an East Asia free-trade area," he said, calling on the relevant countries to pursue the goal "with greater urgency and seriousness."

He predicted that the free-trade zone would encompass as many as 2 billion people, implying that India, with a population of more than 1 billion on its own, would not be included for the time being.

Abdullah's predecessor, Mahathir Mohamad, who also made a speech at the conference, questioned whether Australia and New Zealand can be members of an East Asian Community, although the two nations were invited to the inaugural East Asia Summit in Kuala Lumpur last year. "Their attitudes, the way they think, represent those of Europeans. They are not able to understand the Asian way of doing things," he said.

China and South Korea have criticized Prime Minister Junichiro Koizumi's repeated visits to Tokyo's Yasukuni Shrine, which enshrines Japan's war dead as well as Class-A war criminals.

Minister Mentor Lee Kuan Yew of Singapore called for the three nations to form free-trade agreements separately with ASEAN. By binding the three economic powers through ASEAN, "we can have a big FTA for the whole Asian region, which will increase the bargaining power of Asian countries when we go to the WTO (World Trade Organization) to negotiate."

Moves to have stronger economic ties in the West are prompting Asian countries to form a new community. "The EU (European Union) is expanding into eastern Europe and the U.S. is striving to establish a Free Trade Area of the Americas," said Shi Guangsheng, chairman of the China Association of Enterprises with Foreign Investment. "Unless Asia speeds up creation of regional economic cooperation, it will not find a place in the world." He added that China, Japan and South Korea should explore the possibility of a free-trade framework among them.

Chung Sye-kyun, the South Korean minister of commerce, industry and energy, said if his country establishes an FTA separately with Japan and China, it would be a good strategy to expand economic ties in Northeast Asia.

In addition to Japan's diplomacy, hurdles to an Asian Community mostly have to do with the economic imbalance among Asian nations - as well as within China - and problems related to energy and the environment, according to Hitoshi Tanaka, senior fellow at Japan Center for International Exchange.

Prof. Richard Baldwin of Graduate Institute of International Studies in Geneva saw the issue in a different way. "What East Asia needs now is more management, not vision." By this he meant, for example, designating which country summons multilateral meetings when trade problems arise in the community.

(The Nikkei Weekly May 29 Issue)

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.