Regional integration should have multilayer structure

July 17, 2006

Former Prime Minister, Japan

At the first East Asia summit, held in December, leaders in the region agreed to pursue the idea of an East Asian Community. While the vision is way ahead of the region's reality, it still represents an unprecedented regional initiative. The agreement is important because it provides a strong incentive for the countries involved to refrain from acting counter to the community initiative.

East Asia is a major center of economic growth. One of its outstanding features is that it enjoys peace and security throughout most of the region, except for a small number of conflicts. Both governments and businesses in the region are keen to promote exchanges. Most of the countries have close security ties with the U.S., and this has invisible but important effects.

Grass-roots exchanges and mutual understanding are also growing in this part of the world, mainly through cultural products such as South Korean dramas, like "Fuyu no Sonata" ("Winter Sonata"), and Japanese animation.

On the economic front, market principles are gaining acceptance. Free-trade agreements among countries and cooperation among central banks, which grew out of the bitter experience of the 1997 Asian financial crisis, are creating a sense of shared interests.

Two key challenges facing East Asia are how to protect the environment from the effects of economic growth and how to ensure transparency in defense buildups. In particular, China keeps enhancing its military, attracting attention from concerned countries. Economic growth is also generating problems regarding intellectual property rights. For Japan, the crucial challenge is the acceptance of foreign workers. East Asia cannot continue to prosper without sorting out these issues.

The community should be built under a multilayer structure. I propose the creation of a new organization for East Asian economic cooperation as the first stage of the process.

Eighteen members

This regional organization should have 18 members, including Australia, New Zealand, India, Russia and the U.S. as well as ASEAN plus Japan, China and South Korea.

Involving Russia is important because East Asia is short of oil and gas. In addition, it would be unwise to exclude the U.S., which has a huge pool of capital and vast consumer markets. It is necessary to create the feeling that the region is in the same boat, although this will require a lot of time.

It is also important to build cooperative relations with Europe and also with the other members of the NAFTA.

Concerning the currency regime of the new organization, the yen and the euro should be considered as possible components of the key currency. It is still too early to involve China's yuan.

Competition to secure access to oil will intensify; agreements and arrangements need to be negotiated to avoid any waste.

An East Asian Community composed of 13 countries - ASEAN plus Japan, China and South Korea - should be established as the inner circle, or core. Unlike Europe, these countries have widely different languages, systems and religious traditions. They don't have a natural sense of community. But East Asia can still have a type of community characterized by tolerance, moderation, and cultural diversity and flexibility.

The most important factor for peace in East Asia is not military enhancement but a sense among the region's people that they share a common destiny. I hope a real community will be built on the basis of economic cooperation and this shared destiny.

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