ASEAN should be core of FTAs

July 17, 2006

Minister Mentor, Singapore

The future of Asia is bright and promising. China and India are rising and recovering the positions they once held before colonialism eclipsed them. They have started to liberalize and have discovered that they can catch up with the Americans and Europeans. A question we have to ask ourselves is how do we maintain friendly competition among India, China, Japan, South Korea and ASEAN?

It is interesting to see that the Chinese have gone out of their way to extend a hand of friendship to the Indians. Both want to put the past behind them and move into friendly cooperation and competition.

The only problems that remain are those left behind by the war within China and South Korea on one side and Japan on the other. I don't think they are all that overwhelming of an obstacle. It is more a psychological problem. As long as the Chinese and South Koreans feel that Japanese leaders are not really contrite, this subject will come up again and again. It is unnecessary friction and irritation.

Recently I was in Beijing and Seoul. I think both governments want to cooperate with Japan. They need Japanese investment, technology and markets. But if this irritation comes up again and again, it slows down the process.

So in the meantime, we have decided in ASEAN that we cannot wait for this to be resolved. At the East Asia summit, we invited India, Australia and New Zealand. Originally the invitation was only to ASEAN+3.

From an ASEAN point of view, we must have a reason for this meeting. The purpose is a series of concentric circles of free trade agreements - ASEAN and China, ASEAN and Japan, ASEAN and South Korea, and so forth. For Japan, South Korea and China, to reach an FTA is very difficult. But through ASEAN we have these overlapping circles and gradually we can have a big FTA of the whole Asian region, which will increase the bargaining power of Asian countries when we go to the World Trade Organization to negotiate. What is important is we should avoid hostility and animosity so that all will grow in friendly cooperation and competition. That is the future.

The greater underlying factor which will bind the community together will take time to forge itself. If we study the history of this region, there are broadly three different groups - East Asia, South Asia and Islam. Can you combine them into one community? I think it would be very difficult. We have to be realistic and will first work for economic integration.

And with economic integration will come people-to-people contact with trade and investment. There will be the Chinese, Japanese and South Koreans working all over the place. We will get to know each other better. Maybe you will never feel like one people like the Europeans feel, but we can be one economic unit.

U.S. umbrella

For the Pacific region, we have enjoyed peace and stability because of the alliance between the U.S. and Japan. Without that security umbrella, there would have been great rivalry and conflicts, and there would not have been growth.

So I think that must remain. But as for whether the U.S. should be part of the East Asian market, that is for America to decide. Over the long term the balance in the Pacific will still be maintained as long as there is a strong U.S.-Japan alliance.

We all know that if India and China begin to consume energy like the U.S. or Japan, there will be a world crisis. Long before the oil age comes to an end, there will be a shift to other sources.

At the moment it looks primarily nuclear, because the renewable sources of energy like solar, wind, tide and biofuels are limited. China, South Korea and Japan - don't allow yourselves to be played one against the other and let the price of oil go up. That is what I advise as an outsider.

(As for the integration of Asia), the best way to move forward is to have as much freedom in the movement of goods, services and capital as our economies can bear and allow market forces to decide where the capital will go.

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