Design Parameters for KL's proposal of EAEC

From the very beginning, Malaysia's proposal for an East Asia Economic Group (EAEG) was misunderstood as an attempt to create an inward-looking trading bloc. In proposing the EAEG not only are we not proposing a closed, inward-looking trading bloc for East Asia but we are not even proposing any kind of trading bloc for East Asia at all.

We are not advocating a preferential trading arrangement, or a free trade area, or a customs union, or a common market or an economic union for East Asia. What we wish to see is the establishment of a loose consultative forum for the economies of the region. This forum should have both a regional agenda and an extra-regional agenda.

In pursuit of the internal regional agenda, the economies of East Asia should meet regularly at the ministerial level to discuss how we can enrich regional economic cooperation for our mutual economic benefit in the short, medium and long term.

In pursuit of the external extra-regional agenda, we should discuss how we can act in concert to enhance the chances for the success of the Uruguay Round, the perpetuation of the open global trading system, and other global public goods.

We are not particular about the name for this process. When Indonesia proposed a change from East Asia Economic Group to East Asia Economic Caucus, Malaysia saw absolutely no problem.

Let me set out what I think should be the design parameters for the East Asia Economic Caucus (EAEC) - design parameters which probably will be equally relevant to whatever other East Asian economic cooperation process is undertaken in the years ahead.

First, we should be concerned with both a regional and an extra-regional agenda.

Second, with regard to both the internal and external dimensions, although trade is crucially important, we should not be confined to trade. In East Asia especially, there is also much that can be done with regard to optimizing joint development zones, investment, technology, tourism, even labor flows. The areas for cooperation --- from privatization to infrastructure development -- are too many to enumerate.

Third, on matters related to world trade, we must be champions of free and fair trade. We must champion the cause of global trade liberalization, of multi-lateralism, of an open global trading system, of the Uruguay Round and of GATT and its spirit, principles, rules and regulations. Fortunately, because we are among the most dependent on foreign trade in the world today and because we are so competitive, we will do very well within any fair and free global trading system. The position advocated is the natural one for us in East Asia to take.

Fourth, we must champion the cause of open regionalism. If we agree to do something on regional trade, we must ensure that no new or higher measure of protection and discrimination be introduced against those outside East Asia. The present levels of real protection and discrimination should be pressed down even lower. No economy should ever be required to raise its levels of protection and discrimination to some higher common, regional level.

We must not be inward-looking. All our economies should continue to be strongly outward-oriented. The whole world must be our marketplace. Our own regional market must be increasingly open to others. We must continue to liberalize.

I believe very strongly in attracting foreign investment from every corner of the globe, and the inflow of technology, know- how, entrepreneurship and modern management from the widest and richest possible range of sources. Otherwise, we will only be hurting ourselves.

Fifth, we should aspire to be a model for true North-South cooperation.

Sixth, we must seek to contribute to a sense of security and well being on the part of all the economies of East Asia.

Seventh, whatever schemes of cooperation we embark upon must be founded upon the principles of mutual benefit, mutual respect, egalitarianism, consensus and democracy.

At the same time that we pursue these ends, we should ensure that we are not confrontational, that we are not bullied and intimidated, that we do not damage ASEAN, APEC, the South Pacific Forum and other established processes, that we do not allow others to divide the Pacific, ASEAN or East Asia, and that we are not cowed from speaking out against racism, exclusivism and attempts to create closed trading blocs.

It is fundamental that we should not shut others out of the region. This would be such a stupid thing to do that those who accuse us of wanting to do this must be somewhat feeble of mind. Or, they must think that we are feeble-minded.

The Asia of today is no longer the Asia of the past. We must be accorded our rightful place in a world that has already changed.

We have a dynamic present to travel and a dynamic future to make. This is a journey we cannot make alone. Asia should eagerly extend the hand of friendship and cooperation to all nations, regions and continents which are willing to work with us in true partnership.

Note: this is an excerpt from Malaysia's Prime Minister Dr Mahathir Mohamad's speech at the Asia Society Conference in Tokyo, 13 May 1993.