E. Asian common market still decades away

By Raju Gopalakrishnan

MANILA (Reuters): A common market which links China, Japan and both Koreas to the tiger economies of Southeast Asia is a mouth- watering prospect for the region but one which is at least decades away.

It won't be easy to overcome the historical divide between China and Japan or between North and South Korea, which are still technically at war.

But it is time the nations of the region began to examine the possibility and, given the realities of globalization, the idea is not as unthinkable as it would have been some years ago, political analysts said.

The first steps toward more regional cooperation are likely to be taken this weekend when the 10-member Association of Southeast Asian Nations (ASEAN) holds a summit in Manila which will include the leaders of Japan, China and South Korea.

ASEAN -- which includes Brunei, Cambodia, Laos, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam -- is already on track for a free trade area by 2002 and this could be expanded to the three northern neighbors, Philippine Foreign Secretary Domingo Siazon said.

"I think you will see this number expanding not only to China, South Korea and Japan but perhaps in the near future to North Korea. Maybe Mongolia might wish to join," Siazon told Reuters Television.

"I see we will be having first an ASEAN common market, (then) an east Asia free trade area, an east Asia common market, an east Asia currency, it is just inevitable."

"I am not surprised," said Stephen Leong, at the Institute of Strategic and International Studies in Kuala Lumpur.

"We have a long way to go on this, but nevertheless it is about time that they think about this. But I don't see it happening before 2020 at least."

Still, some facets can be easily accomplished, analysts said. ASEAN has invited China, Japan and South Korea to its annual summit meetings for the past three years and is likely to formalize the process this year, providing a good starting point, regional officials have said.

"For an East Asian grouping to come together, it shouldn't take long," Leong said. "Informally they are already talking to each other. All they need to do is formalize the meetings, or set up another one and come up with a regional name."

More work will be needed to expand the ASEAN free trade area to the north, but China's agreement earlier this month to prepare to enter the World Trade Organization has improved prospects, the analysts said.

The catalyst, they said, was provided by the 1997/1998 financial crisis, which threw a spanner in the booming growth in Southeast Asia and forced introspection.

"The crisis has shown clearly that the regional states have realized that they have not been cooperating enough, in trade and finance and so on," said Leong. "Despite the domestic problems that they face, the realization that they need to come together (has come about)."

The barriers to any form of Asian common market are manifold, the analysts said, adding that it took a world war and several decades for Europe to attain the goal.

Territorial disputes abound in the region. Taiwan seems an insurmountable problem and North Korea has shown no signs yet of joining a global or even a regional community.

China and Japan have a territorial dispute and Chinese memories of Japan's invasion in the 1930s and 1940s run deep and bitter.

Beijing is also extremely suspicious of Japan's military ties to the United States, but on the trade and investment front their ties are deepening all the time.

"Certainly there will be geo-political problems involved," said Lee Lai To, a political science professor at the National University of Singapore. "They will try to talk about it, but whether they can achieve it remains to be seen."

One pointer is the difficulty which the region is faced with in resolving claims on the Spratly islands in the South China Sea, a matter of dispute between China, Taiwan, Brunei, Malaysia, the Philippines and Vietnam.

A Philippine proposal on a code of conduct to govern the claims ran into rough water within ASEAN itself and is unlikely to pass China's inspection later this week, officials have said.

"When coming to territorial disputes, it is very difficult to solve them," said Lee. "It involves emotion, national interests and so forth."

But he added: "It is very, very difficult but when coming to economics, there is bound to be some pragmatism despite the historical conflicts. It may happen but it will take a very long time."