EAEC could have global benefits

EAEC could have global benefits

By Mahathir Mohamad

KUALA LUMPUR: In December 1990, when I proposed the simple
idea of an East Asia Economic Group (EAEG), which I said should
be like the successful "Cairns Group," I did not know I was being
audacious. I did not think I was proposing anything radical.

Since then, there have been so many interpretations and doubts
cast on it and enough threats and pressures against it that the
proposal appears to be truly a powerful idea.

Yet it is nowhere near the concept of the European Economic
Community, now the European Union, or a trade bloc like the North
American Free Trade Agreement, or even anything like the
Association of Southeast Asian Nations grouping. As has been
stressed over and over again, it is to be merely a consultative
forum for East Asian countries.

When ASEAN, fearing objections on the part of the United
States, renamed it the East Asia Economic Caucus, the intention
was made even clearer. ASEAN went further and proposed that it
become a caucus within the Asia Pacific Economic Cooperation,
thus making clear that it is subsidiary to the bigger APEC. But
objections by the United States have persisted. And a few
countries in East Asia that have benefited from the backwardness
as well as the prosperity of East Asian nations still refuse to
come on board.

At the risk of being repetitive, I would like to explain once
again that the EAEC is merely a forum, and an informal one at
that, intended for the countries of East Asia, big and small, to
discuss common economic problems. Obviously, the decisions of
such a loose forum cannot be binding. But it would certainly
enable the problems to be identified, discussed and solutions
proposed.

It would be done at the level of officials and economic
ministers. No summits are visualized. The member countries would
be free to act on the possible solutions independently.
Nevertheless, if free world trade is threatened, the forum can
adopt a common approach and a common stand in order to be
effective when debating in the General Agreement on Tariffs and
Trade, the World Trade Organization, or negotiating with trade
blocs such as the EU or NAFTA.

It would be unreasonable to expect a small country like
Malaysia or Laos or even for ASEAN to negotiate effectively with
the giant economic blocs of the West that, as we all have seen,
have never hesitated to use strong-arm methods at the drop of a
pin.

Other than the specific issues agreed to for common stands,
the countries in the EAEC would remain free to trade and enter
into economic relations with anyone they like. They are not to be
restricted in any way. In other words they are not expected to
act as members of a trade bloc.

The other important function of the EAEC is to help the
members, particularly the last developed countries, to develop
through intensified investments and trade with other members.
When Japan, purely for its own economic reasons, invested in the
Southeast Asian countries, these countries prospered. They then
became very good markets for all kinds of goods and services
marketed by the developed countries, including Japan. There was
no preferential treatment for anyone.

If the EAEC has a program for investments and trade with
member countries, their development would be accelerated. With
prosperity, their trade with countries outside the group will
also increase. No one benefits when countries are poor. But
prosperous developing countries will make good markets for the
developed industrialized nations. There is no way these countries
are going to be able to manufacture or produce all that they
need.

Clearly the EAEC, far from being harmful, is beneficial to the
economic prosperity of the world. The EAEC will benefit the
member countries, both developed and developing, but in addition
the countries outside the group that will be trading with the
East Asian countries will find East Asians more able to purchase
goods and services. They will need fewer loans or aid. Other poor
countries in other regions will benefit from the release of such
funds.

Even today the prosperity of Southeast and East Asian
countries has benefited those European and U.S. companies with
the expertise and the products needed by these countries. With
the EAEC, the economic development and prosperity of member
countries will accelerate, thus increasing the business
opportunities of the European and U.S. companies.

It is not in the interest of the EAEC countries to reject the
expertise and products of Europe and the United States. Indeed
they have never shown a tendency to do so. They buy the best at
the lowest price. Market forces, not regional considerations,
influence them.

The EAEC is intended to be an open regional organization. It
is not a closed one like the EU and NAFTA, where members have
privileged access to each other, while nonmembers are denied
these privileges. Open regionalism helps to expedite regional
growth without excluding the usual trade and other economic
relations with other countries or regions.

Looked at from any angle, the EAEC harms no one and is good
for all. Its members are not required to change their present
relations with any region or any country outside the group.
Japan, for example, is not required to restrict its trade with
the United States or with Europe. Indeed Japan's special
relations with the United States is not incompatible with the
EAEC. Neither are the European and North American countries
required to make any changes in their trading or economic
relations with any of the member countries of the EAEC or with
the group as a whole.

The EAEC is a simple forum dedicated to protecting and
promoting free, unmanaged regional and international trade and to
accelerating economic growth of member countries. It is not a
trade bloc, a customs union or a free trade area like the EU and
NAFTA. It has no political or security agenda. It does not bind
its members and it is not a formally structured organization.

This being so, it is difficult to understand why there is so
much opposition to it. It is even more difficult to understand
why countries, which themselves belong to formal trade blocs, and
do not object to trade blocs being formed in Europe, North
America and between Australia and New Zealand -- the Australia
and New Zealand Close Economic Relations Trade Agreement or
ANZCERTA -- are so vehemently opposed to the open regional forum
of East Asian countries. We merely want to talk to each other
about our economic problems, as a group and as a region. Beyond
that we are free to do what we think is best for each one of us.
We are not bound or restricted or committed to submit to the
views of the group.

Yet we are openly told that we may not speak to each other
without the presence of the United States. Why? Are we not free?
Are only the Europeans free? Or is it that we cannot be trusted?
Are we suspected of planning an economic war on anyone; on the
world? We, who have gained so much from peaceful free trade, from
access to the world markets; are we insane enough to shut
ourselves out and deprive our-selves of all that we have
benefited from?

I hate to suggest that there may be a racial element in this.
But when we have eliminated all other reasons, we are left only
with racial differences. Is it that Asians have less rights than
people of European origin? Is it that Asians cannot be trusted?

Asians have welcomed APEC even though the eastern Pacific
members are also members of NAFTA, a trade bloc. We trust the
people of the American continent. Can we not be trusted to be
members of the EAEC forum and APEC at the same time?

Most East Asian countries trade hugely with the United States.
We would not want to sacrifice that trade for the sake of an East
Asian restrictive trade bloc. So the United States does not stand
to lose because of the EAEC. Indeed trade between the EAEC
countries and the United States is likely to grow faster. Yet the
U.S. objects to the formation of the EAEC.

As for Japan, the EAEC will not prevent it from trading with
any country or bloc. There will be no change in Japan's present
economic or political relations with countries outside the EAEC.
But its membership of the caucus will be seen by other East Asian
countries as a genuine helpful act. It will be much more
meaningful than a thousand apologies for the events that took
place more than half a century ago. If Japan really wishes to
make amends, then joining the EAEC would do so better than the
Diet passing resolutions expressing regret.

I hope that this article will help to clear the misconceptions
and the frequently deliberate misinterpretations regarding the
East Asia Economic Caucus. The EAEC is an open regional forum and
nothing more. Japan, as possibly the strongest member, can ensure
that this will always be so.

Mahathir Mohamad is prime minister of Malaysia.

-- The Daily Yomiuri

Window A: It is not in the interest of the EAEC countries to
reject the expertise and products of Europe and the United States.

Window B: Asians have welcomed APEC even though the eastern
Pacific members are also members of NAFTA, a trade bloc.