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.