Japan helps kick off East Asian regional grouping

Japan helps kick off East Asian regional grouping

By Eiichi Furukawa

TOKYO (JP): Not too long ago, a luncheon meeting was held in a
royal suite room at the Shangri-la Hotel in Bangkok. During that
encounter, the foreign ministers of nine East Asian countries,
the six ASEAN members, plus Japan, China and the Republic of
Korea, discussed the formation of the East Asia Economic Caucus
(EAEC).

The EAEC was first proposed by Malaysia's Prime Minister
Mahathir Mohamad in December 1990. He urged the East Asian
countries to form a regional grouping in order to strengthen
their negotiating position and to have a voice in international
economic fora.

This call has been challenged by 60 countries that have clout
in the GATT negotiations. The United States, which supported East
Asia during the Cold War, the European Union, including many
former colonies in Africa, the Pacific and the Caribbean and, to
some extent, Japan, all oppose the formation of the EAEC.

During the Cold War, the United States played the role of a
benign benefactor to the East Asian countries in order to cope
with the threat of the Soviet Union. At the time it had an
economic base to support its benevolent policy. Now, it has
become a country which makes demands and puts pressure on the
countries in East Asia.

Apart from its 12 members, the European Union has the support
of a number of associated members and the participants of the
Lome convention. This convention includes former colonies of
European countries in Africa, the Pacific and the Caribbean.

Thus more than 60 countries in total had a say in the GATT
negotiations. Japan was supported by the U.S. government as an
ally during the Kennedy round of trade negotiations in the 1960s
and the Tokyo round of negotiations in the 1970s. However, in the
Uruguay round of negotiations, which started in 1986, the U.S. no
longer considered Japan an ally, and instead treated it as an
independent negotiating party.

This means that Japan has become something like an independent
member excluded from members of the government party in
parliament. Japan was completely isolated under the
circumstances.

Even the Caians group which consisted of 12 small exporting
countries of agricultural commodities, played a significant role
in the negotiations and achieved respectable results.

In the last stage of the negotiations, therefore, Japan took
an initiative in forming an East Asian regional group. The group
immediately showed its effectiveness by succeeding in blocking
the American attempt to mutilate the Dunkel draft on the
procedures for settlement of disputes at the World Trade
Organization (WTO). The provisions are to regulate various
matters such as the application of Article 301 of the U.S. trade
act and anti-dumping measures. The group also succeeded in
obtaining concessions from the United States and EU in respect of
lowering the tariffs on electronic goods and others. The
formalization of such an East Asia grouping was therefore
strongly called for.

The EAEC proposal has been vehemently opposed by the U.S.
government from the beginning. Former U.S. secretary of state
James Baker, under the Bush administration, called it the one
thing which would divide the Pacific into two, implying that the
relations between the United States and the East Asian countries
would be ruptured if EAEC was created. It was a rather extreme
statement.

One of the strongest supporters of EAEC is Singapore. The
economy of Singapore is heavily dependent upon the trade and
investment relations with the United States and its economy
cannot survive without them. Among the East Asian countries, the
leaders of Singapore are the most vocal in stressing the
importance of the military presence of the United States in Asia.

Prime Minister Goh Chok Tong expressed the desire to join the
North American Free Trade Agreement (NAFTA). Malaysia also highly
values the United States for the rapid economic development and
high growth of the country. It is therefore impossible to imagine
that EAEC, which is being promoted by these two countries, has
anything to do with the idea of dividing the Pacific, and of
decreasing the relations with the United States.

In fact, the formation of EAEC means recognizing the already
existing reality in East Asia that the influence of the United
States in the region is no longer a monolithic one, and has been
relatively lowered in recent years.

When Clinton administration was installed in January 1993, it
softened its stand on EAEC. Its only concern was that EAEC would
jeopardize the development of Asia Pacific Economic Cooperation
Conference (APEC), whose annual meeting was to be held in Seattle
in November of last year. At the APEC summit and ministerial
meetings, the U.S. suggestions on forming an Asia Pacific
economic community and conducting GATT-round-type trade
negotiations were rejected by the East Asian countries as hasty
measures.

However, the United States succeeded in obtaining agreements
for the setting up of a trade and investment committee and the
holding of a finance ministers meeting, which would serve as a
tool for the implementation of the trade liberalization desired
by Washington.

As a result, the U.S. government further relaxed its stand on
EAEC. Sandra Chirstel, special assistant to the president in the
National Security Council said in January this year that the U.S.
government neither supports nor opposes EAEC, but did not
understand its objective and what direction it was heading in.

Her remark was understood as indicating that the U.S.
government withdrew its objection to EAEC in principle. Then the
Japanese ministry of foreign affairs started a study on the
question of participation in EAEC, and made up its mind to
announce its participation in EAEC at the ASEAN post ministerial
conference scheduled for late July in Bangkok. However, at the
ASEAN-U.S. consultations held in Washington D.C. in early May,
the U.S. side objected to ASEAN's plan of activities for EAEC.
They argued that they were duplicating and competing with those
of APEC.

In the following month, in early June, the U.S. government
communicated its opposition to EAEC to the Japanese government.
The Japanese government then abandoned its plan to announce the
participation in EAEC at the Bangkok meeting.

To this situation, the ASEAN side acted promptly. They invited
the Japanese foreign minister to an informal luncheon during the
ASEAN conference as a social function. Yohei Kono accepted the
invitation. Thus the luncheon meeting of nine East Asian
countries was materialized. Before the luncheon was actually
held, it was renamed an "informal working luncheon meeting" and
was no longer a social function.

The question of EAEC was actively discussed at the meeting,
and it was nicknamed the "EAEC luncheon". The first concrete step
for EAEC was taken, and the fait accompli was established. Japan
crossed the Rubicon river to recognize the reality of the change
in the order of East Asia, after the end of the Cold War in a
similar way as Caesar did to change the order of the Roman
Empire. In APEC, 13 of 18 members belong to some regional
groupings such as NAFTA, ASEAN-NAFTA or Australia-New Zealand
CER.

Only Japan, China and Korea have been left out of any regional
grouping. Among 25 members of OECD (Organization for Economic
Cooperation and Development), only Japan belongs to no regional
grouping. It was therefore very difficult to understand why the
United States was opposing the formation of EAEC, arguing that
EAEC is an exclusionary regional grouping, while all others are
more or less open and benign. Of course nobody could understand
the U.S. accusation.

The writer is executive director of the Japan Center for
International Strategies.

Window: It was very difficult to understand why the U.S. was
opposing the formation of EAEC, arguing that EAEC is an
exclusionary regional grouping.