Sat, 27 Aug 1994

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.