Growing Independence of East Asia
Byline: Fidel Valdez Ramos
AT the 9th CEO Forum organized by BusinessWeek and the China Enterprise Confederation in Beijing on 15-16 November 2005, leaders and experts are seeing the emergence of a powerful economic regime centered on Asia-Pacific. A high-level Philippine 20man business delegation with several CEOs attended the said Forum. Increasingly, East Asia a" with China and Japan in the lead a" is able to sustain economic growth from within itself because of an expanding regional market and a deep savings pool. Because of the opportunities in interdependence that globalization has opened, East Asia is in a position to master its own destiny. East Asia is beginning to command its own fortunes after decades of economic dependence on the US and Europe. A summit meeting of the East Asian leaders a" which is to take place in Kuala Lumpur next month a" dramatizes East Asiaas coming of age. This landmark event a" billed as the first "East Asian Summit" of the 10 ASEAN states plus the three Northeast Asian powers of China, Japan and South Korea a" has, for strategic reasons, been enlarged to include India, Australia and New Zealand. But there will be a significant absentee; for the very first time, the United States will be excluded from such a large regional gathering.
The Kuala Lumpur Summit will mainly discuss the modalities of an "East Asian Economic Grouping" (EAEG) of the ASEAN-10 plus the three Northeast Asian powers. EAEG was pioneered by then PM Mahathir who first broached, in the early 1990s, the possibility of an East Asian counterpart of the European Union (EU) and of the North American Free Trade Area (NAFTA). The idea was so firmly resisted by Washington that the EAEG was downgraded quietly into an East Asian Economic Caucus (EAEC). This implied that it would merely be a sub-unit of a more inclusive grouping a" that of the AsiaPacific Economic Cooperation (APEC) Forum, which would incorporate all the Pacific Rim countries into a Free Trade Area by 2020.
And that may indeed happen in 15 yearsa time. But, as a global economic regime centered on Asia emerges in the form of the EAEG, the United States may end up on the outside looking in. Henry Kissinger has noted that Asiaas rise will be the test of US competitiveness in the 21st century. Unfortunately, Washingtonas general reaction to the Asian challenge has been negative a" even antagonistic. For instance, last August, anti-Chinese sentiment in the US Congress killed the Chinese National Offshore Oil Corporationas (CNOOC) bid for UNOCAL, a 2nd-tier American energy company a" in what The Economist of London described as a "blatant disregard for fair play and open markets."
The East Asian Summit is likely to see a similar sharpening of rivalry between China and Japan. As the largest economy in East Asia, Tokyo (like Washington) prefers bilateral to multilateral arrangements a" believing (as the Americans do) that the latter modality limits its freedom to maneuver. But even Japan cannot ignore East Asian dynamics for long. The rising interdependence of the regionas economies compels them to seek broader integration. Had Japan stayed out of the EAEG, then China could conceivably be the main launching pad for Asia-Pacific economic power. To a certain extent, other East Asian economies share Japanese apprehensions that, as Chinaas influence increases, China would ultimately begin mandating the rules for regional transactions a" whether in trade, investment, energy, the environment, or even security. But the other East Asian economies differ from the Japanese in that they see regional institutions and agreements as their best hope for the beneficial "channeling" of the rising influence of the great powers. For the ASEAN states, EAEGas usefulness will lie in the framework of rules and procedures that it sets up a" and within which not just China, but both China and Japan, must work cooperatively in all their regional dealings.
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