Session III Regional Cooperation: Relevance of EU Model to East Asia?

Makio Miyagawa said that regional co-operation has now become a dominant feature around the world, particularly during the last decade. The EU was the vanguard of such cooperation while East Asia was in the early stage. Since the Asian financial crisis in 1997, ASEAN countries, Japan, China and South Korea now feel that they share a common destiny. Although there are sceptics in all countries, the majority of views in this region, including Japan, favour efforts to explore more profound regional co-operation and even integration. It was essential that such cooperation would not disadvantage other countries or regions. East Asia should create its own integration in its own way, by making use of lessons from the EU. The 1997 Asian financial crisis created external pressures on Asian governments to promote regional economic and financial integration as the crisis had demonstrated that Asian economies are highly interdependent. Asian cooperation in the financial sector will become necessary to avoid future crises and should create the basis for meaningful political integration in Asia.

Miyagawa argued that the creation of free trade area plays a precursory role for the arrival of deeper and broader regional integration and noted several examples. The scope and the benefits of FTAs which countries in this region have either agreed, or are currently negotiating on, are very extensive. Considerable trade expansion can be expected from bilateral liberalisation in a broad range of pivotal services sectors. The harmonisation and convergence of rules, standards, procedures and business practices through the creation of FTAs would afford greater convenience and certainty to the private sector, particularly in areas such as (a) e-commerce, (b) customs clearance, (c) product testing and certification, (d) settlement of commercial disputes, and (e) competition policy. Business sectors can enjoy the benefit of having a similar business environment, wherever they do business in this region.

Like the EU, FTAs in Asia should also cover even broader subjects than those above. The Asian financial crisis proved that assets accumulated in one country could suddenly become nil if financial markets collapse. Creating a larger and more resilient financial market in this region by linking up financial markets would increase their stability when they face disturbances. Strengthening bilateral or regional financial systems would, therefore, be one of the critical pillars of FTAs created among countries in this region. Miyagawa drew attention to the development of the EMU as perhaps holding lessons for Asia and pointed out the benefits of the so-called Chiang Mai Initiative.

But economic partnerships were also an important step and he noted that the Japan-Singapore Economic Partnership Agreement contains all the above mentioned elements, including financial co-operation. The way East Asia can establish such broad ranged economic partnerships could also be modelled after the EU. Just as its current expansion is based upon the acceptance by new members of the acquis communautaire, a comprehensive legal structure which the EU considers ideal and proper as a minimum standard accepted by any member of the EU, Japan has sought a similar path for regional co-operation in East Asia. The EU also provides a good lesson for political co-operation in East Asia.

One may question whether there is a need for reconciliation and building trust in East Asia before constructing regional political co-operation. Again, the EU experience seems to suggest that the two processes would go in parallel. Divergences, difficulties and even disputes still exist among East Asian countries but the community building process could help overcome these problems. One of the challenges for political integration in East Asia should be what common principles and values countries and peoples of the region can share.

Axel Berkofsky said that whereas the EU is highly integrated, Asia still lags behind with regard to economic and political integration. EU-style political integration processes will not take place in East and Southeast Asia any time soon and Asian governments will continue to favour bilateral over multilateral free trade agreements for the foreseeable future. Compared to Europe, the Asian institutionalisation process is usually referred to as "nascent" and the "principle of non-interference in internal affairs" (formulated in the charter of the Association of Southeast Asian Nations (ASEAN) will remain an obstacle to further economic and political integration in Asia.

However, given the different cultural backgrounds and history, it would be a mistake to compare the success of the EU integration process with the less impressive state of Asian economic and political integration. EU-style integration does not necessarily set the standards by which Asian integration can be measured. There was also the question of leadership and Berkofsky asked whether China, the region's economic powerhouse with impressive economic growth rates, is likely to become the engine of economic and political integration in Asia.

Berkofsky contrasted the highly integrated rules-based European system of integration with market-driven integration in Asia. Whereas the benefits of political integration in Asia are not yet fully acknowledged, economic integration is perceived as beneficial when it yields economic benefits for all parties involved. Further economic integration in Asia - institutionalised or not - will become necessary if Asia wants to increase its share in world trade. Further Asian integration would not only strengthen economic co-operation, but will become necessary to tackle problems such as energy supplies, poverty, environmental pollution, water shortage and deforestation in Asia as well as financial stability.

Berkofsky then noted that from an Asian perspective, regional integration does not have to be supported by institutions imposing legally-binding rules and norms on their members. While regional organisations and forums in Asia (APEC, ASEAN, ARF and others) are already playing a role fostering trans-national networks, they have yet to become policy-making institutions.

Unlike the EU, ASEAN acts according to the principle of non-interference in internal affairs of its member states. This principle significantly limits the association's influence on member states' policymaking.

Despite China's recent free trade initiatives, however, China is still perceived as the engine of economic growth and not necessarily of economic integration. Like other developing countries in Asia, China will be mainly concerned with the development of its own economy and it is not yet fully clear whether China's economic multilateralism will prevail over Beijing's bilateral instincts and strategies with regard to trade. A full and sustainable recovery of the Japanese economy is imperative to achieve further regional economic integration as Japan is still by far the largest investor in East and Southeast Asia. Despite numerous Japanese promises to "return to Asia," Tokyo's business, political and security relations still focus on the US. Amongst Japan's neighbours in Asia (except South Korea which maintains an equally close relationship with the US) its close alliance with the US is perceived as an obstacle to further integration in Asia. Another problem is different attitudes towards regional integration among Japanese ministries. Those in Japan who favour further economic integration and the opening of Japanese markets are confronted with powerful domestic lobbies in Japan opposed to further economic integration. Import-competing and non-traded businesses are the main interests group opposing economic integration. Their main goal is the maintenance of Japanese protectionism making it extremely difficult to enter the Japanese market in many sectors, above all the agriculture sector.

Berkofsky argued that stable Chinese-Japanese relations are key for further regional integration in Asia. China and Japan are the region's biggest economies and regional economic integration will also depend on both countries' willingness to overcome the historical legacy of World War II.

Economic integration in Asia will be measured by the level of success in fully implementing the ASEAN Free Trade Area (AFTA) which covers the ASEAN countries. However, the 2010 deadline to fully implement AFTA and eliminate all existing tariffs and trade barriers amongst its member states seems unrealistic. Many Asian scholars and politicians argue that Asia is too culturally "diverse" to achieve an EU level of political and economic integration. The significant gap in GDP per capita amongst Asian countries will remain an obstacle to further economic integration.

EU-style integration is not a model case for Asia and Asian integration and there is no agreement on who should lead the Asian integration processes neither within ASEAN nor in East Asia, or South Asia. Asian integration will, at least for the time being, remain mainly limited to economic integration through the establishment of free trade agreements.


Discussion

Asian Identity: European scholars argued that Asian nations need to promote a concept of an "Asian identity" in order to make progress in regional integration. They pointed out that the lack of a geographically defined Asia as well as the tendency to emphasise cultural differences rather than unity will hinder increased Asian influence in global institutions such as the UN, the IMF and the World Bank. Japanese scholars pointed out that the historical background was very different but maintained that Asia will develop an identity through political and economic integration as well as through increased cultural exchange. It will be a slow but steady process and Japan, due to its economic and financial capabilities, will need to take a leading role. China, some argued, is not necessarily bound to take a leading role in Asian integration, despite its impressive economic growth and growing political influence. Japanese scholars stressed the fact that Asian integration is still an informal integration lacking a legally-binding character. Japan, it was emphasised, is engaged in an Asian community-building process even though the term "community" still lacks a clear reference and definition. The preconditions for meaningful integration in Asia, it was argued by Japanese participants, are democratic structures as well as stable Japan-China relations. Japan and China, it was argued, are still not on an "equal footing."

China and democracy

The lack of democracy and democratic structures in China, a Japanese scholar maintained, does not qualify China to take a leading role in regional integration. China's "democratic deficits" as well as domestic political structures need to be addressed first. A European scholar agreed adding that democracy and democratic structures were the preconditions for meaningful economic and political regional integration. One participant noted that there is concern within Asia that the economically and militarily growing China might turn into "Asia's pre-war aggressive and expansionist Germany" willing to dominate the region. This would be a "scary vision" for Asia.

European integration

There was a lively discussion on the reasons and driving forces behind European integration. A European participant argued that EU integration was less "voluntary" than usually believed referring to the catastrophe of World War II, the Soviet threat and US pressure to cooperate via the Marshall Plan, while others referred to the concept of tolerance and the reconciliation between France and Germany as driving factors. The concept of shared sovereignty and supra-national institutions with legal powers were also cited as unique factors in the integration process.

European scholars agreed that meaningful integration needs to be supported by institutions able to implement legally-binding decisions. This "traditionalist" approach to regional integration has turned out to be successful for Europe. However, it was agreed amongst all participants, Asia needs to choose its own strategies of integration. Japanese scholars noted that regional institutions equipped with the instruments to implement legally-binding decisions, will not be necessarily helpful to promote Asian integration given that Asian nations are still reluctant to give up or share sovereignty with their neighbours. Hence, Asian integration will, at least for the time being, be limited to economic integration.

ASEM

The Asia-Europe Meeting (ASEM), an informal interregional dialogue forum established in 1996, it was noted from a Japanese scholar, seemed to have lost its momentum as meaningful dialogue forum between Asia and Europe. Even Japan, until recently an active supporter of ASEM seemed to have lost interest in the forum putting ASEM on the "backburner" of its foreign policy agenda. ASEM, a European scholar noted, suffers from a self-imposed obligation to deal with so-called "high politics" issues such as WMDs, terrorism, nuclear proliferation instead of promoting interregional cultural and academic exchanges and other "low politics issues." ASEM, however, is not equipped with the instruments and capabilities to deal with "high politics" and is therefore wasting its resources when dealing issues that are being addresses by the UN and other international organisations.


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