Opportunities and challenges of cooperation in East Asia
By Liu Junhong |
Updated: 2018-11-14 10:26
Liu Junhong
This week sees a series of meetings kicking off in Singapore on East Asian cooperation. It is attention catching against the backdrop of protectionism, populism and other countercurrent in globalization, which have led to a keener need in the region to respond to the world's drastic changes and greater pressures.
This year’s meetings are composed of the ASEAN summit, ASEAN Ten Plus One, ASEAN Plus Three, and the East Asian Summit the the United States and Russia are included. The topics range from trade, investment and currency to cultural exchange, regional development, and regional security, mirroring the region’s diversity in ethnic groups, religions, and geographical makeup, as well as distinctly different political and economic systems. All these make “regional identity” more urgent in promoting cooperation.
Since the end of the Cold War, East Asia countries have become more interdependent in closer business relations that gradually shaped a “regional business network” and have created many common regional interests and opportunities, which contributed to an endogenous impetus for regional identity.
Particularly notable is the rise of such an East Asian identity since the financial crisis broke out in 1997 in the region, when nations began to work in joint efforts to combat the crisis, giving rise to a stronger sense of “regional identity”. In light of the big wave of cooperation, ASEAN for the first time invited the leaders of China, Japan and South Korea to attend a special summit in Kuala Lumpur, Malaysia in December 1997 to discuss possible solutions.
The ASEAN Plus Three (APT), or styled as 10+3, has since established, and later been added by a series of ministerial conferences and ASEAN Ten Plus One, which all contributed to the mainstream channel of regional cooperation in East Asia.
Under the umbrella of 10+3 mechanism, with ASEAN as the pivot, countries reached free trade agreements with each other in a swift manner, and further carried out comprehensive cooperation from investment, service trade, infrastructure to currency swap. The 10+3 framework has become the first regional cooperation model initiated and promoted by developing countries, thus taking into consideration of appeals of developing countries. It slashes transaction costs among countries, greatly facilitating regional trade.
Take the largest developing country China as an example. It took the initiative to launch the Early Harvest Plan as early as 2003 and 2004 for importing more agricultural and industrial products from ASEAN countries. Exports of the six major ASEAN countries totaled $852.1 billion in 2007 and reached $1.27 trillion in 2017, an increase of about 1.5 times in 10 years. In the same time span, Japan’s exports fell by 2.1 percent, and South Korea’s only increased by 54.4 percent. In China-ASEAN Free Trade Area, it is clear that China's trade expansion means the ASEAN’s trade expansion, which has brought total volume to nearly $500 billion.
At the same time, East Asia has also achieved remarkable achievements in financial and monetary cooperation. In May 2000, ASEAN+3 finance ministers and central bank governors held a meeting in Chiang Mai, Thailand, and decided to establish a broader currency swap agreement Chiang Mai Initiative Multilateral (CMIM), the first currency exchange agreement between developed and developing countries since Japan and South Korea are members of the Organized Economic Cooperation Organization. Later, the CMIM was continuously expanded to the East Asian Common Foreign Exchange Reserve, leading to the establishment of East Asian Macroeconomic Office, in an endeavor to create a regional cooperation mechanism.
However, the expansion and upgrading of regional cooperation also caused anxiety of powers in and outside of the region, since the rules of regional trade, investment and other activities have been modified while the powers want to control the process and keep their dominant position.
For instance, since the “10+3” Vientiane Conference decided at the end of 2004 to build the East Asian Community as the overall goal of regional cooperation and proposed to hold the East Asia Summit, the Koizumi government of Japan launched its own version of the “Community” after a cabinet meeting to secure their leading place. Earlier, the US hinted that the East Asian Community "lacks democracy" and so forced Japan to pull in "Australia, New Zealand and India" to add "democratic elements" in the organization. However, Japan uncharacteristically rejected the request, causing unusual response from the US.
Starting from 2006, the US began to push the Free Trade Agreement of the Asia Pacific. It claimed tolerance of any bilateral FTA within the APEC framework, but rejected the US-Japan FTA alone. Since then, the Bush administration had proposed to circle the Pacific Rim Free Trade Zone based on Singapore, New Zealand, Brunei and Chile; Obama extended it to the Trans-Pacific Economic Partnership Agreement (TPP) to disintegrate the East Asian Community. Then, after the catching-up of Chinese economy, Japan finally left the East Asian Community for the other side of the Pacific Ocean. Since then, the East Asian regional cooperation has experienced five years of difficulties in development.
Presently, the US is hyping trade protectionism in the region, although it is a member of the East Asia Summit, with the desire to dominate the Pacific and Indian Ocean and monopolize offshore infrastructure.
The new round of East Asian cooperation meetings was held in such context. It remains a big challenge for developing countries to safeguard their leading position in regional cooperation, steer the cooperation back to the right track and ensure common interests.
We expect the 10+3 to keep playing a critical role in regional cooperation despite any interference, base its efforts on developing countries and serve the interests of developing countries in the following regards: effectively cut trade costs and facilitate trade and investment; promote the exchange of human resources, technological innovation and industrial upgrading; strengthen agricultural cooperation and build the local grain trade market and pricing system in this region; strengthen comprehensive financial cooperation and create the regional financial market; improve the efficiency of capital utilization and the transformation of savings into investment; form up regional financial and non-financial assets. With these, we are sure there will be enhanced social well-being.
It is important for East Asia cooperation to break away from the old, West-dominated model, and to embrace a new one that serves the development of the region itself. Next year, China will become presidency country of the Regional Comprehensive Economic Partnership Agreement. As the largest developing country, it should proactively responds to development demands, create favorable conditions and highlight development interests, thus contribute to a fair, just and mutually beneficial development.
Liu Junhong is a research fellow at Japan Studies Institute and director of Center of Globalization Studies, China Institute of Contemporary International Relations. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
Liu Junhong
This week sees a series of meetings kicking off in Singapore on East Asian cooperation. It is attention catching against the backdrop of protectionism, populism and other countercurrent in globalization, which have led to a keener need in the region to respond to the world's drastic changes and greater pressures.
This year’s meetings are composed of the ASEAN summit, ASEAN Ten Plus One, ASEAN Plus Three, and the East Asian Summit the the United States and Russia are included. The topics range from trade, investment and currency to cultural exchange, regional development, and regional security, mirroring the region’s diversity in ethnic groups, religions, and geographical makeup, as well as distinctly different political and economic systems. All these make “regional identity” more urgent in promoting cooperation.
Since the end of the Cold War, East Asia countries have become more interdependent in closer business relations that gradually shaped a “regional business network” and have created many common regional interests and opportunities, which contributed to an endogenous impetus for regional identity.
Particularly notable is the rise of such an East Asian identity since the financial crisis broke out in 1997 in the region, when nations began to work in joint efforts to combat the crisis, giving rise to a stronger sense of “regional identity”. In light of the big wave of cooperation, ASEAN for the first time invited the leaders of China, Japan and South Korea to attend a special summit in Kuala Lumpur, Malaysia in December 1997 to discuss possible solutions.
The ASEAN Plus Three (APT), or styled as 10+3, has since established, and later been added by a series of ministerial conferences and ASEAN Ten Plus One, which all contributed to the mainstream channel of regional cooperation in East Asia.
Under the umbrella of 10+3 mechanism, with ASEAN as the pivot, countries reached free trade agreements with each other in a swift manner, and further carried out comprehensive cooperation from investment, service trade, infrastructure to currency swap. The 10+3 framework has become the first regional cooperation model initiated and promoted by developing countries, thus taking into consideration of appeals of developing countries. It slashes transaction costs among countries, greatly facilitating regional trade.
Take the largest developing country China as an example. It took the initiative to launch the Early Harvest Plan as early as 2003 and 2004 for importing more agricultural and industrial products from ASEAN countries. Exports of the six major ASEAN countries totaled $852.1 billion in 2007 and reached $1.27 trillion in 2017, an increase of about 1.5 times in 10 years. In the same time span, Japan’s exports fell by 2.1 percent, and South Korea’s only increased by 54.4 percent. In China-ASEAN Free Trade Area, it is clear that China's trade expansion means the ASEAN’s trade expansion, which has brought total volume to nearly $500 billion.
At the same time, East Asia has also achieved remarkable achievements in financial and monetary cooperation. In May 2000, ASEAN+3 finance ministers and central bank governors held a meeting in Chiang Mai, Thailand, and decided to establish a broader currency swap agreement Chiang Mai Initiative Multilateral (CMIM), the first currency exchange agreement between developed and developing countries since Japan and South Korea are members of the Organized Economic Cooperation Organization. Later, the CMIM was continuously expanded to the East Asian Common Foreign Exchange Reserve, leading to the establishment of East Asian Macroeconomic Office, in an endeavor to create a regional cooperation mechanism.
However, the expansion and upgrading of regional cooperation also caused anxiety of powers in and outside of the region, since the rules of regional trade, investment and other activities have been modified while the powers want to control the process and keep their dominant position.
For instance, since the “10+3” Vientiane Conference decided at the end of 2004 to build the East Asian Community as the overall goal of regional cooperation and proposed to hold the East Asia Summit, the Koizumi government of Japan launched its own version of the “Community” after a cabinet meeting to secure their leading place. Earlier, the US hinted that the East Asian Community "lacks democracy" and so forced Japan to pull in "Australia, New Zealand and India" to add "democratic elements" in the organization. However, Japan uncharacteristically rejected the request, causing unusual response from the US.
Starting from 2006, the US began to push the Free Trade Agreement of the Asia Pacific. It claimed tolerance of any bilateral FTA within the APEC framework, but rejected the US-Japan FTA alone. Since then, the Bush administration had proposed to circle the Pacific Rim Free Trade Zone based on Singapore, New Zealand, Brunei and Chile; Obama extended it to the Trans-Pacific Economic Partnership Agreement (TPP) to disintegrate the East Asian Community. Then, after the catching-up of Chinese economy, Japan finally left the East Asian Community for the other side of the Pacific Ocean. Since then, the East Asian regional cooperation has experienced five years of difficulties in development.
Presently, the US is hyping trade protectionism in the region, although it is a member of the East Asia Summit, with the desire to dominate the Pacific and Indian Ocean and monopolize offshore infrastructure.
The new round of East Asian cooperation meetings was held in such context. It remains a big challenge for developing countries to safeguard their leading position in regional cooperation, steer the cooperation back to the right track and ensure common interests.
We expect the 10+3 to keep playing a critical role in regional cooperation despite any interference, base its efforts on developing countries and serve the interests of developing countries in the following regards: effectively cut trade costs and facilitate trade and investment; promote the exchange of human resources, technological innovation and industrial upgrading; strengthen agricultural cooperation and build the local grain trade market and pricing system in this region; strengthen comprehensive financial cooperation and create the regional financial market; improve the efficiency of capital utilization and the transformation of savings into investment; form up regional financial and non-financial assets. With these, we are sure there will be enhanced social well-being.
It is important for East Asia cooperation to break away from the old, West-dominated model, and to embrace a new one that serves the development of the region itself. Next year, China will become presidency country of the Regional Comprehensive Economic Partnership Agreement. As the largest developing country, it should proactively responds to development demands, create favorable conditions and highlight development interests, thus contribute to a fair, just and mutually beneficial development.
Liu Junhong is a research fellow at Japan Studies Institute and director of Center of Globalization Studies, China Institute of Contemporary International Relations. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.
All rights reserved. Copying or sharing of any content for other than personal use is prohibited without prior written permission.
