ADELAIDE - Japan's Economic, Trade and
Industry Minister Toshihiro Nikai this month
proposed the establishment of an "East Asian OECD"
along the lines of the Paris-based Organization of
Economic Cooperation and Development. However,
standing in the way is the giant on its doorstep.
The proposed organization would serve as a
region-wide think tank. While the 30-nation OECD
comprises mainly industrialized nations of the
West, Japan and South Korea, the East Asian
version would include 16 members from Asia and
Oceania: 10 members of the Association of
Southeast Asian Nations (ASEAN), South Korea,
Japan, China, India, Australia and New
Zealand. The last three were
included in the recently formed East Asian summit
process that held its inaugural meeting in Kuala
Lumpur in December.
This new initiative is
part of Japan's incessant quest for a leadership
role in Southeast Asia - an arena where it
maintained an unchallenged supremacy for most of
the post-war period. In the 1970s, it engaged the
region through the famous "Fukuda Doctrine",
ushering in a new era of Japan's relations with
Southeast Asian nations. Huge sums of aid money
went to many Southeast Asian nations, as did
direct investment and trade, leading to a high
rate of regional economic growth.
However,
Japan today faces tough competition and formidable
challenges in maintaining its regional influence.
Other major Asian powers, mainly China but also
India, are actively seeking to engage ASEAN as a
regional body as well as with its individual
members. This competition for influence has
compelled Japan to launch new diplomatic
initiatives to remain ahead.
Through this
new proposal, Japan desires to create an East
Asian economic partnership among these 16 nations,
leading to the beginning of free trade agreement
negotiations by 2008.
While an East Asian
community has been an ultimate goal of Tokyo's
regional vision, as outlined by Prime Minister
Junichiro Koizumi in a statement in Singapore in
2002 and subsequently at the December 2003 Tokyo
Declaration, its progress has been rather slow for
many reasons.
However, if such a community
is realized, it will be a formidable force and
definitely form a third pole after the North
American Free Trade Agreement that comprises the
United States, Canada and Mexico, and the
35-nation European Union. The Asia-Oceanic region
consists of more than half of the world's
population and more than 25% of the world's gross
domestic product.
This is not the first
time Japan has put forward a new idea toward
greater regional cooperation. Being a firm
believer in regional multilateral frameworks,
Japan has played a critical role in establishing
wide-ranging regional institutions.
Japan's role in the establishment of the
Asian Development Bank is one early example. The
Asia-Pacific Economic Cooperation (APEC) forum was
also a brainchild of Japan. Japan's Ministry of
International Trade and Industry (MITI) was the
key driver behind the idea of APEC. In its
reincarnated form as METI, Nikai now has floated
the idea of an OECD-type body for Asia.
Tokyo also played a high-profile role in
the establishment of the ASEAN regional forum
(ARF), a security dialogue venue in the
Asia-Pacific region.
During the late 1990s
Asian financial crisis, Japan proposed an Asian
Monetary Fund and was willing to make a
significant financial contribution. The idea was
to offer financial packages to Asian countries
needing help at the time of any future crisis so
the impact on others could be minimized.
This move was thwarted by the United
States on the grounds that it would undermine the
International Monetary Fund (IMF). The US in this
case dominates the IMF and its setting of the
world's financial agendas. The new organization
would have significantly reduced US influence in
the region. China also opposed this move, as it
would have meant Japan receiving ever more
prominence in the region just when Beijing had
begun to expand its own influence.
Japan's
new proposal has some notable characteristics.
First, unlike APEC or the ARF, the proposed
membership does not include the United Sates. Two,
although the tag East Asia is attached, the
proposed membership goes beyond East Asia.
Inclusion of India in particular is a
feature that did not appear in any past regional
proposals. For example, India was excluded and
remains outside of the APEC process. Neither was
India a part of the ASEAN regional forum process
at the time of its formation. Australia is
generally comfortable about being included in the
category of East Asia, especially as Gareth Evans
in his capacity as foreign minister in the early
1990s worked hard to convince the region that
Australia was part of what he called the "East
Asian hemisphere".
While New Delhi will be
pleased to be included in any new regional
institutions and will certainly view Tokyo's
gesture in positive light, it is not New Delhi
that matters so much. It is how Beijing reacts to
this proposal.
China looms
large Tokyo's new initiative is part of its
realization that its influence in the region has
been eroded since China's "charm offensive" toward
Southeast Asian nations began in the mid-1990s.
Until then, Japan provided most of the much-needed
aid, investment and trade in the region.
While Japan served as the lead economic
goose, at the same time ASEAN was concerned about
China's design in the South China Sea and its
attitude toward Taiwan. However, as China's trade
began to grow in the Southeast Asian region and
Japan stagnated, Beijing was also able to convince
the regional players that it would follow a
peaceful means to settle any regional dispute.
Furthermore, China undermined Japan's
regional status by killing Japan's proposal of an
Asian Monetary Fund. Indeed, Beijing successfully
projected itself to as a savior of the region by
choosing not to devalue its currency, a move that
could have had disastrous effects on the regional
economy.
Today, China maintains a high
level of diplomatic presence in Southeast Asia and
its relations with most nations in the region have
improved significantly over the last 10 years.
Southeast Asian nations are unlikely to accept any
proposal by Japan unless it has Beijing's
acceptance. Japan's proposal for an East Asian
community and China's concern about its ultimate
aim have left the Japanese proposal on the
backburner.
Early in the 21st century,
Japan's central foreign policy dilemma in the
region is how to balance support for the US as its
key ally across the Pacific, while maintaining,
and possibly expanding, its influence in Asia
beyond its postwar foreign-policy vision that
focussed predominantly on East and Southeast Asia
and essentially truncated Asia at the Myanmar
border.
Now this vision stretches westward
into South Asia with India as the principal
concern. Managing this balance is Japan's Asia
challenge. It requires Japan to seek cooperation
more broadly and manage conflict effectively on a
broader geostrategic front, especially when the US
may soon be the "descendent" superpower, China
already appears an "ascendant" superpower and the
potential of India is rising rapidly.
Japan's new proposal may be discarded on
one or the other pretext especially by China, as
Beijing is distrustful of Japan generally and its
regional initiatives. The current circumstances
really require Japan to build with its neighbors
the trust that is so essential to developing
cooperative relations in the region. Without this,
even Japan's most sincere initiatives such as an
Asian OECD are likely to be scuttled by the giant
on its doorstep.
Purnendra Jain
is professor and head of Adelaide University's
Center for Asian Studies in Australia.
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