The East Asian Community and Japan-U.S. Relations

Although the theme of the East Asian Community and Japan-U.S. alliance has been widely discussed up to now, I feel that a general understanding has been established that difficulties exist in attaining compatibility between these two areas. These factors have supported my decision to address that theme in my talk here today.

To begin, let's turn back the clock to the Lower House Election of September 11, 2005. The results of that vote itself produced a landslide victory for the ruling Liberal Democratic Party (LDP), with the common evaluation from newspapers and other arms of the media labeling this an election campaign characterized by a dearth of policy contentions, with the focus instead narrowed to the issue of the privatization of Japan's postal services. With regard to foreign policy, however, an examination of the policy manifestos released by the LDP and the leading opposition Democratic Party of Japan (DPJ) reveals clearly stated points of contrast.

The LDP, for example, speaks of "resolute foreign policy" --the stance of acting with conviction to implement diplomacy rooted in one's own beliefs. Based on this approach, the single greatest cornerstone for Japanese foreign policy is the Japan-U.S. alliance, with the posture toward the Asian "community" being one of support. As noted, however, in the LDP manifesto the "community" in the "Asian community" is placed in parentheses.

The DPJ, in contrast, subscribes to the basic stance of "enlightened national interests," and speaks of evolving the Japan-U.S. alliance. The aim of such alliance development can be boiled down to the belief that because it is preferable to avoid a situation in which the U.S. engages in overly unilateral actions, when deemed necessary Japan should speak out on behalf of the interests of the Japanese public and the people of the Asia-Pacific region. The statement adds that Japan should likewise support the East Asian Community, with no parentheses used to frame the term "community" in that context.

Phrased differently, the horizontal axis in this formula, for example, could be referred to as the "Japan-U.S. global partnership," and the vertical axis as "East Asian Community building." In addition, let's make the right side of the horizontal axis a simple "Yes," while assigning the left side the nuance "Yes, but." The top of the vertical axis is likewise made "Yes" and the bottom "Yes, but." Under this layout, the DPJ position lies in the second quadrant and the LDP stance in the fourth quadrant. The key point here, of course, is that there is no longer an absence of a shared arena for doing battle, as was the case in the past. In other words, there is a common forum for discussion, with the actual debate consisting of the confrontation between "Yes" and "Yes, but." Viewed in these terms, it becomes possible to clearly ascertain the positions of these two leading Japanese political parties by the benchmarks of the Japan-U.S. global partnership and the East Asian Community. This is a clear indication, I believe, of just how important these themes are to Japanese foreign policy.

The problem is why we feel it is impossible to bring the first quadrant into play. In my talk today, I wish to contend that this belief is little more than an assumption, and with the creation of a skillful institutional mix it would be possible to produce a solution for the first quadrant after all. Basically speaking, I want to first determine how to approach the idea of the East Asian Community, and then devote similar attention to exploring the possible avenues to realizing compatibility between that community and the Japan-U.S. alliance.

The so-called regional formation of East Asia took place through a process that differs from that we have seen in Europe, for example. The key point here lies in the existence of network-based economic integration. Phrased differently, on the strength of the Plaza Accord worked out by economic ministers in 1985, the business networks of companies from Japan and East Asia experienced regional expansion, with all the economies of this region effectively integrated in a relatively short period of time.

A closer examination of the situation, however, reveals that this regional integration was not advanced solely on the strength of the market. At the foundation of these developments, in other words, were a number of political arrangements. One of these arrangements is the regional design of the United States. In particular, Washington subscribes to the "hub and spoke" system of building up a security structure in the region with the U.S. at the hub, to serve as a bastion of bilateral security. The preservation of peace by the U.S. was an extremely important condition for the foundation of this arrangement. The second such arrangement is the "growth politics" of Japan. More precisely, it was also an important point that Japan succeeded in forging accelerated growth, to be followed by advances into the region in the form of economic cooperation and Japanese companies' direct investment, as the political-based extensive expansion of that growth. Finally, functioning well up until the Asian economic crisis was a development-fueled political approach in which South Korea, Taiwan and the countries of Southeast Asia stabilized politically, advanced their economies and improved people's livelihoods, and then went on to reach even further stabilization on their political scenes. It was against the backdrop of these conditions, therefore, that this type of network-based integration progressed.

The East Asian Community may very well be viewed as a concept that has been around for some time now. In reality, however, among Japanese politicians I believe that the first Prime Minister to use this term was naturally the current Prime Minister Junichiro Koizumi. The occasion, furthermore, was Koizumi's state visit to Singapore in January 2002, when he proposed the Japan-ASEAN Economic Partnership as the first step in building the East Asian Community. In other words, the idea of an East Asian Community is an extremely new concept. Prior to that, from 1990-1991 Malaysian Prime Minister Mohamad Mahathir advocated the East Asia Economic Group and the East Asia Economic Caucus. From a historical perspective as well, therefore, the concept can be seen as dating from around that time.

Why, then, did this idea come to acquire such robust strength? In my view, there are at least two important points in this area. The first is the economic crisis of 1997. Prior to that, I believe there was an idea that creating an institutional framework was not desirable in East Asia, and that in place of such a structure allowing integration to proceed on the strength of market forces alone would facilitate progress without having governments do much of anything. The economic crisis of 1997 signaled the end of this theory. Moreover, with the failure of the U.S. government to join the support framework when Thailand fell into economic crisis also a contributing factor, a surge in nationalism occurred among the majority of countries in this region. In the midst of these developments, the first ASEAN+3 meeting was convened in 1997. Soon after, the East Asia Vision Group was formed at the proposal of President Kim Dae Jung of South Korea, with talk of the "East Asian Community" emerging. This, then, represents one of the key directions behind this concept acquiring a firm following.

As the second trend, and while I believe that the first moves in this direction within Japan were made by the current Ministry of Economy, Trade and Industry, not only the liberalization of global trade but also the economic partnership between Japan and Singapore commenced after the economic crisis, with economic partnerships becoming a major pillar of Japanese trade policy. Around the same time, in the arena of currency cooperation as well, in 1997 Japan spearheaded efforts to promote the Asian Monetary Fund, with this leading to the subsequent formation of a framework for currency cooperation outlined in the Chiang Mai Initiative. Accordingly, from the perspective of Japan at the very least, the East Asian Community concept did not simply represent the acceptance by Japan of development on the regional level, but rather a vision that Japan itself sought to independently advance as one phase of the pursuit of its own national interests.

Next, let's examine the type of architecture that has actually been erected in the name of the East Asian Community vision. In the first place, what types of values comprise the foundation of this architecture? For example, the requirement for membership in the recent East Asia Summit was status as a signature party of the Treaty of Amity and Cooperation in Southeast Asia. The essential points of this treaty, meanwhile, are respect for sovereignty and amicable cooperation. The call for amicable cooperation on the groundwork of respect for sovereignty is a statement of the most basic philosophy in the quest for community. It is important to understand, therefore, that this call comprises the original foundation for the East Asian Community vision.

Next, let's examine what type of architecture is actually in force. To begin, I will comment on currency cooperation. Structured with ASEAN+3 as the framework, currency cooperation is being conducted as a group of bilateral swap treaties--namely, Japan-China, Japan-Thailand, Japan-South Korea, South Korea-Thailand, South Korea-China, China-Thailand and China-Singapore. For trade cooperation, in the case of Japan the present approach includes both the kind of bilateral agreements entered into with Indonesia, Thailand and Malaysia, as well the Japan-ASEAN treaty. From an overall perspective, however, the actual approach to trade partnerships is being advanced as the ASEAN+1 framework of Japan-ASEAN, ASEAN-China, ASEAN-South Korea and ASEAN-India. The East Asia Summit structure, meanwhile, consists of ASEAN plus the three countries of Japan, South Korea and China, as well as the additional trio of India, Australia and New Zealand -- in other words, ASEAN+3+3.

APEC is effectively comprised of ASEAN+3, with the United States, Taiwan and others additionally coming onboard as "α." In the same way, the ASEAN Regional Forum (ARF) also adopts the ASEAN+3+α format. The upshot, therefore, is that the architecture currently used to bring the East Asian Community into existence does not comprise the caliber of strict and intrusive coalition, like that of the European Union, in which a basic treaty is signed and an extremely long list of conditions must be fulfilled to gain membership. It makes more sense, I believe, to categorize the East Asian Community as a functional network-format mechanism extending across the individual regions, while retaining ASEAN as the hub.

Talk of respect for sovereignty and amicable cooperation as the hub, a framework that in a certain sense can be viewed as shallow, obviously leaves margin for debate over what lasting good such an arrangement will bring. Be that as it may, I can personally identify at least two major reasons for making efforts to establish the East Asian Community.

As the first reason, let's use the case of Indonesia as an example. Indonesia is a country with a population of 210 million, where some 2.5 million persons enter the labor market every year. Just how does the country generate that many jobs, and how does it manage to achieve such a level of economic growth? These are very important questions. Simply stated, the keys to generating jobs and economic growth lie in how to attract business networks already existing in the region and promote industrial agglomeration. To succeed in that quest, there are really few viable choices other than forging economic partnerships or establishing the East Asian Community. This, then, can be seen as one of the reasons for the establishment of this regional community.

The second important point concerns the issue of how to engage China. Viewing China's economic scale by the yardstick of purchasing power parity, China has already surpassed the economic scale of Japan in the mid 1990s. Even when computed at the current exchange rate, it will not be long before China's economic magnitude moves past Japan. By 2050, in fact, the scale of the Chinese economy may very well approach that of the United States. If this scenario plays out, there will naturally be a major shift in both the regional and global power balance. This will lead to the question of how to engage China. I view this as the single greatest challenge for Asia in the 21st century, and with regard to this issue I identify two major basic trains of thought.

The first assessment is based on the belief that China, in the medium to long term, does in fact have hegemonic intentions, and if given the opportunity will attempt to establish an inwardly focused regional order. The second line of thought is that China is essentially a defensive country. That is, viewed from a historical perspective as well, as long as the surrounding region has remained stable the Chinese have never made any particular attempts to force their rules on the outside and gain acceptance for their own ways of doing things. Since China has not traditionally taken the offensive in that way, this line of thought regards the country as a largely defensive presence. As such, these two viewpoints appraise the future of China in considerably different terms. In my analysis, I believe that we can broadly classify the specific points targeted in such evaluations into three major categories.

The first category concerns hegemonic intentions. If we accept the view that China is intent on establishing hegemony and replacing the United States as the leading power sometime in the future, then Beijing can be expected to raise the level of spending needed to maintain that stance in opposition to the regional security system currently engineered by the U.S. With regard to monetary order, trade investment rules and other areas as well, it would be wise to expect that China will attempt to force its own rules on its neighbors. Based on this thinking, it should be possible to form judgments on China's intentions over the medium to long term.

As the second category, when we examine China's foreign policy or diplomatic activity, we can see two different patterns. One is that of accepting sets of rules, and the other is that of unilateral actions. For example, in the case of the South China Sea, China accepted the collective standards for behavior proposed by ASEAN. In 2002, specifically, China and ASEAN reached consensus on a strategic partnership, with China agreeing not to take unilateral action. Under this accord, it appears China is advancing talks with the Philippines and Vietnam on means of undertaking joint exploration of ocean floor resources. In contrast to that stance, however, Beijing is acting unilaterally when it comes to the East China Sea.

For the third category, regardless of what intentions China may or may not harbor, in the event of that nation's swift emergence as an economic power its neighbors in the region can naturally be expected to mount certain responses to the outcome. Such actions will not be limited to the state or government level, with various different reactions also emerging at the social level as well. On the government level, for instance, Myanmar has seemingly already transformed itself into a satellite state of China. This differs from Thailand, a country that I see as both intentionally and systematically adopting policies geared to strike an excellent balance between Japan and China. Indonesia, meanwhile, does not appear to be adopting an overly strategic stance toward China -- a factor that may very well reflect its relative distance from China across ocean waters. In my view, Indonesia seems rather to be following a stance that is considerably opportunistic in nature, and taking whatever it can get. In this way, the conditions clearly differ from country to country. Nevertheless, compared to the time when China remained largely closed to the outside world, as well as the era when its economic development was not all that significant, the emergence of China has prompted shifts in the measures of the governments of Southeast Asia in various different ways.

At the same time, the past 20 years or so have also brought rapid changes in the ethnic Chinese of Southeast Asia. Many of the people in this category are now capable of speaking Chinese, English and the local languages, with increasing numbers coming to excel on the global and/or regional fronts. As a result, changes have occurred in the very nature of the issues surrounding such overseas Chinese. The indigenization of these ethnic Chinese populations, a theme that emerged as a major challenge in the 1960s and '70s, has been essentially over for some time now. Today, efforts in this vein by the individual nations have shifted to devising means to better retain within their own borders the regional- or global-scale businesses of these ethnic Chinese. In that context, the rise of China is a matter of considerable complexity, with the question of how to deal with the situation comprising one of the key reasons that the various different countries have come to think in terms of the East Asian Community.

How, then, should Japan work within these dynamics to become involved in the building of the East Asian Community? To address this issue, I wish to touch upon three major points. The first is my view that Japan should treat the East Asian Community as one phase of its search for the most effective means of engaging China. The most important factor here is that there are global rules, like those of the World Trade Organization (WTO), that seek to curb China from taking unilateral action to the greatest degree possible. Therefore, if regional rules can be drawn up through the medium of the East Asian Community, I believe they should be steadily increased, with China encouraged to accept those directives. The basic thinking in this respect, therefore, is to expand actions that are in fact based on such rules to the greatest extent feasible.

The second key for Japan in engaging the East Asian Community is to think of the community itself as a means of contributing to the growth of this region. Policy-wise, this route is already being pursued in various shapes and forms. When considering the future of the East Asian Community, it will be critical to bring on board, for example, Vietnam, Thailand, Indonesia, the Philippines and even Myanmar (if the necessary policy requirements can be put into place). Then, spearheaded by the Japanese private sector, with backup from the government, efforts will be needed to further deepen and expand the existing networks to develop industrial agglomeration.

The third important factor here is the question of how best to engage the United States within the moves to realize the East Asian Community. What will be the key to success here? First of all, there are various types of architecture in place, in the form of networks set up in each separate functional domain, with ASEAN serving as the hub. We generally refer to this networking, albeit in extremely loose fashion, as the "East Asian Community." In reality, however, ASEAN is not the only hub in East Asia. There is one other hub -- that of the United States. Why is this? Simply stated, the hub of security in this region is first and foremost the U.S., with another major system existing with Washington as the hub, and a group of bilateral security and military base treaties signed by America with Japan, South Korea and the Philippines serving as the spokes. If we accept this as being the case, the key to success may be defined as Japanese efforts to advance various other systems for regional cooperation that rely on the U.S. as the hub.

The role of the U.S. further depends on how the engagement with China is engineered. Within Japan, there are those who take the "Yes" stance with regard to the East Asian Community, and those who subscribe to the so-called "Yes, but" thinking. When we attempt to define why this is, we find that there are those who believe that we should place our trust in China's long-term behavior, and those who feel that no such trust is warranted. In essence, furthermore, we really don't understand what actions China will take over the long run, nor do the Chinese people. This, I feel, is critically important. Working within this extremely obscure realm, it will be vital for Japan to adopt a stance of engagement in which we work out various different rules and draw China into these rules. At the same time, there is also a need for "deterrence" as such. Obviously, the most important aspect of this deterrence lies in the Japan-U.S. alliance, meaning that it will grow increasingly crucial to determine how to persuade Washington to act as the hub and assume a role of leadership in the formation of a new order for this region.

To briefly summarize my talk, please think in terms of an oval, with two focal points within. At these two focuses, ASEAN and the United States act as separate hubs, in an image in which orderly systems are formed for each network-format issue. In a manner of speaking, therefore, Japan needs to think in terms of both the East Asian Community, and the Japan-U.S. alliance, as the key policy measures for dealing with the situation at hand.

Q: You spoke of ASEAN and the United States as hubs. In reality, though, it appears that one part of the U.S. engagement in this region consists of the efforts to contain China, while it is also dubious whether the U.S. would provide cooperation if there were no merits for the country there. What is your view of the strategies in that light?

A: That is an extremely important point. U.S. researchers with whom I am familiar frequently debate the issue of what merits exist in simply shouldering the security cost burden. Personally, though, I wonder about the viability of such a view. This is because the fundamental U.S. policy in East Asia, at least from the end of the 19th century, has been to permit no hegemony of any kind in the region. Stated conversely, it is the U.S. that persists in being hegemonic in this region. If that is the foundation of national policy, then it makes perfect sense that the U.S. will seek to stay in this region to pursue its own interests. Against that framework, if Japan makes approaches through the Japan-U.S. alliance, and if the issues involved are viewed to be in the best interests of Washington as well, I see no reason that the U.S. would not choose to move in that direction.

Moderator: So you are saying that if the U.S. chose not to get involved, such a stance would be acceptable as well?

A: That really couldn't be helped. But then again, it will also be necessary for Japan to persistently think in terms of presenting the case for its best interests in terms that encourage the U.S. to get on board. What is truly important in all this, however, is the reality that the U.S., when all is said and done, has vital interests in this region. By vital interests, I am not referring merely to security. For Washington, Japan is an extremely important country. Besides that, the odds are extremely high that the region of East Asia will continue to chart long-term development as a world growth center from here on as well. If this pans out, it will be highly desirable for U.S. rules to emerge as the de facto statutes, or that at least formal rules acceptable to Washington take root in this region. This is the desirable scenario for Japan as well. In that case, if China were to take action along the lines of imposing its own rules on others, the U.S. would naturally mount opposition to that stance. In view of these dynamics, I see no particular cause for concern here.

Q: With regard to the significance of the rise of China and the roles to be played by the East Asian Community, you emphasize the aspects of moving to engage the Chinese. It does appear that Beijing's foreign policy stance is shifting from its traditional bilateral configuration to one of multilateral rules, and upon reflection this would in fact appear to be a natural matter of course. On the other hand, however, if you take the view of China as being hegemonic, isn't there in fact the potential for the East Asia Community itself to be used as a tool to neutralize the influence of the U.S. in the region, and enable China to expand its leverage there?

A: This is an area that promises to truly put diplomatic skills to the test, and the Japanese government clearly needs to exert major efforts in that direction. But then again, we also need to realize that efforts by the Chinese to utilize the situation for their own interests and ends, as was the case with the East Asia Summit, is also the expected state of affairs and a reality that we have no choice but to live and deal with. Naturally, though, efforts by China to steer the situation to favor its interests can be duly opposed. This leads to the question of how Japan will join with other countries in mounting resistance to such potential developments. This will be the key point in Japanese foreign policy.

At the same time, it is very interesting to note that, as in the case of the Chiang Mai Initiative for example, it is Japan that assumed the leadership in creating that scheme. If Japan takes no action in that direction, therefore, nothing will come of this. But even so, insofar as the structure is concerned, ASEAN serves as the hub. With regard to trade cooperation as well, while in the China-ASEAN alliance it is China that has assumed the leadership, nothing can really take place without agreement from the other side. Here again, then, it is ASEAN that has been installed as the hub. What I am attempting to say is that we really shouldn't worry all that much about the China leadership factor because, in the final analysis, there are also other parties involved in the process, so in the end I think there will be a system in place with ASEAN as the hub.

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