A Canadian Perspective on Northeast Asian Relations

NOT for quotation

Date February 2, 2006
Speaker H.E. Joseph CARON(Ambassador, Embassy of Canada in Japan)
Moderator TANABE Yasuo(Vice-President, RIETI)


*As per the author's request, this transcript is not for quotation.

At the East Asia Summit held in Kuala Lumpur in December last year, we witnessed a new attempt to gather together some of the countries of Northeast Asia, Southeast Asia, Oceania, and South Asia, to see whether an East Asian community of nations could be constituted. Did the meeting create a new community? My own personal view is that an Asian community of nations that is contiguous with the Asian land mass from Japan to India and from Russia to Australia is not achievable as the national interests of all major and most minor players vary too significantly to achieve one. An Asian political association of shared geostrategic objectives and acceptance of a hierarchy of power and influence is not possible without the concurrence of China, Japan and the 10 ASEAN countries. An effective Asian economic community is not possible without the participation of the US economy. An Asian security community cannot be built in the absence of mutual trust, shared fundamental values, and an acceptance of military leadership by the most militarily powerful players, currently Japan and China. An Asian community based solely on an amorphous Asian identity, such as that proposed by the East Asia Summit, is not acceptable for example to Japan, which since the Meiji Restoration has variously balanced its Western as well as Asian orientations. This is one of the reasons Japan was so active in promoting Australian, New Zealand and Indian participation at the East Asia Summit. Also perhaps abandoning the notion of an East Asian identity, ASEAN and China concurred to the presence of these non-Asian nations.

Centripetal dynamics arising from geography, the need to address transnational problems, economic integration, and security concerns have resulted in not one but three very important communities in Asia. The first is ASEAN and its growing constellation of regional political and economic linkages; the second is APEC; and the third is the Transpacific Security Community, led by the U.S., and including Japan, South Korea, Philippines, Indonesia, Singapore, Thailand and Taiwan. These three communities are the defining communities of Asia. The formal East Asian Community will not in the foreseeable future supplant any of the existing groupings. It will strengthen ASEAN's role as the only acceptable East Asian convening power, and hopefully assist in the process of economic integration, now formally led by APEC.

ASEAN is the lead political community, first created in 1967 by the grouping of five Southeast Asian nations - Indonesia, Malaysia, Philippines, Thailand and Singapore. From the outset, ASEAN explicitly invited the participation of other Southeast Asian countries, with the result that today it groups 10 countries. Furthermore, ASEAN developed formulas to promote associations with non-Southeast Asian countries, with the Treaty of Amity and Cooperation in 1976 extending an invitation for cooperation to all nations "both within and outside Southeast Asia." Today ASEAN has 11 dialog partners including Canada, the EU and Russia. The foreign ministers of these 11 partners attend the annual meeting of ASEAN every year, spawning another regional dialog mechanism, the ASEAN Regional Forum. ASEAN's field of endeavor is very broad and flexible, initially spanning economic, social, cultural, scientific, education, trade and industry, transportation and communications, and now including dialogs on issues such as agriculture, customs dispute settlement and finance. These dialogs and linkages have provided the underpinnings of the ASEAN Free Trade Area, the ASEAN Economic Community, the ASEAN-China Free Trade Area, ASEAN+3 dialog and an agenda of negotiations with Japan, Australia and New Zealand, among others.

ASEAN's power rests on several pillars. The first is the principles propounded by ASEAN: gradualism, openness, functional partnerships, collaboration through cooperation rather than legally binding commitments, consensus decision making, security through economic growth and cooperation and its broad agenda, encompassing economic, social, technical and scientific fields, underlies subsequent forms of regional association. Taken together, these principles have become known as the "ASEAN way." ASEAN has thus set the ground rules for collaborative institutional development, for ARF, for APEC and into the new era. The second is that over four decades ASEAN has adapted its membership and its institutions to keep ahead of other centripetal forces that have emerged in the region. Third, ASEAN has developed an agenda that brings real world benefits to its members, primarily through expanded and regional economic integration. Fourth, ASEAN has managed relations with the regional powers -- the U.S., Japan, and now China and India -- in ways consistent with the interests of these important players. Fifth, it has addressed security issues through economic integration, and through the soft agenda of the ASEAN Regional Forum, where the focus has been on elucidating concepts such as common security and mutual security, and encouraging transparency and confidence building measures. Sixth, force majeure, it has benefited from the fact that none of the four regional powers -- Japan, China, India and the U.S. -- has comparable convening power, because of competition among them.

ASEAN's weaknesses include small economies, the loss of investment to China, and Chinese and eventually Indian competition at the bottom of the manufacturing chain. These have not prevented ASEAN from developing its very expansive internal dynamics. Nor have these weaknesses diminished its convening power. It remains, therefore, a strong community. It risks becoming a weak community when the circumstances and political alignments pass this political leadership to one of the large powers, such as to China, to Japan or to India. Needless to say, I do not see that happening in the near future.

The second important community in the region is formed around the concept of economic integration, whose formal representation is APEC. The creation of ASEAN in the 1960s preceded by 10 years the growth in investment and trade among the countries of Northeast and Southeast Asia and across the Pacific. It preceded by 20 years the availability of communications and information processing technologies that would globalize manufacturing capacity and lead to ever higher levels of economic growth in the region. It preceded by 30 years the emergence of China as an economic and political giant. Australian, Japanese, American and Canadian academics in particular started to notice the gravitational pull among Japanese, American, Taiwanese and Southeast Asian economies in the mid-1970s. By the late 1980s Australia organized a meeting of ministers for the first informal dialog aimed at discussing the phenomenon of integration, and possible means to optimize its benefit. The U.S. invitation to the heads of state of an emerging Asia-Pacific economic community to meet at Blake Island in 1993 gave birth to APEC.

APEC is first and foremost an economic phenomenon. It consists of an immeasurably large number of linkages arising from the trade in goods and services, transnational investment, corporate partnerships, R&D relationships, intra- and inter-company manufacturing supply chains, outsourcing of services, etc. The process is primarily microeconomic, autonomous, business to business, and the formative engine has been the vast economies of scale and efficiencies spawned by brand new and highly efficient communications technologies and the processing of information. Integration has also been advanced by extensive Japanese investments in the region, and the investments and trading activities of the Chinese diaspora, particularly in Taiwan and in Southeast Asia. Taken as a whole, the cumulative force of these contacts has transformed the regional and global landscapes. The initial processes have been microeconomic, but the resulting phenomenon is macroeconomic and the end result is transpacific economic integration at an unprecedented scale.

APEC and the forces of economic integration also reinforce the liberal view that the more countries trade with each other and collaborate on common endeavors the less likely they will choose conflict and military solutions to solve their differences as the costs of doing so become prohibitive. Rules, including those developed by outside institutions such as the WTO, will manage conflict much better than when they are explicit components of a shared community. Accordingly, APEC contributes not only to economic development but to strengthening political ties and to enhancing a sense of security.

The third community is what I call the Transpacific Security Community. Since the end of World War II, successive developments such as the U.S. occupation of Japan, the Cold War, communist insurgencies in Southeast Asia, the Korean and Vietnam wars, Muslim insurgencies and threats to maritime security in Southeast Asia have driven the development of national as well as regional security policies. These various forces have led to extensive cooperation as well as competition in the region. Taken all together, these and other factors, such as history and the global reach of the U.S., have created an extremely complex and dynamic security environment. The result is a mix of formal and informal agreements that balkanize rather than unite the East Asia collection of countries. They make the creation of a truly comprehensive Asian Security Community unlikely if not impossible.

The resulting arrangements are heterodox to say the least. First, there is the U.S.-led security community. Japan, Korea, Australia and New Zealand have determined that their national security will be based, in part, on formal alliances with the U.S. With the exception of ANZUS, these are hub and spoke arrangements with the U.S. clearly in the role of the hub. U.S. involvement in Southeast Asia remains significant, but it too is entirely bilateral in nature. Joint exercises, military-to-military talks, intelligence exchanges and law enforcement cooperation, for example, are almost entirely on a one on one basis. Efforts at multilateralizing, or regionalizing these exchanges have had very limited success.

In sum, all of the arrangements have the U.S. in the middle as the hub, with few formal arrangements linking the spokes. Nevertheless, it is possible I believe to speak of a Transpacific Security Community, linking the U.S., ROK, Japan, Taiwan, Australia, New Zealand and some of the countries of Southeast Asia. All of these countries on the Western side of the Pacific have domestic and international security concerns that have led them to conclude that reliance on U.S. military power is essential to their long-term security, with each believing that the U.S. can provide a range of options to enhance its own security, from warding off armed attacks by domestic insurgents to ensuring maritime security in the major sea lanes of communication, to providing training to military forces engaged in actual or threatened domestic problems. Security concerns, however, are not the only source of affinity among the countries of this Transpacific Security Community. Equal in cohesive force is the fact that these countries, to varying degrees, share fundamental values. They all believe, even if they implement them with varying degrees of commitment, in human rights, the rule of law, democratic governance and the peaceful resolution of conflict. To a surprising degree, given the differences in culture and history, all these countries believe that there are limits to the power that governments should be allowed to exercise in the governance of their own people.

Now, if you accept my theory, where does this structure allow Canada to fit in? Canada is neither a member of ASEAN nor a formal ally of the U.S. in the Asia-Pacific region, but it is linked in important ways to all these three communities. Canada has been a full member of APEC since the outset. It is our principal vehicle for influencing the direction of regional economic policy and regulatory development, but it is also the primary tool for Canada for our overall political development and commitment to the region. Canada is the fourth largest economy in the APEC family. Our immigration policies also provide an Asian complexion to our Canadian family. Our standard of living, our leadership in science and technology, and connections to global supply chains will increasingly play themselves out in Asia. We are also part of the ASEAN-led political community, through our long-term dialog partner status and our participation in the ARF. The ARF's soft agenda is completely compatible with the thrust of Canada's peace and security agenda, and indeed that of Japan as well. Good ideas and ministerial attention guarantee our place at the table. Our security ties to the U.S. are through NORAD and NATO, but we retain residual responsibilities as a member of the Korean Armistice.

Where does this structure allow Japan to fit in? Interestingly, in my view, Japan has unique roles in each of these three communities. Japan took an early interest in ASEAN, recognizing its potential as an effective integrator force for the Southeast Asian region, diplomacy starting with Prime Minister Sato Eisaku, but followed by Prime Ministers Tanaka, Ohira, and the extensive economic activities of Japan's private sector through investment in resources and manufacturing have guaranteed Japan's primary role. Like Canada, Japan was an early member of the family of ASEAN dialog partners, but now also has a privileged position as a member of the ASEAN+3 grouping, and if you believe as I do that ASEAN remains at the heart of the East Asian community and the summit process, Japan has contributed to strengthening the principles of openness and transparency in the region by advocating the participation of Australia, New Zealand and India. Japanese diplomacy thus remains relevant and effective in shaping the ASEAN-led political community.

Japan's business community, and eventually intellectuals and political leaders can rightly claim founding member status for APEC. Japanese investment has been one of the driving forces of integration. Japanese, along with Australian and Canadian academics and intellectuals first analyzed and publicized the growing regional economic dependence and dynamic. As I said, Prime Minister Ohira provided political leverage to the idea of regional economic integration in the late 1970s and 1980. Japan led in the creation of the Pacific Economic Cooperation Council in 1980, the first regional grouping to link business, government and academia, and Japan continues to provide leadership in APEC.

Japan with a large military establishment, and as a close ally of the U.S. is increasingly engaged in regional security issues. Thus Japan, as the world's second largest economy, is an important source of investment and business linkages throughout the region, key source of ODA and investment, and important partner of the U.S., and has a unique role to play in all three of the overlapping communities. Each of these communities contributes in different ways to Japan's prosperity and security and of course that of the region.

My conclusion is that the nations on the Western and Eastern coasts of the Pacific Ocean are enjoying unparalleled prosperity and peace, and all countries in the region must contribute to maintaining these benign conditions. The three communities -- the political community, ASEAN; the economic community, represented by APEC; and the actual and emerging security communities -- have been effective and in fact are working in harmony, not due to formal linkages between the three, but through the overlapping memberships of these various communities and an effective division of labor. The communities are proving that while geography remains important, a harmony of interests is the key factor assuring the long-term promotion of peace and prosperity in this vast transpacific region.

Questions and Answers

Q: How do you believe the sensitive relationship between Japan and China can be eased, and do you believe Canada has a role to play in easing the tensions between the two?

A: What is of concern to many is that there are not one or two sensitive issues between these two powers, but many different issues. In my view, bilateral relations between countries can manage three or four problems and keep going relatively smoothly. China and Japan are of course well aware of this dimension. I do not think that Canada has a role to play in advising either government as to how to move forward, but obviously there cannot be progress without political leadership on both sides, starting perhaps with private discussions to agree that the situation is in need of improvement, and to agree on what the public dimensions of that improvement would be. There needs to be agreement between Japan and China on which problems do not have solutions in the short or medium term, and how to manage them. Historically, both political traditions have a tremendous degree of practically and problem solving desire. There needs to be agreement on the problems that can be solved or worked out, identifying them and making real progress. It is easier to say than for anyone to do, but I think eventually something like this will emerge.

Q: In the Japanese government we are focusing on WTO negotiations and EPA negotiations. Perhaps after the conclusion of the WTO, APEC will be at a different stage, and Japan will host APEC in 2010. What is the Canadian strategy toward the year 2010 or 2020 with regard to APEC?

A: I was an APEC senior official for a number of years, including during the debate over Early Voluntary Sectoral Liberalization (EVSL). At that time, APEC was strengthened by the ASEAN-way approach to problem solving, bringing together very diverse economies to talk about issues such as trade liberalization, but in eschewing legally binding agreements APEC deprives itself of the legal infrastructure that could assist and advance economic integration. The argument was made that the WTO should continue to be the primary vehicle for trade liberalization. I do not see the political will in the major capitals to support a trade negotiation through APEC, so our strategy will be to continue to play to APEC's strengths, such as liberalization of trading rules, and concentrating on the regulatory environment.

When APEC was formed I felt that it should have OECD-type research capacities and a very focused agenda, but that is not the route that it took. Instead what we have is an organization that in a sense does not exist except when it meets, which is a reflection of how ASEAN has felt most comfortable in dealing with these kinds of issues, and that the leaders have not decided to give more power to the organization.

Q: How do you evaluate the election of last September? How do you feel has Japan changed or how is it changing?

A: I am surprised almost daily by how much Japan has changed in the past seven years. Focusing on the political dynamic, from what I can see of Prime Minister Koizumi's attack on the plumbing of decision-making within the party and increasingly within the government, it is in my view impossible to go back to the system that was perfected by Prime Minister Tanaka, or the variations brought by Prime Minister Nakasone. I doubt however that this transformative agenda is going to continue uninterrupted.

Q: Looking at parallels between China and Japan in the 1970s, and the sense of optimism, the growth, and the pace of change, I wonder if one difference in China is a population-based one. What happens if China gets old before it gets rich? What is that going to do to the pace of change in terms of 10 or 20 years from now?

A: One thing I can tell you is that in four years in China this issue never came up. It was never raised by any Chinese official, never at any university. This has only received media attention in the last four or five months, and now it is getting a lot of media attention. The shape of curve is worrisome, and the increasing number of boys versus girls is also worrisome, but this is not a high priority at the state level. From the curves I have seen, this is a problem 30 years from now, and because there are so many other issues, I do not think it is very high on the agenda. The rate of growth of population I think is still about 18 million a year, so they are more concerned about balance at this stage.

Q: What means or mechanism can we use to resolve environmental problems in China?

A: This is an important question, because it is a very important question in China as well. China is so big, and has so much variety in geography and administration, that even with a very successful set of environmental policies you could have successful implementation in one region and a total lack of implementation in another region. What is significant, however, is that the thinking in the National Development and Reform Commission is moving increasingly in the direction that raw economic growth is not good for China, that in fact it is damaging to China, and that the whole paradigm has got to change. The National Environment Protection Agency says all the right things, and they have some remarkable people, so the knowledge is there, but the difficulty is in the implementation in moving this great machine or set of machines. We must do more of what we are doing, which is for Japan, Canada, Australia, the U.S. and the Europeans to continue to have a very active dialog with China on the environment, to encourage our business sectors to team up with Chinese businesses so that increasingly green practices are introduced in the Chinese business community.

*This summary was compiled by RIETI Editorial staff.