Assessing the Development of Asia-Pacific Trade and Economic Institutions through the Lens of Geo-Political Economy (PART I)

Regional development in Asia is characterized by the struggles between the principles of “Asia-Pacificism” and “Asianism.” To maximize benefits, countries in the Asia Pacific region must engage in both multilateral cooperation and bilateral FTA agreements, aiming to find a balance between these two principles.

The rise of sectoral division of labor and multinational trade in the Asia-Pacific region has greatly facilitated trade within East Asia. According to the WTO, Asia’s intraregional trade in 2003 reached 949 billion US dollars in total, while trade within North America only reached 404 billion US dollars. That is, trade within Asia is about 49.9% of total value of export, which is 9.4% more than those in North America.

The figures above indicate a trend of “trade integration” within Asia. During 2005 Boao Forum, Japan’s former Minister of Foreign Affairs Yoriko Kawaguchi noted that Northeast Asia’s intraregional trade increased from 34% in 1980 to 58% (of global trade) in 2003, while trade within North America FTA was only 55%. Despite such impressive number, the Asia-Pacific is marked by the presence of complicated and multi-faceted political-economic relations. As such, many countries in the Asia-Pacific are prevented from achieving greater economic cooperation.

Two regional doctrines—Asianism and Asia-Pacificism—have delayed the process of greater economic cooperation within the Asia Pacific region. The former, supported by the ASEAN members and China, views the region as “Asian Pacific,” one that includes members with similar cultural background—in other words, Asian countries. Meanwhile, the US and other industrialized countries advocate the geographically-based “Asia-Pacific,” one that considers countries in the Pacific—not just those in Asia—as part of the region.

The struggle between these two forces explains the shift from early effort on developing Asia Pacific Economic Co-operation (APEC), an organization that includes countries such as the US and Australia, to late 1990’s regional cooperation that centers on Asian countries. Since 1992, the US has invested tremendous amount of effort in developing the APEC. However, due to the existence of divergent perspectives among the developed and developing countries in the APEC, the efforts to balance them are often backfired, generating clashes throughout the Asia-Pacific’s path to open regionalism.

The three central pillars of the APEC are: trade and investment liberalization; business facilitation; economic and technical cooperation (Ecotech). To elicit developing countries’ cooperation, members from developed countries, which usually lean towards the first two pillars, declare their willingness to provide Ecotech to developing countries. Under the influence of the US, however, the APEC’s development still veers towards the first two pillars. It is no wonder that members from developing countries remain suspicious of the APEC.

Such underlying tension became apparent during the Asian Financial Crisis. As a loose institutional structure, the APEC failed to become a “hub” for member countries to address and manage the crisis. Even the major force behind the APEC, meaning the US, did not provide adequate and immediate assistance to crisis stricken countries. Such inadequate responses led to massive criticisms among Southeast Asian members, which prompted Malaysia’s former Prime Minister Mahathir Mohamad to call for Asian nations’ withdrawal of APEC membership.