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

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.

It was not the first time when Mahathir openly advocated alternative institutions. In 1990, he espoused the idea of an East Asian Economic Group (EAEG), which consisted of ASEAN members, Japan, China and South Korea. Facing opposition from the US and other developed country members, the proposition did not lead to a separate regional organization, but was instead incorporated into the APEC framework and renamed East Asia Economic Caucus (EAEC). But Mahathir did not give up. When Malaysia was the chair of the 30th anniversary ASEAN meeting, Mahathir used this opportunity to personally invite leaders from Japan, China and South Korea to attend the meeting. Since then, alternative cooperative mechanisms such as ASEAN+3 (ASEAN plus Japan, China and South Korea) and ASEAN+1 (ASEAN plus Japan and China) flourished. Starting from 2000, various ministerial-level meeting have taken place. These meetings not only became annual forums for policy discussion and consensus but also led to significant progress. Take year 2005 as example. The Chiang-Mai Initiative, which creates a network of bilateral currency swap among ASEAN+3 countries to address short-term liquidity difficulty within region, was formulated during ASEAN+3 financial ministerial meeting that year. At the same time, different versions of Asian-centered “Free Trade Agreement” (FTA) were proposed. It was also a year when ASEAN+3 meetings were elevated to bi-annual East Asia Summit.

ASEAN’s regional initiatives resulted in various forms and levels of regional cooperation. After Japan’s proposal, in 1999 leaders from Japan, China and South Korea met for a caucus. This meeting established precedent for future annual meetings between the three and thus was a starting point for Northeast Asian cooperation. In addition to this landmark event, bilateral and multilateral FTAs between Japan, China and South Korea were also proposed and under progress.

This trend of Asian-centered regional cooperation does not spell the waning influence of the “Asia-Pacific” centered APEC. During the 2004 APEC meeting in Peru, the presence of Sino-US trade conflicts did not preclude members from declaring their support over trade and financial liberalization, the resumption of Doha Round, free trade agreements, anti-terrorism and anti-corruption efforts. In response to rising trade volume and export competitiveness in East Asia, participants of the 11th APEC Trade Minister’s meeting issued the Jeju Declaration. According to the Jeju Declaration, members would adopt the Swiss Formula, which allows higher tariff reduction for non-agricultural goods (NAMA) with high initial tariffs. As shown by recent APEC and WTO meetings, market opening and agriculture issues continue to be significant yet sensitive. This means that, even though member countries’ individual interests prevent the APEC from becoming a more institutionalized organization, it is still a major communication and cooperation channel for developed and developing countries in the region.

Regional development in Asia is characterized by the struggles between the principles of Asia-Pacificism and Asianism. Under the strong man leadership of the US, the former principle led to the creation of APEC, a loosely structured organization made of both developed and developing countries. Stressing the so-called “Asian characteristics,” the latter principle and its advocates face suspicion and even opposition from supporters of Asia-Pacificism. To maximize their benefits, then, countries in the Asia Pacific must engage in both multilateral cooperation and bilateral FTA agreements, aiming to find a balance between these two principles.