East Asia and the International System

Table of Contents

I. Introduction

A. Differing Perceptions of the International System
B. Evolving East Asian Regionalism
C. East Asian Participation in the Trilateral Process

II. Deeper Integration in East Asia: Implications for the International Economic System
Wendy K. Dobson

A. Introduction
B. The Financial Crisis and Its Implications
C. How Is Deeper Integration Taking Place?
D. Questions About Effectiveness and Broader International Impact
E. Conclusion

III. East Asian Security and the International System
Michel Oksenberg and Charles E. Morrison

A. Introduction
B. The Grand Bargain
C. The Underlying Structure of Power
D. Challenges to the Grand Bargain in the 1990s
E. Conclusion: Strategic Choices and Policy Recommendations

IV. Rethinking the ASEAN Formula: The Way Forward for Southeast Asia
Hadi Soesastro and Charles E. Morrison

A. Origins and Elements of the ASEAN Formula
B. New Departures: ASEAN in the 1990s
C. The ASEAN Malaise
D. Rethinking the ASEAN Formula and Its Global and Regional Foundations

V. An East Asian Security Order for a Globalizing World
Hisashi Owada

A. The Changing Global Political Order
B. The New Security Landscape of East Asia
C. A Future Security Framework for the East Asia Region
D. The Place of the Japan-U.S. Security Alliance

Appendix: Trilateral Commission Special Study Group on East Asia and the International System

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INTRODUCTORY CHAPTER

East Asia today is a core part of the international system. Stretching from Japan and China in the north to Myanmar and Indonesia in the south, it has about 40 percent of the world’s population and 25 percent of its gross product, about half the latter accounted for by Japan. Its economies possess almost half the world's gold and foreign exchange reserves. During the decade of the 1990s, East Asia accounted for more than 50 percent of new global petroleum demand despite the economic crisis at the end of the decade. It also accounts for about 40 percent of carbon dioxide emissions from fossil fuel consumption.

These statistics underscore a point stressed in the 1997 report to the Trilateral Commission entitled Community-Building with Pacific Asia—that there is virtually no global problem that can be managed, much less resolved, without the participation of the major East Asian countries. Despite this, the countries of the region have not been major actors in shaping the institutions and rules of the international system. They often lack the weight and status in international organizations they should have based on population or economic size. In some cases, such as China and Taiwan in the World Trade Organization, they have lacked representation. Where they have representation and status, they are rarely demandeurs or agenda-setters.

The Trilateral Commission Special Study Group on East Asia and the International System is based on the assumption that East Asia will continue to rise in global importance and that the international system will have to be adjusted accordingly. The project is intended both to underscore East Asia’s importance and to help establish a process through which leading thinkers from emerging East Asia and the traditional Trilateral countries jointly explore issues raised by East Asia’s greater role in the international system. This process should both facilitate Trilateral understanding of the interests, priorities, and sensitivities of emerging East Asia and strengthen East Asian input into thinking about global issues. It should lead to the full integration of East Asia beyond Japan into Trilateral activities.

One might question why the traditional Trilateral countries should encourage a transformation that promises to reduce their own global influence. The rise of East Asia is a phenomenon that, if it could be suppressed at all, would be at great cost for both the traditional Trilateral countries and East Asia. There are absolute benefits for both in East Asia’s rise as long as adjustments can be carried out smoothly in an evolving international system.

The Study Group held two workshops in Seoul (November 1998) and Beijing (October 1999). These workshops involved a considerable number of participants from non-Trilateral countries of East Asia together with individuals from traditional Trilateral countries (see Appendix). At the Trilateral Commission annual meetings in Berlin (March 1998) and Washington (March 1999), one session was devoted to Study Group-related issues and Study Group participants met for discussion among themselves on the side of these larger meetings. Draft papers from Study Group participants came before the Trilateral Commission annual meeting in Tokyo in April 2000, and many Study Group participants served as panelists in the related discussions.

A number of papers were prepared in the course of the Study Group’s work. Four of them have been drawn together in this publication. Charles E. Morrison, Coordinator of the Study Group, worked with each of the authors and also prepared this brief introduction.

• The first essay following this introduction focuses on deeper economic integration in East Asia and its implications for the international economic system. In the wake of the financial crisis of 1997-98, while the Study Group was operating, a sea change took place in East Asian perceptions of the international economic system that is causing a determined thrust toward deeper East Asian integration. This first essay analyzes how deeper integration is taking place and raises key questions about its effectiveness and broader international impact. The conclusion of this essay is basically optimistic. No crisis economy in East Asia turned inward despite the painful adjustments required in the wake of the financial crisis, and this commitment to openness should be embedded in any new regional institutions.
• The unprecedented tranquility and prosperity which East Asia has enjoyed since 1975 is largely attributable, the second essay argues, to an implicit “Grand Bargain” struck between Tokyo, Beijing, and Washington during the 1970s and 1980s, through a process of extensive dialogue and mutual accommodation. The bargain covered Taiwan, the security architecture of East Asia, third-country issues, economic relations, and human rights and governance. The 1990s saw increasing pressure on this Grand Bargain, for various important reasons. Has the Grand Bargain now outlived its usefulness? This essay concludes that it is far too early to jettison arrangements that have brought unprecedented stability to the region. By expanding the earlier accommodations to address an altered set of issues, the leaders of the region can build on the Grand Bargain and go beyond it.
• Another key part of the East Asian success story, the third essay argues, was the “ASEAN Formula,” the approach to regional relations and economic engagement of the founding members of the Association of Southeast Asian Nations-Indonesia, Malaysia, the Philippines, Singapore, and Thailand. While their regional cooperation was based on a minimalist approach which respected sovereignty and privileged non-interference, ASEAN helped maintain international order in Southeast Asia. The other dimension of the ASEAN Formula was economic engagement with the world. The essay argues that, in light of the malaise created by internal changes and the fall-out of the Asian economic crisis, the ASEAN Formula needs to be reworked to be made relevant to the Southeast Asian realities of the twenty-first century.
• In the brief fourth essay one of the most distinguished participants in the Study Group discusses the building of a viable East Asian security order in a globalizing, post-Cold War world. Elements of a new regional security framework for East Asia are beginning to take shape. Like the Cold War order in East Asia, this new framework continues to feature the deep involvement of the United States, enabled by its alliance relationship with Japan. However, indigenous actors are playing a much larger role and East Asia has a distinctive pattern of regional relations in a more decentralized global security framework. Given the great diversity in the region, the “integration” model embodied by NATO and the European Union is not workable in East Asia; nor is the outdated balance-of-power model. This essay argues for an eclectic “multi-layered network model.” The first layer consists of a series of bilateral arrangements to take care of concrete security needs. The second layer is a regional framework for consultations on issues affecting common security interests.

The remainder of this introduction focuses on two important matters that highlight the importance of the East Asia and the International System project: the perception gap between Trilateral and East Asian understanding of the international system and the recent growth of East Asian regionalism.

It should be noted that Japan plays a dual role as both a traditional Trilateral country and an East Asian country. In general, through the rest of this introduction, East Asia refers to the developing countries of the region, excluding Japan. However, many of the perceptions described here for East Asia’s emerging economies have significant force also in Japan or did in the recent past. Japan’s dual role is not an easy one, particularly in recent years as Japanese are rediscovering their East Asian identity. Of all the traditional Trilateral countries, Japan has the greatest stake in the comfortable integration of East Asia into an international system perceived to be of mutual benefit to Trilateral and East Asian countries.

A. DIFFERING PERCEPTIONS OF THE INTERNATIONAL SYSTEM

Underlying many of the issues associated with East Asia-Trilateral relations are differences in prevailing perceptions of the nature and legitimacy of “the international system.” Despite the frequency with which this term is used in the Trilateral world, it is rarely defined or given careful thought. Generally it is used as a synonym for the institutions and patterns already governing the relations among the major Western powers and is regarded as fair and of universal validity. The authoritative voice for determining righteousness in the international system is the “international community.”

For emerging East Asian countries, however, the same system is basically a Western system, originally created by and for the transatlantic powers with the recent, but perhaps not fully integrated, addition of Japan. At the apex of this system as the main global agenda-setters are the Group of Seven and the Permanent Five of the UN Security Council, each with only one Asian member. Although much modified over the decades, the historical roots of the present system lie in the same state system responsible for colonial conquests, unequal treaties, and other forms of humiliation that remain potent memories in much of East Asia. As such, the international system is rarely endowed with the same legitimacy and moral authority as in the Trilateral world, particularly as interpreted by the “international community,” a term that in East Asia often appears to refer mainly to dominant Western public and political opinion.

As a practical matter, emerging East Asian countries usually find it in their interests to accommodate themselves to the dominant international norms and rules. However, while seeking benefit and legitimacy from participating in the system, there is also strong suspicion that the system operates to the relative benefit of its creators and constrains the ability of late-comers to assume equal status. Similarly the changes in the system, which typically flow from changing needs and norms in the traditional Trilateral world, are frequently viewed with suspicion as efforts to move the goal posts.

This can divert debate away from the merits of participation in terms of the contemporary international scene and national interests. For example, it is often pointed out in developing East Asia that the Western powers expect East Asian countries to abide by standards that they did not impose on themselves during their own earlier periods of economic growth and political development. This is true, but it also focuses on a historical equity argument at the expense of analysis of whether the standards themselves would be beneficial or not for East Asian countries in the contemporary context.

Differing perceptions can be illustrated by popular East Asian and Trilateral reactions to two events that occurred during the work of the Study Group: the Asian economic crisis and the Kosovo intervention.

In the case of the economic crisis, Western public commentary, particularly in the early stages of the crisis, tended to treat it as if the affected countries and their economic circumstances were homogenous, and to look for causes in such common features of the East Asian systems as corruption, cronyism, and institutional lacunae. Familiar with the effective operation of the international financial system in the Trilateral world, explanations in the popular media focused on what was wrong with East Asia. The Asian model or models of development were suddenly regarded as fatally flawed. More attention was given to risky borrowing than to risky lending. Unfettered capital flows were generally accepted as inevitable and beneficial rather than as part of the cause of the catastrophe.

In contrast, East Asians knew that these features of Asian systems had been there all along during the many years of high growth. It seemed incongruent that the very systems that had been so much praised in the Trilateral world as paragons of growth up to 1997 were now the target of such criticism. In seeking answers to what had gone wrong, East Asians looked to features in the external environment that had so quickly exposed the weaknesses in their domestic systems, particularly the huge and panicky capital movements. Some sinister explanations of the crisis—including the notion that the United States had orchestrated it to cut rising East Asian economies down to size or that hedge fund executives had engineered the crisis for their own profits—enjoyed significant popularity. For some East Asians, such explanations took the Asian models off-the-hook as the culprit of this drama.

Debate surrounding a premature proposal emanating from Japan for an Asian monetary fund was affected by the differences in perception. The proposal was opposed by the United States, where there was concern that it would undermine international disciplines and delay needed reforms in the affected Asian economies. In contrast there was considerable support in the affected Asian economies, which viewed the prospect of access to additional Japanese capital as highly desirable to help counter capital flight.

In the case of Kosovo, Trilateral debate gave little opportunity for thought about any possible reactions from East Asia. In this region, however, there was a notable mistrust of and discomfort with the humanitarian rationale behind the NATO intervention, although individual country reactions varied with religious affinities. The norms of sovereignty and non-interference in the internal affairs of other countries are widely appreciated in a region where many countries have been subjected to foreign military interventions. Aside from the general attachment to this norm, the Kosovo intervention demonstrated the unequal structure of global power and influence in the international system. East Asian countries tended to see the intervention as almost entirely an American-driven and executed affair, discounting allied pressures and presence. The U.S. bombing of the Chinese embassy in Belgrade reinforced this perception.

China makes clear its strong preference for a more multipolar system. While many smaller East Asian countries have U.S. links and welcome the continued presence of U.S. forward forces in the region to balance the larger local powers and compensate for their own weaknesses, they strongly prefer the U.S. presence to be a passive one in the absence of a threat of international aggression. To them Kosovo suggested that the Americans might play a more active role in backing human rights concerns with sophisticated military muscle. The later reluctance of the United States to become militarily involved on the ground in the 1999 East Timor crisis helped to counterbalance this impression of an interventionist-minded superpower. The East Timor crisis generally reaffirmed the non-interventionist norms of the East Asian states. The pressure for intervention largely came from outside the region, and the Asian states were reluctant to send forces despite the Indonesian desire for non-Western peacekeepers once outside intervention was inevitable.

B. EVOLVING EAST ASIAN REGIONALISM

A lasting effect of the Asian economic crisis and the Western triumphalism associated with it was to help bring East Asian countries, including Japan, closer together. The lack of a regional mechanism for intergovernmental dialogue and cooperation has been a distinctive feature of East Asian international relations. During the Cold War years, regional cooperation mechanisms were found only in parts of Southeast Asia or for quite specific functional tasks (such as the provision of development capital through the Asian Development Bank). With the end of the Cold War, Asia-Pacific regionalism (including the Americas and Oceania) emerged with the Asia Pacific Economic Cooperation (APEC) process, established in late 1989. The subsequent Asia-Europe Meeting (ASEM) established an interregional dialogue joining East Asia with the European Union. By the year 2000, however, East Asian attention had shifted toward the development of an institutional expression of East Asia's own identity. This potentially has important implications for the dialogues with other regions and the global system.

APEC and ASEM owe their existence to a combination of political and economic drivers. Despite their promise, both have struggled in recent years to maintain the momentum of their earlier years. A string of annual APEC meetings from 1993 to 1996 focused on vision, principles, and action plans that increasingly focused on trade. This process produced a bubble of expectations that were difficult to sustain when concrete, “WTO Plus” results were needed. Efforts to accelerate trade liberalization and facilitation on the basis of concerted, voluntary unilateral and collective actions (such as “early voluntary sectoral liberalization”) met resistance from special interest groups, encountered disputes about burden-sharing, and were hampered by a growing mood of skepticism about the benefits of globalization. APEC’s inability to respond effectively to the financial crisis added to the disappointment. The continual widening of the organization (from the initial twelve members in 1989 to twenty-one a decade later) reduced internal “like-mindedness” and tended to blur the focus. APEC recovered some momentum in 1999 and 2000 by reducing expectations to the level of more realistic consensus-building in the area of trade and emphasizing areas more amenable to cooperation. The political value of APEC was reinforced by the important bilateral “side meetings” among leaders at its September 1999 Auckland ministerial and leader meetings, and a special informal session there on East Timor. Indeed the fortuitous coincidence of the APEC meetings in Auckland with the East Timor crisis helped produce a degree of international and regional consensus and cooperation that would otherwise have taken much longer to achieve.

ASEM, which held its inaugural leaders meeting in 1996 and has had subsequent leaders meetings in 1998 and 2000, has also had difficulty sustaining interest and momentum in the wake of the economic crisis. However, since ASEM is an inter-regional dialogue, it required its East Asian side to organize and coordinate, and thus became an incubator for broader East Asian regional cooperation. ASEAN reinforced this by establishing a regular ASEAN Plus Three (China, Japan, South Korea) dialogue as a part of its summits. An East Asian vision group, consisting of two individuals from each country and analogous to APEC’s former Eminent Persons Group and ASEM’s Vision Group, was commissioned by the ASEAN Plus Three countries at the November 1998 Hanoi summit. This group reports to the leaders at the 2001 summit. Like APEC, it appears that some form of freer trade arrangement is likely to be a centerpiece of the East Asian movement. At the same time, smaller East Asian groupings and bilateral schemes are proliferating. The leaders of the three Northeast Asian countries held an unprecedented joint breakfast meeting alongside the ASEAN Plus Three Summit in Manila in November 1999 and agreed to joint research on economic cooperation. There are also numerous proposals for bilateral free trade agreements both within East Asia and between East Asian countries and outsiders.

These steps have not yet found concrete expression in an East Asian institutional identity, but this is only a matter of time. Meanwhile, the emerging movement toward East Asian regionalism has received relatively little attention in the Trilateral world outside Japan despite the important issues it raises. What should be its underlying vision and the scope and nature of its activities? How can the East Asia group avoid falling into the same institutional traps that have afflicted APEC and ASEM? Should its efforts be conducted on the same basis of informal consultation and cooperation that was pioneered in the “ASEAN Way,” or is such an approach under-institutionalized and ineffective in addressing concrete issues? How will East Asian regionalism relate to subregional efforts, such as ASEAN, as well as to the larger regional and inter-regional institutions such as APEC and ASEM? Will East Asian regionalism be compatible with and supportive of global institution-building?

This last question relates directly to the theme of the Study Group. East Asian and Asia-Pacific regionalism has evolved thus far within the context of global norms and institutions. In fact, a claim can be made that compared to European or North American regionalism, the regional cooperation institutions of East Asia and the Pacific have done no violence to global norms and rules. This is likely to remain the case at least in the near-term future since East Asia is diverse and thus there is little common ground beyond the minimal global norms to serve as a basis for intensified cooperation within the region. In this sense, it is unlikely that an East Asian institutional process would establish a new set of norms in competition with those prevailing in the world at large.

However, the establishment of an East Asian or Northeast Asian institution might affect the international system in several ways. First, for the same reason that East Asia is unlikely to move beyond the universal, minimal norms of order, it could well be a conservative voice in the evolving international system. The influence of a conservative approach would be strengthened through East Asian coordination and organization. There is also a possibility that the East Asian countries more likely to support more intrusive forms of international norms and institution-building (these include the Philippines and Thailand) would moderate their support in the interest of group unity. Japan’s policies on such issues could also be powerfully affected. Thus there is a potential for increased divergence and tension between East Asia and the West over the appropriate norms and rules for the international system.

Second, East Asian regional cooperation could serve important regional order-keeping functions. Many global regimes are weak and require reinforcement at the regional level. Even in the internet age, geography is meaningful, and neighboring countries are most likely to perceive a direct stake in each other’s well-being. This sense was reinforced in the East Asian region by a perceived lack of concern by the United States and Europe about the impact of the financial crisis on the region, as contrasted with the significant regional contributions to the international financial support packages.

Rooting regional security more in indigenous institutions and depending less on outside powers (notably the United States) is probably much further in the future. The key security relationships are currently found in the Japan-China-U.S. triangle. China’s rapid rise is occurring in a region that lacks firmly established, integrating institutions like the European Union that help build trust. Asia has no security community in the transatlantic sense of a zone of peace in which resort to violence has become virtually unimaginable. The building of such a community could be the outcome of the now nascent forms of regional cooperation. This would be a truly historic contribution to regional and global order, but since it involves shifts in basic attitudes and political institutions, it is clearly a long-term task. In the meantime, there is a need to establish a more politically viable set of understandings among the large powers as to how to manage their own relations and build cooperation in the handling of regional order problems.

Finally, the growth of East Asian regionalism underscores the continuing need for reinforcing connections across the Pacific to the Americas and across the Eurasian landmass to the European Union to prevent misunderstanding and maintain inter-regional links. East Asians are understandably concerned about the potential reaction of the United States to exclusive forms of East Asian regionalism since the United States opposed both Malaysian Prime Minister Mahathir’s East Asian Economic Caucus proposal of the early 1990s and the 1998 version of the Asian monetary fund. While American officials have said that U.S. concern has declined with the firmer establishment of Asia-Pacific processes, the Asian monetary fund proposal illustrated the continuing potential for misunderstanding in the absence of consultations. European-East Asian dialogues can help reinforce the notions of open regionalism in both areas.

C. EAST ASIAN PARTICIPATION IN THE TRILATERAL PROCESS

The work of the Special Study Group reinforces the sense that as the linkages of East Asian countries with the international system have intensified so too have the linkages within the East Asian regional system. There is no natural leader in this regional system. Japan remains by far the largest and most technologically advanced economy, but it has either been constrained or constrains itself from seeking a strong leadership position. China is by far the region’s largest nation, but it has many domestic priorities and is still only partially integrated into the international system. The ASEAN group has taken much of intellectual leadership for establishing institutional processes and has historically the longest and most intimate contacts with the Western powers. Because of its geopolitical position, South Korea may play a leadership role in developing forms of Northeast Asian cooperation.

These observations underline the importance of reaching beyond Japan in connecting East Asia to Trilateral dialogue and research. East Asia is an essential partner in a continuing effort to build international cooperation in the management of global problems.

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Authors
(titles at time of writing)