East Asia and the Financial System

These statistics underscore a point stressed in the 1997 report to the Trilateral Commission on 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. As pointed out in the following paper on the financial system, they often lack the weight and status in international organizations they should have based on population or economic size. In some cases, as for China and Taiwan in the World Trade Organization, they lack representation. Even 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 establish a process through which leading thinkers from the developing countries of East Asia and the 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 the East Asian developing countries and strengthen East Asian input into thinking about global issues. It should lead to the full integration of East Asia beyond Japan into the Trilateral activities.…

Differing Perceptions of the International System
The contemporary international system is often perceived in East Asia as not being mutually beneficial. Underlying many of the issues associated with the East Asia—Trilateral relationship are differences in the prevailing perceptions on 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 trans-Atlantic 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 Trilateral world, are frequently viewed with suspicion as efforts to move the goal posts.…

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 Asian Development Bank). With the end of the Cold War, Asia-Pacific regionalism (including the Americas) emerged with the Asia Pacific Economic Cooperation (APEC) process and the Asia-Europe Meeting (ASEM). Today, East Asian attention has shifted toward the development of an institutional expression of East Asia’s own identity.…

[T]his is only a matter of time. Meanwhile, the emerging movement toward East Asian regionalism has received 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 consultation 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 interregional 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. As pointed out by project workshop participants, 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 Asia and the Pacific have done no violence to 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 coordination and organization. There is also a possibility that the East Asian member countries more likely to support more intrusive forms of international norm and institution-building would moderate their support in the interests of group unity. Thus there is a potential for increased divergence and tension between East Asia and the West over the predominant notions of 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 has impact, and neighboring countries are most likely to perceive a direct stake in each other’s well-being. This was reinforced in the East Asian region by a perceived lack of concern by the United States and Europe as contrasted with the significant regional contributions to the international financial support packages.

Rooting regional security more in indigenous institutions and less on outside power is probably much further in the future. [T]he key security relationships are currently found in the Japan-China-US 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 trans-Atlantic sense of a zone of peace in which resort to violence has become virtually unimaginable. The building 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 in 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, 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.

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 subsystem. There is no natural leader in this subsystem. 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 suggest 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.