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76. APEC and ASEAN: New Roles, New Directions
- ISEAS–Yusof Ishak Institute
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378 Janadas Devan By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville 76. APEC AND ASEAN New Roles, New Directions JANADAS DEVAN Reprinted in abridged form from Janadas Devan, “APEC and ASEAN: New Roles, New Directions”, in Southeast Asia: Challenges of the 21st Century, compiled by Janadas Devan (Singapore: Institute of Southeast Asian Studies, 1994), pp. 56–71, by permission of the author and the publisher. The APEC Roundtable sessions were notable for the contrasting views of the two papers presented: while one set out the positive effects of a grouping like APEC, the other argued that all regional groupings were by definition sub-optimal. Discusssion at the sessions revolved around these contrasting perspectives on regional cooperation and other related issues: (1) the political versus the economic dimensions of ASEAN and APEC; and (2) regional versus global strategies of economic growth. APEC: REDEFINING THE REGION? Dr Wendy Dobson, of the University of Toronto, in a magisterial survey of developments in the Pacific posited the necessity of APEC thus: had it not been created, we would have to invent it now to respond to the increasingly fluid situation in the region. Economic developments around the world were creating growing interdependence. Interdependence created not only closer economic links but spillovers from one country to another as governments lose autonomy over their own economies. In this situation, interdependence needed to be managed if it was not to be a source of tension and uncertainty. What was urgently needed, then, was a framework of cooperation to manage the spillover effects of interdependence. APEC, Dr Dobson suggested, was that framework in the Pacific region. As it was, a number of developments in the region were already creating spillovers that threatened the economic stability of the region. Among those developments that required immediate attention were the following: U.S. Economic Policy U.S. trade policy now followed several tracks: multilateral in the case of the GATT negotiations; plurilateral in the case of the North American Free Trade Agreement (NAFTA) and bilateral rules-based, and unilateral “results-oriented” trade policies in the case of Japan. Fears that NAFTA will 076 AR Ch 76 22/9/03, 12:56 PM 378 APEC and ASEAN: New Roles, New Directions 379 By: ROS Size: 7.5" x 10.25" J/No: 03-14474 Fonts: New Baskerville turn into a trade bloc, with common discriminatory barriers to the rest of the world, were misplaced. Rather, the major source of uncertainty in U.S. trade policy was the management of its relations with Japan, which was in serious trouble. A harmonious and productive U.S.-Japan relationship was fundamental to the future of both countries, to the rest of the world, and to smaller countries which were closely integrated with one or both of the protagonists. However, instead of pursuing common goals of global leadership, bilateral relations were increasingly conducted as if they were a short-term zero-sum game that the United States must win in order to generate employment growth before the next presidential election. In response to U.S. demands, Japan had become more assertive, and the bilateral relationship more difficult to manage. Indeed, the U.S.-Japan relationship would become a larger source of conflict and uncertainty before current tensions ceased. The Clinton Administration’s preference for managed trade in its relationship with Japan, for example, was unlikely to stop there or affect only Japan. The same principle may well be applied to other successful Asian exporting economies. China Besides the tensions between the United States and Japan, the emergence of China as an economic powerhouse had added another source of uncertainty. China’s rapid growth was already spilling over into the region through export competition and through its import demand. In addition, the current explosion of credit and related inflationary pressures in China would have effects throughout the region. The pace of China’s growth was such that even in the United States, where China’s human rights record had been linked with most-favourednation (MFN) status, there was a growing realization of China’s importance: an estimated 171,000 U.S. jobs could be jeopardized if China were to retaliate for the withdrawal of MFN status. Economic Integration of the East Asian Region This integration had had both positive and negative effects which needed to be managed. Factors such as growth of trade and investment flows and deregulation of financial markets which had contributed to the rapid expansion of the...