Engaging East Asian Integration: States, Markets and the Movement of People

5. The Nature of East Asian Integration and Australia's Engagement

127 5 The Nature of East Asian Integration and Australia’s Engagement Jiro Okamoto This chapter focuses on states’ involvement in the institutional integra­ tion processes in East Asia. “Institutional integration” here means formal agreements between states, such as free trade agreements (FTAs), as well as their participation in regional cooperation frameworks, such as ASEAN and ASEAN+3 (ten ASEAN members and Japan, China, and South Korea). The outbreak of the Asian financial crisis in 1997 gave direct momentum to the creation of the concept of “East Asia” as a region and political and economic integration in the region. Since then, the integration processes in East Asia have developed in various aspects and forms: from separate bilateral currency swap agreements to the Chiang Mai Initiative, from bilateral FTAs to ASEAN+1 FTAs, and from ASEAN cooperation to ASEAN+3 and ASEAN+6 (ASEAN+3 plus Australia, New Zealand, and India) initiatives, among others. During these processes several characteristics of East Asian integration processes have emerged. The main aim of this chapter is to identify these characteristics and try to explain the factors behind such characteristics. 128 Jiro Okamoto First, this chapter points out that integration processes in East Asia are generally sector­ and function­based, and bilateral, subregional, and multilateral frameworks coexist in the same sectors. It also shows that “extra­regional” states are participating in many of these bilateral and multilateral frameworks. Then, the chapter considers the factors behind these characteristics. It assumes that individual East Asian states are seeking practical and concrete benefits from the processes and they are not tying themselves to any particular method, or geographical area, to achieve the benefits. Second, it argues that East Asian engagement policies of Australia — whose place in “East Asia” remains ambiguous — illustrate the characteristics of East Asian integration in the last twenty years. Australia changed its foreign policy approach significantly at the turn of the century. The chapter explains the change in some detail, and argues that the nature of East Asian integration can be explained in sharp relief by examining the differences in intentions and results of Australia’s Asian engagement policies in the 1990s and 2000s. The chapter concludes with some implications, drawn from the overall argument, on the future of East Asian integration. I. THE NATURE OF EAST ASIAN INTEGRATION PROCESSES Characteristics Tables 5.1 and 5.2 demonstrate how institutional integration processes have been developing in East Asia. Table 5.1 indicates the proliferation of FTAs, or Economic Partnership Agreements (EPAs). Over the last decade, FTAs seem to have become almost synonymous with the concept of institutional economic integra­ tion in East Asia. In Table 5.1, AFTA (ASEAN Free Trade Area) is quite notable. The intraregional trade liberalization process within ASEAN, which marked the beginning of institutional economic integration in East Asia, had commenced in 1993. By 2003, five original members (Indonesia, Malaysia, the Philippines, Singapore, and Thailand) and Brunei had all achieved intraregional tariffs of five per cent or less, with a small number of exceptions. These members eliminated all regional Australia’s Engagement with East Asian Integration 129 tariffs by 2010 and others (Cambodia, Lao PDR, Myanmar, and Vietnam) are to do the same by 2015. The development of FTAs between ASEAN members and Japan is also noticeable. Starting with Singapore, Japan has negotiated FTAs with seven out of ten ASEAN members. The number of China’s and Korea’s bilateral FTAs with ASEAN members is small compared with Japan because they preferred to negotiate FTAs with ASEAN as a whole. As a result, the FTAs between China and ASEAN, and between Korea and ASEAN, have come into effect earlier than that between Japan and ASEAN. Another point that should be mentioned is that most East Asian states are looking for “extraregional” FTA partners as well as “intraregional” ones. Table 5.2 shows major multilateral cooperation frameworks in and around East Asia. ASEAN, ADPS, APEC, ARF, and ASEM already existed before the Asian financial crisis, but other frameworks have emerged over the last decade. The ASEAN+3 framework was created in the midst of the financial crisis for the purpose of financial cooperation first, but the areas for cooperation have been extended significantly since. BIMSTEC is mainly a Thai and Indian initiative for economic cooperation across the Bay of Bengal. The members of BIMSTEC are also negotiating their own FTA. Australia, India, and South Africa lead the IOC­ARC framework...