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Positioning Asian regional architecture internationally

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In Brief

Whatever is done to re-position Asian regional architecture, it needs to take account of Asia's new role in global economic governance.

It needs to attend to the implications of Asia’s rise for political and security affairs.

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And it needs to build on the foundations of established regional structures — APEC and East Asian arrangements. It will sensibly coordinate with, and draw on the base of, all of the established trans-Pacific and East Asian arrangements.

ASEAN is still the fulcrum of Asian cooperation arrangements, including APEC, the ASEAN Regional Forum (ARF), ASEAN+3 and the newly expanded East Asian Summit (EAS). But with the rise of the bigger powers in Asia and the emergence of the G20 after the global financial crisis and the role of the Asian 6, including Australia, within it, this seems destined to change. And there is a new and immense fluidity in the shape of regional architecture despite the recent initiative to include the US and Russia in the EAS dialogues.

None of the existing Asian or Asia Pacific institutions addresses all the key dimensions of regional cooperation that they now need to face — providing a collective forum for regional leaders to address the full range of regional and global economic issues; dealing effectively with the consequences of economic integration, particularly its trade and investment but also its financial and macro-economic dimensions; addressing issues of political change and security; and educating the public and opinion leaders about the region. Nor should any one organisation need to perform all these roles. Each of the established forums has evolved to serve some or other of these roles and all can make an input across the range of issues that are now important.

There are two big gaps in the structure and operation of regional architecture. The first is its failure to connect to evolving global arrangements, including the G20 process. The second is that it does not yet encompass the political and security dialogues that are a necessary anchor in managing the impact on political and security affairs of the huge changes in the structure of economic power that are taking place in the region.

In principle, the first of these issues can be remedied relatively easily. Already there are informal dialogues among Asian G20 members and participants in the EAS and other regional processes. These dialogues could be formalised so that regional input and regional initiatives are a recognised part of the G20 process and its reach.

Getting this right in practice will be more complicated than it appears in principle. It will require decisions about which regional arrangements provide the most effective link between regional and global cooperation. Many of the initiatives will sensibly require strengthening East Asian arrangements (at least within ASEAN+6), perhaps via enhanced financial cooperation through finance ministry and finance regulatory agency involvement (the idea that an Asian Financial Stability Dialogue might be established, for example, and develop an association with the G20’s Financial Stability Board). Others will benefit from participation of a broader Asia Pacific group, including the United States. Getting the connection between regional and global arrangements right will require careful attention to scheduling regional meetings and initiatives so that they can both make useful input into, and be reinforced by, the efforts in global cooperation. Success will turn heavily upon the logistical detail. There needs to be much careful thought given to this question. The legitimacy of the G20 will ultimately depend on how the interests and views of non-G20 members are brought to the G20 process. Structuring the timing of Asia’s regional meetings around the G20 to give the regional non-G20 members input and ownership of initiatives is an important start. The implication is that, while ASEAN provides a critical modus operandi for regional initiatives, the agenda and schedule for regional arrangements, if regional institutions are to remain relevant, need to be more flexible also and essentially to be driven from elsewhere.

The second issue is one that leaders throughout the region have been struggling with in different ways. Former Australian Prime Minister Kevin Rudd advanced the idea of an Asia Pacific Community to address this gap. Former Japanese Prime Minister Yukio Hatoyama’s idea of an East Asian Community sought to serve a similar purpose. At the core of both ideas was the development of a framework which might help to reduce the risk of a fracture in political confidence through political and security dialogue around the rise of China’s (and India’s) political influence alongside the established military and political power of the United States, a goal consistent with growing East Asian economic cooperation.

When the United States announced that it wanted to join the East Asia Summit, it was a move that ASEAN was strategically in no position to resist, even if it had wanted. From this year, the US and Russia are participating in the EAS meetings. For some, this development creates the framework which includes all the key players — the United States, China, India, Japan, Korea, Indonesia and the core ASEAN group, Australia, Russia — that are needed for effective political and security discussion. Of course, it also includes others who are not central to that. India is not a member of APEC, and the EAS and APEC include others that are not central to this objective.

Yet it is by no means clear that this development, in the longer or even the medium-term, will serve the political-security purpose of the Asia Pacific Community idea which Rudd had in mind. Reservations include the lack of depth of its economic agenda, the ASEAN anchor, and the breadth of membership. Should the EAS become primarily a dialogue for political affairs without the ballast of economic dialogues to which the United States can effectively relate, it would likely exacerbate rather than calm trans-Pacific tensions. There have already been signs of how this could happen.

There is hope within ASEAN that the economic agenda of the EAS might take off, with ASEAN firmly at its core, linking the ASEAN-plus trade arrangements gradually into an Asian Free Trade Area. But America now has its Trans-Pacific Trade Partnership and getting into bed with China in a free trade area any time soon is unlikely.

It would appear wise, especially from the perspective of the US or the Chinese presidents, not to put all the eggs into that one basket. A more practical strategy might be for the major players to use both the East Asian and the Asia Pacific Summit arrangements for side meetings on critical issues, fashioning over time a high-level council of the principal parties that links both structures. Specifically, it is likely to prove impractical over time for the US president to join every East Asia Summit and every APEC Summit. It would be very damaging to US and broader regional interests to ditch the economic and political asset that America has built so patiently in APEC while the prospect of building anything remotely similar in the EAS that organically involves the US is distant.

Back-to-back regional summits are a real and practical option. This might appear messy to the tidy-minded. But given the character of the region, neat and tidy arrangements are less likely to be useful than arrangements that draw the whole region together in different ways.

In East Asia, and especially in the trans-Pacific relationship, the APEC experience demonstrates that it is the economic dialogue upon which substantial cooperation has been built. In East Asia, the economics is the politics — and the positive part of the politics. Political dialogues not tightly nested in a framework of economic cooperation will quickly turn to focus on points of contention and friction. This is why APEC remains a core functioning forum that puts America in harness with Asia.

In the EAS the US will be, for some time yet, an economic visitor rather than an organic participant.

This worry recommends the need for a heads of government meeting that transcends, and incorporates, APEC and the EAS and could address the full range of regional and global issues, including issues that might arise in APEC, EAS, ASEAN+3 or other regional forums. Asian leaders who are involved in the G20 group, except India, are all currently members of the EAS and APEC. It is a group whose economic deliberations could also feed into the G20 and other global processes. And it is a group that should naturally draw in the broader regional membership of APEC and the EAS to its deliberations. The EAS group now forms the nucleus of a new political partnership with the US and Russia. US and Russian participation in EAS is another useful step in the evolution of Asian regional architecture but not the end-point.

Peter Drysdale is Emeritus Professor Economics at the Crawford School of Economics and Government and the editor of the East Asia Forum.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Asia’s global impact.

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