The prevailing crisis prescription in Europe focuses on regional architecture: Germany insists on fiscal union and the implied centralised power over national budgets. This is in return for giving the European Central Bank more room to apply the tools of lender of last resort. But this focus comes at the expense of essential attention to the structural adjustments necessary to restore growth impetus in the deeply indebted southern members. Growth and restructuring are the only acceptable ways to reduce debt. Faced with shrinking economies and rising unemployment, and lacking exchange rate flexibility to restore price competitiveness in external markets, how will they grow? Other countries have successfully dealt with such situations; Canada, for example — which in the late 1990s faced a serious fiscal imbalance — restored its books to balance with a depreciating exchange rate and by focusing on trade with strongly growing international markets. Clearly Europe’s prospects for export-oriented growth do not lie in the OECD countries, but in emerging markets like those in Asia.

But external expectations of Asia are growing much faster than Asia’s capacity to meet them. Of course regional architecture is required for cooperative action. Yet with some notable exceptions, Asia’s focus remains on the architecture rather than the domestic and regional economic adjustments required to sustain growth momentum in the face of potentially serious external shocks from renewed European recession and near-stagnation in the US.

Following the Cannes Summit (3–4 November), Asian leaders participated in a series of summits: APEC in Honolulu (12–13 November), the ASEAN summit (17–19 November) and the East Asia Summit (EAS) (19 November). Despite the Cannes fiasco and Europe’s continuing troubles, the prominent feature of the Asia Pacific meetings was the ‘return’ of the US: as host at APEC, where President Obama re-launched the Trans-Pacific Partnership (TPP) negotiations, targeting a 12-month completion date; and as one of the newest members of the EAS, which some see as the forum most likely to link regional and global strategic issues.

The immediate problem remains global rebalancing: current account surplus countries should rely more heavily for growth on domestic demand and allow greater exchange rate flexibility. Yet the issues were at best tangentially discussed at these summits, which were mainly focused on trade and integration. The EAS came closest with its emphasis on connectivity, among 10 other issues.

What, then, should Asia’s priorities be in 2012? Two stand out: macroeconomic rebalancing and trade liberalisation.

To carry out macroeconomic rebalancing, discussions among ASEAN+3 governments should take place in the multilateralised Chiang Mai Initiative, yet little has been seen or heard of the secretariat’s activities. In its inaugural year this silence may be understandable, but it is troublesome when viewed in the context of potential risks from the global economy.

In terms of trade liberalisation, recent indications of interest in the TPP by Japan, Canada and Mexico ignited debate about a possible US hidden agenda of excluding China. Additional entrants will not be invited to join — they must apply. And the TPP’s uniqueness is its refreshingly explicit admission bar: applicants must be prepared to talk about everything. Just as in any serious trade agreement, the outcome is based on bargaining over potential gains and losses, with phase-in periods for sectors that must adjust. China should apply while the negotiating parameters are still up for discussion. Otherwise it faces the prospect, as do other latecomers like Canada, of being a policy taker rather than a policy maker.

It is understood that Asian economic integration is a long-term process based on consensus decision making. But a lot of bad things can happen while this long-term process is unfolding. The likelihood of new external shocks from Europe through financial markets and trade flows is not declining. The shocks of the 2008 global financial crisis revealed the vulnerabilities of continued reliance on export-led growth strategies and created, at least for a time, incentives to rebalance the sources of domestic and regional growth. But has enough progress been made?

Asia’s growing economic weight brings with it growing responsibilities within cooperative responses to the global imbalances that weigh so heavily on our collective growth prospects. But will it take another crisis to catalyse the emergence of Asian leaders and institutions as champions of a stable and open global economic system?

Wendy Dobson is co-director of the Institute for International Business in the University of Toronto’s Rotman School of Management and a former Associate Deputy Minister of Finance in the Canadian government.

This is part of a special feature: 2011 in review and the year ahead.