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The institutions behind East Asia’s transformation

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Workers tie bamboo to erect a temporary shade for shops in New Delhi (Photo: Reuters/Kamal Kishore).

In Brief

One remarkable development in East Asia over the past three decades is the emergence of a regional architecture — a coherent network of institutions that work together for prosperity and stability — that has revolved around small and middleweight countries with support from the Pacific’s big powers.

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What is equally important is that this regional architecture has been characterised by open regionalism — the removal of trade barriers within the region without discriminating against outsiders — and a cooperative multilateral perspective on security.

Region-building is a dynamic process, and the development of East Asia’s economic and security architecture has been shaped by a network of institutions in the region. Asia Pacific Economic Cooperation (APEC), ASEAN and its related arrangements like the ASEAN Regional Forum (ARF) have been among the most prominent. Non-official or semi-official institutions like the Pacific Economic Cooperation Council and Pacific Trade and Development (PAFTAD) have also been central to framing regionalism in the Asia Pacific.

The 1990s and 2000s saw ASEAN became the centre of East Asia’s regional architecture. The major benefit of ASEAN for the region during its first two decades of existence was not economic but rather the engendering of peace, neighbourliness and cooperation among the founding countries. In a region once disparaged as the ‘Balkans of the East’, ASEAN built confidence and dispelled mutual suspicion between member states through frequent meetings and cooperative activities.

ASEAN’s success in the ending of the Cambodian conflict through the 1991 Paris Peace Agreement attracted diplomatic kudos, providing a foundation for the 1994 establishment of the ARF. This reflected ASEAN’s role as the primary interlocutor to major regional powers, China, Japan and the United States.

The ARF was the first official-level security dialogue involving regular multilateral discussion on regional security and cooperation in the Asia Pacific after the Cold War. Most importantly, it employs a cooperative security approach to security, which is sharply in contrast to the then-prevailing realist ‘balance of power’ perspective. ARF reflects the view that, in the words of regional politics expert Alice Ba, ‘security is best gained not by working against others, but rather [by] working with them’.

The cooperative security approach is an institutional innovation to regional security architecture that is influenced by ASEAN’s emphasis on dialogue, diplomacy, and consensus. The approach is workable because it represents a realistic means by which the small and middleweight powers can assume diplomatic centrality in security arrangements involving all major regional powers.

The years 2015–17 have been shaping up almost as a watershed period for the region. East Asian countries furthered their commitment to regional economic integration and connectivity, while at the same time, issues in the South and East China Sea markedly raised regional security uncertainty.

More recently, the ascendancy of a more nationalist, less open ‘America First’ administration in the United States has drastically increased uncertainty in the Pacific economic and trade environment. This poses major challenges to future region-building in East Asia and puts tremendous pressures on the efficacy and credibility of current institutions in the region.

The emerging, more contentious relationship between the United States and China arguably makes East Asia’s regional economic and security architecture, relying on small and medium-sized countries espousing open regionalism, ever more relevant and important for the region.

The remarkable opportunities offered by a robustly growing East Asia to the region and the world demand the strengthening of both the current regional economic and security architecture in East Asia. As China transitions towards becoming a high-income country, many more Chinese households are entering the country’s already huge consumer market. The potential for expanded trade within the region as a result is tremendous. McKinsey projects that India’s middle class will increase from 50 million people in 2005 to 583 million people by 2025. The sheer magnitude of projected middle classes in India, China and ASEAN makes developing East Asia the world’s largest source of potential market growth.

The ASEAN-led Regional Comprehensive Economic Partnership (RCEP) currently under negotiation presents huge possibilities for liberalising regional trade and investment. For East Asia as a whole, successful RCEP negotiations could facilitate the ‘historic opportunity’, as economist Peter Drysdale puts it, ‘to secure its future as the dynamic centre of higher than average global growth’.

Despite large gaps among negotiating countries on a number of areas, including services, there appears growing resolve among RCEP members to finish the negotiations in 2017.

International relations scholar Zhongqi Pan describes the logic of East Asian region building as ‘from the periphery to the centre’, with the periphery being middle weight countries, in contrast to the process of European regionalisation which is ‘from the centre to the periphery’. The gravity of power in East Asia’s regional architecture appears to be tilting towards the centre, especially in view of China’s rise.

Still, maintaining peace, stability and prosperity in East Asia calls for current and future big powers in East Asia and the Pacific — China, India, Japan and the United States — to remain wedded to a coordinated network centred around the region’s small and middle-weight countries. Most importantly, the big powers must support ASEAN and ASEAN-related institutions and agreements, as well as APEC, which are imbued with the principles of open and cooperative regionalism and security multilateralism.

The remarkable economic transformation of East Asia has been underpinned by a relatively stable regional security environment. Contest over regional leadership between China, Japan and the United States means that the existing architecture, coupled with the ‘ASEAN way’ of dialogue, consultations, consensus and non-interference, remains the most robust regional means of managing East Asia’s changing security landscape.

In coming years, East Asia will be the locus of opportunity, and to some extent uncertainty, for the region and the world. Is the current regional architecture is up to the task?

Addressing the challenges in East Asia would call for investing more in making the existing regional architecture even more responsive to meeting the challenges ahead. More than ever, the current and future network of institutions that helps to define East Asia’s regional economic architecture will need to work to better manage the challenges — and opportunities — of a more integrated, open and fast-changing East Asia.

Ponciano Intal Jr is a Senior Economist at the Economic Research Institute for ASEAN and East Asia.

This article summarises a paper prepared for the 2016 Pacific Trade and Development Conference in Australia.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Towards Asian integration‘.

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