Find­ing the right bal­ance

The Pak Banker - - Front Page - Liu Jun­hong

AT the Sev­enth East Asia Sum­mit held at the Peace Palace in Ph­nom Penh, Cam­bo­dia, a con­sen­sus was reached on launch­ing ne­go­ti­a­tions for the China-Ja­pan-Repub­lic of Korea Free Trade Area and the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship, in pur­suit of an Asian free eco­nomic zone.

In the con­text of in­ten­si­fied mar­itime ter­ri­to­rial dis­putes among some Asian coun­tries, the con­sen­sus en­hanced con­fi­dence that Asian coun­tries will unite and pur­sue com- mon in­ter­ests, and showed their com­mit­ment to mak­ing un­remit­ting ef­forts for re­gional co­op­er­a­tion.

But due to the coun­tries' dif­fer­ent lev­els of in­dus­trial devel­op­ment, eco­nomic struc­ture and so­cial con­di­tions, it will be dif­fi­cult for them to pur­sue com­mon devel­op­ment in a sim­ple and uni­fied way. Pur­su­ing a "uni­fied and sin­gle re­gional rule" will un­doubt­edly ex­ac­er­bate dif­fer­ences, and even lead to the dif­fer­en­ti­a­tion of the re­gional struc­ture. Be­hind the com­mon in­ter­ests of Asian coun­tries, there is the re­al­ity of dif­fer­ent in­ter­ests. Only by show­ing fair con­cern for all th­ese dif­fer­ent in­ter­ests can com­mon in­ter­ests be agreed on equal terms.

Af­ter the East Asian fi­nan­cial cri­sis in the 1990s, East Asian coun­tries reached a con­sen­sus to jointly ad­dress the cri­sis through mu­tual as­sis­tance and co­op­er­a­tion. In this con­text, at the end of 1997 the ASEAN mem­bers in­vited the lead­ers of China, Ja­pan and the ROK to join them to dis­cuss re­gional devel­op­ment plans, and the ba­sic frame­work of re­gional co­op­er­a­tion, namely ASEAN plus China, Ja­pan and the ROK (10+3) was formed.

Af­ter 15 years of co­op­er­a­tion, East Asia has built up a se­ries of co­op­er­a­tion mech­a­nisms that have pro­moted eco­nomic, trade and in­vest­ment ties, in­creased cul­tural ex­changes and deep­ened non-tra­di­tional se­cu­rity co­op­er­a­tion, such as dis­as­ter preven­tion and mit­i­ga­tion. The coun­tries have be­come each other's im­por­tant trad­ing part­ners and man­aged to avoid be­ing neg­a­tively af­fected by the crises that have orig­i­nated in the United States and Europe.

The 10+3 meet­ing sum­ma­rized the co­op­er­a­tion over the past 15 years and lauded the co­op­er­a­tion mode, and put for­ward the Ph­nom Penh Dec­la­ra­tion on the East Asia Sum­mit Devel­op­ment Ini­tia­tive, point­ing out the di­rec­tion for fu­ture re­gional co­op­er­a­tion.

In the post-global fi­nan­cial cri­sis pe­riod, the fal­ter­ing world econ­omy and shrink­ing ex­port mar­ket have brought new chal­lenges for the sus­tain­able devel­op­ment of East Asian economies, and to seek new ways, in ac­cor­dance with re­gional char­ac­ter­is­tics, has be­come the re­gional con­sen­sus. But the prob­lem of the devel­op­ment gaps be­tween coun­tries is still prom­i­nent as there are many de­vel­op­ing coun­tries, such as China, and un­der­de­vel­oped coun­tries, such as Myan­mar, Cam­bo­dia and Laos, as well as devel­oped coun­tries, such as Ja­pan, the ROK and Aus­tralia.

The per capita GDP of Ja­pan, Sin­ga­pore and Aus­tralia in 2010 ex­ceeded $40,000, which is about 10 times that of China and 40 times that of Viet­nam, Laos, Myan­mar and Cam­bo­dia. Ja­pan, which mo­nop­o­lizes a con­sid­er­able pro­por­tion of core com­po­nents, raw ma­te­ri­als and pro­duc­tion equip­ment, ad­vo­cates the es­tab­lish­ment of a re­gion-wide free trade zone and im­ple­ment­ing a sin­gle zero tar­iff. By dom­i­nat­ing in­dus­try stan­dards and in­vest­ment rules, Ja­pan can build an in­dus­trial chain cov­er­ing the whole re­gion so as to mo­nop­o­lize the in­ter­ests of re­gional free trade. The rel­a­tively weak in­dus­tries in de­vel­op­ing coun­tries will have to face the im­pact of this. This is a fore­see­able re­al­ity.

A rel­a­tively un­even struc­ture also ex­ists in the China-Ja­pan-ROK co­op­er­a­tion. In 2011, a joint study by the three coun­tries con­cluded that a China-Ja­pan-ROK FTA will ben­e­fit all the par­ties. How­ever, No­mura Se­cu­ri­ties ar­gues that ben­e­fits brought by the FTA will be un­even, as it will ex­pand Ja­panese ex­ports by $60 bil­lion, while in­creas­ing the deficits of China and the ROK.

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