Recent years have seen much discussion about greater economic
integration in East Asia. However, the majority of significant
achievements have always been made within the Association of
Southeast Asia Nations (ASEAN) or between ASEAN and other economies
in the region.
Encouraged by progress on the path leading to freer trade among
themselves, ASEAN nations on Tuesday agreed to speed up the
timetable for the creation of a single market called ASEAN Economic
Community (AEC) by five years to 2015.
Considering the status quo of economic relations in East Asia,
and perhaps political relations as well, AEC could well serve as
the core and absorb other economies to expand itself to a bigger
common market in the region. This is not the only possible
scenario, but it is the most likely one.
In contrast, a proposal by Japanese Trade Minister Toshihiro
Nikai for a sweeping free trade agreement that involves the
16-country East Asia free trade zone which covers ASEAN, Japan,
China, the Republic of Korea (ROK), India, Australia and New
Zealand is too ambitious for the moment.
Japan's trade talks with both the ROK and ASEAN have not been
progressing smoothly. And Japanese wariness of China's increasing
influence has complicated any attempt for a free trade arrangement
that would involve the two. This has made anybody talking about a
free trade agreement involving China and Japan, Asia's biggest and
second-biggest economies, sound naive and idealistic.
In the broader context Japan proposed, which would also include
such economic powers as India and Australia, it would be much
tougher to make headway.
The uncertain prospects of the multilateral trading system after
the pathetic Doha Round of talks seem to justify the need for a
growing effort toward bilateral and regional trade pacts in East
Asia, which relies heavily on trade for growth. At the same time, a
unified Europe has increasingly become the envy of businesspeople
in East Asia.
Indeed, the increasing business transactions and cross-border
industrial supply chains for many industries in the region do
necessitate more liberalizing steps in terms of trade and economic
co-operation.
There is already a patchwork of free trade agreements or
potential agreements on a smaller scale in the region.
However, trade officials and company executives have to accept
this regrettable fact: Relationships between nations in the region,
especially between its major powers, are still not mature enough
for an aggressive plan as suggested by Nikai.
Commenting on the Nikai initiative, ASEAN trade ministers said
the plan was worth study but urged Japan to make its FTA
negotiations with ASEAN the current priority.
This would be a realistic approach.
(China Daily August 25, 2006)
