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GISPRI No. 11, 1994

GISPRI Activities

GISPRI Symposium
"Rise of Economic Regionalism and
the Asian Economy"


On 12 July, an international symposium entitled "Rise of Economic Regionalism and the Asian Economy" was held by Global Industrial and Social Progress Research Institute (GISPRI) under the sponsorship of the Ministry of International Trade and Industry, the KEIDANREN, and Nihon Keizai Shimbun, Inc. This symposium was developed from the studies that the Study Group on Economic Regionalism and Global Economic System, one of the GISPRI organizations, have been developing since last November. The purpose of the symposium is to announce results of studies of the future of rapidly developing Asian economies.

A total of 13 lecturers from both the academic and business worlds gave speeches and participated in panel discussions. Among these, six from Japan were: Mr. Ken Iijima (Deputy President and Executive Director of Sakura Institute of Research), Dr. Shumpei Kumon (Director of Center for Global Communications, International University of Japan), Mr. Akira Kojima (Deputy Chief Editorial Writer at Nihon Keizai Shimbun, Inc.), Mr. Sumio Takeichi (Senior Assistant to Senior Managing Director of Mitsubishi Corporation), Mr. Noboru Hatakeyama (Advisor to the Long-term Credit Bank of Japan), and Dr. Ippei Yamazawa (Professor at Hitotsubashi University). Seven from overseas were: Dr. Jagdish Bhagwati (Professor at Columbia University, USA), Dr. Gary Hufbauer (Senior Fellow at Institute for International Economics, USA), Mr. Datuk H. M. Khatib (Ambassador of Malaysia), Dr. Helmut Laumer (Member of the Board of Directors, IFO Institute, Germany), Dr. Hadi Soesastro (Executive Director of Centre for Strategic and International Studies, Indonesia), Mr. Sun Shang Qing (President, Development Research Center of The State Council, PRC), and Dr. In-Joung Whang (President of Korea Development Institute, The Republic of Korea).

About 80 people attended, mostly from member companies of GISPRI, embassies, and the media. Mr. Shinji Fukukawa (Advisor to GISPRI), who served as host, addressed the audience. The program is detailed on the next page. The talks were exceptionally elaborate for a one-day symposium. Three sessions were held, each presided over by an able coordinator. Inspiring presentations by famed speakers were followed by lively comments, discussions, and questions and answers with participants from the floor. The symposium was very successful.


[Keynote speech]

"New order for post-cold war world"

Dr. Shumpei Kumon

(Director, Center for Global Communications, International University of Japan).

The end of the cold war has brought about the feasibility of economic growth without inflation through bilateral relationships between developed and developing countries in the Asia-Pacific region. In developing countries, continuous economic growth is made probable by the information revolution. The future world will rest on three columns; the third column, added to the two comprising political and economic orders, should be called the cultural or information order. The most essential in the Asia-Pacific region is loose unification based on common cultural (information) values.

The form of development and new world order in the Asia- Pacific region after the cold war will be as described above. Two questions arise about the role of Japan in the new world order:

  1. Will a closed market and backwardness in the information revolution exclude Japan from the favorable cycle of new economic development in the Asia-Pacific region?

  2. Will Japan be disqualified for its role as lubricant between Asian culture and Western (notably American) culture because of the information-oriented 21st century system of industrialization, which differs distinctively from the 20th century system of industrialization where the model for Japan was formed?

SYMPOSIUM(at Keidanren Kaikan Room 1001)

9:00 a.m. Registration
9:15
    Address
         Dr. Shinji Fukukawa (Advisor to GISPRI)
9:25
    Keynote speech
         Dr.Shumpei Kumon (Director, Center for Global 

                         Communications, International University of Japan)
9:45
   1st Session:

    "Strategy of each country for the regional economy in
                      the Asia-Pacific region"


    Coordinator
   Dr. Ken Iijima (Deputy President and Executive
                          Director, Sakura Institute of Research, Japan)
    Speakers
   Dr. Gary Hufbauer (Senior Fellow, IIE, USA.)
                Dr. Hadi Soesastro (Executive Director, CSIS, Indonesia)
    Panelists
   Dr. Datuk H. M. Khatib (Ambassador of Malaysia)
   Dr.Helmut Laumer (Member of the Board of Directors, 

                          IFO Institute, Germany)
     Dr. Ippei Yamazawa (Professor, Hitotsubashi University,                             Japan)
0:10 p.m.
Lunch
0:50
   Luncheon speech
   Dr.Noboru Hatakeyama (Advisor to the Long-term Credit                             Bank of Japan)
1:30
  2nd Session:

"Chinese Economy and NIES Countries; Entry of China                        into picture, attractive market or competitor"

    Coordinator
     Dr.Sumio Takeichi (Senior Assistant to Senior Managing                             Director, Mitsubishi Corporation)
    Speakers
     Dr. Sun Shang Qing (Minister, DRC, PRC)
     Dr. In-Joung Whang (President, KDI, The Republic of                             Korea)
               Panelists
    Dr. Hadi Soeastro
     Dr.Ippei Yamazawa
3:55
Coffee break
4:10
3rd Session:

"Regional economic arrangements in the Asia-Pacific                       region as seen from the global perspective"

Coordinator
Dr.Akira Kojima (Deputy Chief Editorial Writer, Nihon Keizai                            Shimbun, Inc.)
Speakers
Dr. Jagdish Bhagwati (Professor, Columbia University)
Dr.Helmut Laumer
Panelists
Dr. Gary Hufbarer
Dr.Sun Shang Qing
Dr. In-Joung Whang
6:35
Close


[Luncheon speech]

"VIEW OF JAPANESE GOVERNMENT ON THE ASIA-PACIFIC REGIONAL INTEGRATION"

Mr. Noboru Hatakeyam

(Advisor to the Long-term Credit Bank of Japan)

A line must be drawn between arranged regional integration based on NAFTA, EC, or the like, and de facto regional integration such as that in Asia. Japan disagrees with regionalism based on formal arrangement such as Free Trade Agreement (FTA), because private enterprises, which are the foundation of economic vigor, aim at the entire global market, but not regional markets formed for the purpose of reducing tariffs.

The speaker checked up on the current situations of regional integration with GATT article 24, and mentioned about the possible future of the Asia-Pacific region after the founding of APEC: establishment of AFTA, concept of PAFTA, idea of EAEC, and approaches to Asian countries by NAFTA. He concluded that Japan, being engaged in multilateral relations, does not like enlargement of NAFTA to Asia, considering the discriminating nature of FTA.

The summary of speeches and the succeeding comments and discussions in the sessions is provided in the following.


1st Session

"Strategy of each country for the regional economy in the Asia-Pacific region"

Major points:

  1. US policy towards Asia
  2. Strategy of individual countries in the Asia-Pacific region for the regional economy
  3. Position and role of Japan
  4. European view towards Asia

[Report by Dr. Hufbauer]
US POLICY TOWARDS THE ASIA-PACIFIC: WHERE'S THE STRATEGY?

The Clinton administration's policy towards Asia has three objectives:

  1. continued maintenance of security,
  2. creation of environment for free trade and investment, and
  3. support for democracy and human rights.

The administration should not attempt to achieve everything at once, but pursue these goals discreetly, through close dialogue with individual countries.

Among these goals, the first priority must be security, specifically maintaining of the Asian security umbrella with the cooperation of Japan and China. Pursuing the second goal, the Administration has been relying on unilateral measures that imposed set numerical indexes on other countries. The third goal involves how US trading policy should be linked to the social issues and democracy of trading partners. The Administration has recently toned down its economic and political assertions. In order to achieve these goals, the Administration needs to take positive multilateral approaches to Asia through GATT panels and APEC (especially by reinforcing APEC).

In his speech draft, Dr. Hufbauer suggested that the Administration should consider Asian candidates for NAFTA enlargement, starting with Korea.

[Report by Dr. Soesastro]
EAST ASIAN ECONOMIC INTEGRATION; PROSPECTS AND ISSUES FOR POLICY

I would like to introduce the concept of new regionalism. According to analysis of current situations, the growing economic integration of East Asia is essentially market-driven, with the help of trade and direct investment that has formed an organic network in the region. This regional structure should be sustained and strengthened in a circle that holds ASEAN in its core. (ASEAN should play the core role also in AFTA and EAEC.) East Asia needs to strengthen such regional structures in line with the spirit of "open regionalism" to maintain its economic growth and dynamism.

[Panel discussion]

(1) Dr. Yamazawa (A member of APEC Sages)

Dr. Yamazawa asks Dr. Hufbauer to explain in detail the significance of enlargement of NAFTA in Asia. Thank you. Japan should not attempt to arrange a free trading region; it should remain an independent trading country in concentric cooperation structures such as GATT, WTO, and APEC, and encourage APEC to develop its functionality.

(2) Ambassador Khati

Legislation of APEC would be an inward action and disadvantageous both to member countries and outsiders. It is Asian consensus that EAEC, advocated by Malaysian Prime Minister Mahathir, was an outward and moderate association and not intended to separate countries on the sides of the Pacific. I would like to quote a recent address of Prime Minister Mahathir regarding the prospect that market-driven, open regionalism would promote inclusive economic integration.

(3) Dr. Laume

Europe has turned much attention toward Asia, and Western democracy differs from that of Asia today, because attainment of democracy and human rights is linked to economic growth.

(4) Mr. Iijima (The coordinator)

Issues such as democracy and human rights and the situations of APEC arguments in the US were thrashed out.

With regional association taking place in the diversified Asia-Pacific region, deepening mutual understanding of local culture, history, religion, and the way of thinking would be necessary as well as economic intercourse.


2nd Session:

"Chinese economy and NIES countries; Entry of China into picture, attractive market or competitor"

Major points:

  1. Current situation of Chinese socialist market economy

  2. Significance of Chinese economy for NIES countries

  3. China as undetermined factor in Asia-Pacific region economy

[Report by Mr. Sun]
CURRENT SITUATION OF CHINA'S MARKET ECONOMY AND CHINA'S ECONOMIC STRATEGY IN ASIA-PACIFIC REGION

Under a socialist economic system, China's economy is in a new growth period because of its rich labor force and high rate of saving. The growth rate over the last two years was 13%. The government is anticipating economic overheating and is trying to reduce the growth rate. Making itself an attractive market to other countries by the introduction of a socialist market economy, China's external economic policy aims to establish an open economic cooperation system for mutual benefit on the one hand, and to adjust its export strategy to compete with neighboring countries on the other hand. China will actively promote the establishment of a new economic order in the Asia-Pacific region.

[Report by Dr. Whang]
THE ROLE OF CHINA IN THE ASIA-PACIFIC REGION; A "COMPETITOR" OR AN ATTRACTIVE MARKET

Korea, one of the NIES countries, sees neighboring China as a tough but fair rival because it has a plentiful labor force and is consistent with the comparative advantage principle. Concentration of investment in China is contributing to the pushing of liberalization policies in neighboring countries so that they can once again attract foreign capital. As a whole, China is not a threatening rival but a cooperative partner in the Asia-Pacific region economy.

[Panel discussion]

(1) Dr. Yamazawa

The successful integration of China, a potential economic power, into the Asia-Pacific region depends on its integration into the GATT panel and WTO. In addition, APEC needs to nurture local economic regions such as South China district for the sake of development of the entire Asia-Pacific region economy.

(2) Dr. Soesastro

The majority view in ASEAN countries toward China sees it as a competitor and a contributor to dynamic growth of the Asian economy. Sooner or later China will have to promote domestic economic revolution to adapt itself to international customs, and China will benefit from competition with other countries. The greater China region consisting of China, Hong Kong, and Taiwan, is aiming at economic growth in a way that differs from Japan (like wild geese flying at differing altitudes) and is not likely to be a threat to other Asian countries.

(3) Mr. Takeichi

The population in China today is 1,200 million, which is equal to the entire world's population about 150 years ago. Therefore, China deserves to be treated as a whole world of its own. China will probably progress faster than Japan or the US. However, there is an economic gap between the coast and the inland of China.

(4) Mr. Sun

The Chinese government has taken measures to revamp the taxation system and to entice foreign investment into the middle western area. China would like to be evaluated by the average of the entire nation.

(5) Others.

A floor participant questioned about whether special conditions would be applied to China's joining of WTO. Acknowledging that it was a very delicate issue, most of the panelists agreed that if China started pouring out exports, other countries would take some safeguard measures.


3rd Session

"Regional economic arrangement in the Asia-Pacific region as seen from a global perspective"

Major points:

  1. Relation of rise of regionalism to GATT and WTO

  2. Comparison of Asia-Pacific regional economics with EU and NAFTA

  3. Position of Asia in global framework

[Report by Dr. Bhagwati]
PITFALL IN WORLD TRADE INTEGRATION SYSTEMS

The US is promoting a political strategy of hindering Asian regionalism by manipulating APEC. The US may attempt an arrangement in a form like FTA, to which Asian countries must be alert. Asian countries should consider counteractions to such movements by the US in WTO, because when FTA is imposed on a country, values of a specific culture along with biased views are also imposed. Thus, support for multilateralism is important.

[Report by Dr. Laumer]
RELATION BETWEEN GATT-WTO AND ECONOMIC REGIONALISM

Regionalism may be part of the foundation of a global system. European unity is trying to eliminate trading barriers, for the benefit of not only the EU members, but also for non-member countries. Presupposing that establishment of WTO will make it difficult to form a regional group for the protection of group members from non-member countries, EU is going to promote step-by-step integration to the complete European integration system by 2000.

[Panel discussion]

(1) Dr. Whang

EU and the US may think multilateralism has failed since it incurred dumping imports from Asian countries. If the Asia-Pacific region will open its market for Western exports, it will significantly relieve global tension. Whether Korea or any other specific country will sign onto NAFTA will not be important in a truly enlarged NAFTA. Rather, an urgent issue is the impact of an enlarged NAFTA upon Asia, where the role of Japan, a possible integration nucleus in Asia, is yet to be determined. Another similar question is the will of EU in extending its membership.

(2) Dr. Hufbauer

As for NAFTA openness, a non-member country may enter NAFTA only on its own will. Future US policy in APEC can be tried in part from the way it deals with social issues and where interested groups in labor or environment issues are involved.

(3) Dr. Laumer

A single, global market is the best for world trading, and EU is only the second best. EU is hesitating to grant its membership to Turkey for fear of serious labor problems.

(4) Mr. Sun

China will actively participate in regional cooperation and will try to lift protectionism in the region.

(5) Mr. Kojima

Today globalism has more energy than regionalism. Regionalism based on ideologies are seeking a new form after the end of the cold war. The current regionalism has contributed to improving the bottom line of global economies. Global flows of information and capital are occurring simultaneously on large scales. Because economic dynamism in Asia was transplanted from other parts of the world, exclusion of non-Asian countries would be self-denying. Continuous economic growth in future depends on whether any countries or regions open their markets to exports. Real world economies are moving towards more sophisticated, closer mutual reliance. In other words, economic geography has come to an end.

Note:
Contents of this document were extracted at GISPRI from stenographic records of the meeting. Time restrictions prevented us from requesting the participants to check the text. The responsibility for the wording lies with GISPRI. Information in this brochure may be corrected should errors be found. Proceedings of this symposium will soon be issued
.

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