INTRODUCTION
Both coasts of the Pacific Ocean will be as populated and open to commerce and as
industrialized as the coast from Boston to New Orleans is now. Then the Pacific
Ocean will play the same role as the Atlantic Ocean does now as the Mediterranean did
in antiquity and in Middle Ages. The role of the great water highway of world
commerce and the Atlantic Ocean will decline to the level of an inland sea, as the
Mediterranean is now.
Karl Marx and Fredrick Engels
on the probable consequences of the California gold rush. 1
Throughout history, global economic activity has revolved around three oceans. The
Mediterranean was probably the most accomplished lake of commerce, but with the rise
of the Americas in the 19th Century the Atlantic rose to prominence. The economic
development of East Asia in the second half of the twentieth century has prompted the
speculation that the Pacific may well eclipse the Atlantic in the projected volume of
trade. It is interesting to note that the first person to use the term 'Pacific age' was the
Japanese political economist lnagaki Manjiro (1861-1908).2 Inagaki studied during the
late 1880s at Cambridge University, under the guidance of British historian Robert
Seeley. lnagaki compared his country to Great Britain. For him Japan: a few small barren
islands far away from glittering Europe would someday be like Great Britain. The recipe
for success taught by Seeley - commercial and industrial expansion and refraining from
wasteful military adventures - could be applied to Japan's case. lnagaki was optimistic,
wholly confident that his country, which at that time exported coal, raw silk, tea, and rice,
would be able to rise to the top rank of manufacturing nations. 3 However, he cannot be
regarded as the absolute originator of the vision. Some roots could probably be found in
seventeenth and eighteenth century utopian writing regarding China and Japan.
According to Australian lore about the origins of the idea, Henry Copeland, who painted
visionary images of the Pacific in 1882, had been mentioned. 4 In America, Senator
William H. Seward, who later became President Abraham Lincoln's secretary of state, has
1 Cited in H. Edward English, 'The Pacific Formula, Institutional and Other Variables', Paper presented at
the Institute of Strategic and International Studies (ISIS) Affairs FoiUlll; Malaysia, April13 1989.
2 w~.tanabe Akio, Ajia-TaJJe)O no kokusai kan1x:i to Nihon Uapan and the Asia-Pacific Relations], (Tokyo:
Tokyo University Press, 1992), pp. 98-102.
3 Inagaki Manjiro, japan and the Pacific: A japanese view of the Eastern Q.iestion, (London: T. Fisher Unwin,
1890), pp. 54 - 6.
4 Brunsdon C. Fletcher, 7he New Pacific: British piicyand German Aims, (London: Macrnillan, 1917), p. 39.
2
been credited with having uttered the following prophecy during the California gold rush
sometime in the 1850s.
European thought, European commerce, and European enterprise, although actually
gaining in force, and European connections, although becoming more and more
intimate, will nevertheless relatively sink in importance in the future, while the Pacific
Ocean, its shores, its islands, and adjacent territories will become the chief theatre of
human events and activities in the world's great hereafter.s
When the process of economic development began in Japan in the 1950s, it was
thought to be a great exception that a non-Western country had attained the levels of
modernization and economic development. However, this spread to other parts of Asia
including the Newly Industrializing Economies (NIEs), such as the Republic of Korea,
Taiwan and Hong Kong, the states of ASEAN (Indonesia, the Philippines, Thailand,
Malaysia, Singapore, Brunei and NIEs) and then to China. These countries have often
sustained for a decade or more average annual growth rates of 8-10 percent or more. The
speed of this economic transformation has been overwhelming. As Kishore Mahbubani
has pointed out, it took Britain and the United States fifty-eight years and forty-seven
years, respectively, to double their per capita output, but Japan did it in thirty-three years,
Indonesia in seventeen, South Korea in eleven, and China in ten. 6 An equally ci.ramatic
expansion of trade has occurred first between Asia and the world and then within Asia.
Simultaneous to the rise of East Asia and the subsequent change in the global
economic balance of power, has been the consolidation of the East Asian regional
identity. Samuel Huntington points out that economic success has led East Asia tc
trumpet the distinctiveness of their culture and superiority of their values as compared to
the West.7 This in tum led to a trilateral consolidation of power with North America and
Europe. According to Richard Higgot, the three regions do not make three distinct 'trade
blocs', but are in the process of consolidation.8 Hence for regional openness to continue,
there is the need for regional and multilateral institutions.
5
Nicholas Roosvelt, 7he Restless Pacific, (New York: Charles Scribner's Sons, 1928), p. 3.
Kishore Mahbubani, "The Pacific Way," Foreif!Z Affairs, Vol. 74, January/Februai)' 1995, pp.100-103;
World Bank, Global Eroncmic Prospa:ts and the DeuJoping Countries 1993, (Washington: 1993), pp. 66-67.
7
Samuel P. Huntington 7he Gash ofC~ and the Remaking ofthe World Order, (New York: Simon and
Schuster, 1996), pp. 103-4.
8 Richard Higgot, "The Pacific and Beyond: APEC, ASEM and Regional Economic Management," in
Grahame Thompson (ed.), Eronanic Dynami!m in the Asia~Pacific: 7he GruuAh of Integration and ~s,
(London: Routledge, 1998), p. 335.
6
3
Subsequently, this has led to the post war surge in the building of institutions for
regional cooperation. It began with institutions like Pacific Basin Economic Council
(PBEC) in 1967 and the Association of Southeast Asian Nations (ASEAN) which started
the same year. The Asian Development Bank (ADB) followed the next year. Besides this,
Pacific Trade and Development (PAFTAD) came into being in 1968. Subsequently, in
1980 and 1989, the Pacific Economic Cooperation Conference (PECC) and Asia Pacific
Economic Cooperation (APEC) were set up. Amitav Acharya points out that multilateral
institution building in the region is process-driven to a large extent. 9 In other words, by
avoiding grand institutional designs demanding finn obligations and reciprocity and
focusing instead in the development of a slow-moving consultative process based on
existing regional norms and practices, regional actors have grown comfortable with the
idea of multilateralism. Multilateral institution - building in the Asia-Pacific region is thus
a sociological and intersubjective dynamic, rather than a legalistic and formalistic one. It
is an attempt to contrive and construct a regional identity through the development of a
long-term habit of consultations.
However, the fundamental goals of the multilateral institutions are not peculiar to
the region. As Paul Evans has argued, institution building in the Asia-Pacific region,
rather than following the pattern established in Europe and North America, is instead
'emerging from unique historical circumstances and will likely evolve in its own particular
way'. 10 The origin of what is increasingly being referred to as the 'ASEAN way', 'Asian
way' or 'Asia-Pacific way' of multilateralism is to be found in the conscious rejection by
Asian leaders and policy elites of 'imported models' of multilateralism. Satoh Yukio, a
senior Japanese Foreign Ministry official closely involved in the formative stages of
regional security dialogues, provided one of the most forceful arguments as to why
'European concepts and processes would not fit the conditions of the Asian and Pacific
region well.' He offered four reasons: Asia lacked the strict bipolarity of Europe because
of the presence and ro1e of China and because many Asian states adopted a non aligned
foreign policy posture. Secondly, military conditions in the respective regions were quite
9
Amitav Acharya, "Ideas, Identity, and Institution-Building: From the 'ASEAN way' to the 'Asia-Pacific·
way'?," 7he Pacific Re-view, Vol. 10, No.3, 1997, p. 324.
10 See Paul M. Evans, "The dialogue process on Asia-Pacific security issue: inventory and analysis", in Paul
M Evans (eel), Swdying Asia·Pacific Security, (Toronto & Jarkata: University of Toronto-York University
Joint Center for Asia-Pacific Studies and Center for Strategic and International Studies, 1994).
4
different. Thirdly, Asia had a larger number of unresolved conflicts and disputes and
fourthly, while Europe during the cold war was preoccupied with nuclear war, Asia's
main concern was with economic development. Thus the primary aim of regional
cooperatwn to date had been economic, not political or security. 11 More recently,
proponents of the 'Asia-Pacific way' have emphasized the strategic culture and
negotiating styles to account for the apparent uniqueness of institutional characteristics
and decision making processes within Asia-Pacific multilateral institutions.
In addition to the multilateral institutions, Takenaka Heizo points out that there is a
third phase of sub-regional integration assuming shape in place of the earlier framework
of growth led by national or quasi-national units-Japan, the Asian NIEs, and the United
States. Typical examples include the economic integration of South China and Hong
Kong (the South China economic sphere) and of China's Fujian Province and Taiwan
(the Taiwan Strait economic sphere). Another example is Indo-Chinese economic
integration centered on Thailand (the baht economic sphere). 12
The in1petus for regional cooperation can be traced to the years immediately before
and after the World War I. 13 Increasing international economic growth, expansionism,
competition, and disorder sparked the search for ways to ensure the peaceful settlement
of disputes. Tllis was true not only in Western Europe, the major battleground of the
First World War, but also in East Asia and the Pacific, where Sin~-Japanese and RussoJapanese conflicts had already signaled regional unease and imminent danger14 •
Organized governmental action in response to regional concerns was first taken in 1907
with the founding, in Honolulu, of the Pan-Pacific Union, which sought to bring 'greater
unity to the region through the development of communities in microcosm.' 15 Several
efforts led to the establishment of functional but nonofficial fora. It was only in the 1925
that Pacific Union was able to establish the Institute of Pacific Relations (IPR). The
Satoh Yukio, "Asian-Pacific Process for Stability and Security", Paper prepared for the Manila
Conference on Regional Security, 6-7 June 1991, pp. S-6.
12 Takenaka Heiw, "Can Japan Glue Together Asia and the Pacific?," Japan Echo Vol. 22, No.4, Wmter
1995. Available at http:/ /www.japanecho.co.jp/docs/html/22CH07.html
13 Lawrence T. Woods, Asia-Pacific IJiplanacy: Non~ Orgpnizatiazs and Intemational Relations,
(Vancouver: UBC Press, 1993), p. 29.
14 See Christopher Thome, 1he Limits of Fareigz Policy: 7he West, the League ani the Far Eastern Crisis of 193133, (New York: Capricorn), 1973.
11
5
organization's stated purpose was 'to study the conditions of the Pacific peoples with a
view to improvement of their mutual relations'.
16
Discussions of the regional
cooperation idea can also be found in the proceedings of the IPR conferences. The body
was finally disbanded in 1960 - 61. However, the interest generated by it continued
principally in business and academic circles and later tentatively in official quarters.
It is interesting to note the centrality of Japan on the issue of Pacific Cooperation. In
addition to its own failed attempts at creating a Pacific community, Japan was one of the
founding members of IPR.. In the post \XTorld War II era, Japan still continues at the
fulcrum of the proposals for regional economic cooperation.
The country's ties with the region go back into history. It was through China and
Korea that much of its traditional culture including writing system and early forms of
political organization were imported. But following the Meiji Restoration in 1868, Japan
made a conscious effort to distance itself from Asia. Later Japan reached for grander
ambitions; while mouthing the rhetoric of an East Asian "Coprosperity Sphere," it
sought to replace Western domination with its own. Tne World War II chastised Japan
for its aggression but also reinforced its dependency on the West. In the 1950s and 60s,
the Japanese government hesitated the mention of an 'Asia Policy' for fear of offending
the countries victimized by Japanese aggression.
But as the county's economy developed, its relations with the region also improved.
After the mid 1980s, relations with East and Southeast Asia improved dramatically.
Investment and the establishment of offshore production bases accompanied this. By
mid-1990s more Japanese direct foreign investment was going to the Asia than to North
America or Europe. Japan's initial direct investments were concentrated in the NIEs but
gradually shifted to the ASEAN countries and then to China. This trend further
endorsed a policy of "disengaging from America and engaging Asia." 17 This involved a
ts George S. Kanaheb and Michael Haas, "ProspectS for a Pacific Community," Pacific Gmmunity, No.6 ,
1974, p. 87.
!6 J.B. Condliffe, (ed.), Prollons of the Pacific, 1929: Prrxmling of the Third O:Jnfore;ue of the Institute of Pacific
Relatinns, Nara and Ky;to Japan, 23 G:tokr-9 Nawnb.:r 1929 ,(Chicago: University of Chicago press 1930), pp.
660.
17 Alex Kerr, Japan Trmes, 6 November 1994, p. 10; Ozawa Kazuhiko, "Ambivalence in Asia," Japan UJXlate,
44 (May 1995), 18-19.
6
re-identification with Japanese cultural traditions and renewed assertwn of 1t.
Additionally, it also led to efforts to 'Asianize' Japan and identify it with a general Asian
culture. There have been several calls for Japan to play a more active role in the AsiaPacific. Within the country, ultra nationalists like Ishihara Shintaro speak increasingly of
the country's "return to Asia". 18 Some even argue that Japan's foothold is in Asia and it
should catch up with the train of "Asian Community'' to play a leading role. 19In addition
to
this, regional leaders like Mahatir Bin Mohammad of Malaysia have also emphasized
the need for Japan to assume the leadership of the region. On the other hand there are
countries like China which has expressed concern over Japan's regional ambitions. 20 Here
it is important to take a look at the Asia-Pacific region in order to assess Japan's position
in it.
THE CONCEPT OF ASIA-PACIFIC
The region known as Asia-Pacific or Pacific Basin has been variously defined.
Michael Oborne and Nicolas, Fourt distinguish between the two.21 They define Pacific
Basin as the collection of nations washed by the Pacific Ocean including North and
South America, the Asian continent and the island states east and north of Indonesia. On
the other hand, the term Asia-Pacific has a more restrictive implication. This groups
together the market economy nations on the Pacific slope of the Asian side of the Pacific
and is more often referred to as Pacific Asia. The region represents a mosaic of cultural,
social, economic and political entities. The western core comprises the economically
18
This theme is echoed in a book which Ishihara co-authored with Dr. Mahatir Mohammad entitled, The
A si.a That Can Say No: A Card Against the West, it argues among other things, that Japan should return to its
Asian roots and join the EAEC.
19
Toh Lam Seng, "Japan's Asianism a Cause for Concern", Straits Trmes, 17 May 1995.
zc Many Chinese commentators compare Japan to a migratory bird and see Japan's recent 're-Asianization'
as indicative of Tokyo's opportunistic response to the cultural, power and economic shift from the West to
Asia. The flying geese format enunciated by the Japanese is considered to be Tokyo's means of dominating
Asia. According to this format, Japan as the 'head goose' would gradually transfer less advanced industries
and technologies backward to other following 'geese.' Chinese commentators unanimo.JS}y express
disapproval of this format. One observer writes,
'Japan's move to "dissociate Europe and Return to Asia" attempting to be the head goose has attracted
the attention of countries concerned Asian countries that suffered immensely from the Japanese "Great
East Asia Co prosperity Sphere" welcome Japan's technological transfers and investment, and are willing to
develop equal economic and trade relations. But they have no intention whatsoever to become markets for
Japan to dump its outdated industries ...Other Asian countries are catching up, and are demonstrating
themselves as 'group geese'.' Yong Deng, 'Chinese Relations with Japan: Implications for Asia-Pacific
Regionalism' pp. 388-9.
7
developed nations, of Japan, Australia and New Zealand, the four Asian NIEs such as
the Republic of Korea, Taiwan and Hong Kong, the states of ASEAN including
Indonesia, Philippines, Thailand, Malaysia, Singapore, Brunei and Vietnam. The socialist
economies of the People's Republic of China, Laos, Cambodia and the Democratic
People's Republic of Korea complete grouping. The numerous microstates of the Pacific
stich as Melanesia, Micronesia and Polynesia make up another part of the region. On the
eastern core, the Asia-Pacific is flanked by USA, Canada, Mexico apart from the South
American economies of Chile, Peru and Ecuador and Columbia. Some of the societies of
the region are among the world's most ethnically homogenous like Japan and Korea, in
part because of long periods of isolation. On the other hand, parts of Southeast Asia
have always been commercial crossroads and are mixing bowls of cultures and peoples.
The Malaysia-Singapore area astride the Straits of Malacca probably best typifies the
ethnic and cultural diversity of this part of Pacific Asia. However, diversity can also be a
basis for community building when combined with common features and interests.
Despite the diversity, there are several shared features in the region especially in
Pacific Asia. A notable factor is the centrality of China. Historically China's impact has
been mainly through the movement of culture, goods, and people. Culturally the
strongest impact was on Vietnam, the Korean peninsula and Japan. The Chinese diaspora
has the biggest impact in Southeast Asia, where the colonial powers welcomed Chinese
traders and laborers. Secondly, the region's experience with imperialism has been another
common aspect. The West first appeared in the 15th and 16th Centuries, occupying key
ports particularly along the spice trade route to Southeast Asia. In Northeast Asia the
governments reacted to the European presence by trying to shut out foreign influences
and control interaction. Korea prohibited all interactions, while Japan provided an
extremely narrow window through the Dutch trading post at Deshima Island in
Nagasaki. These policies were difficult to enforce and broke down completely in the 19th
century. By the end of the 19th century, virtually all the countries in the region had either
lost sovereignty or were subject to unequal treaties and de facto foreign control in
commercial areas.
2!
Michael West Obome and Nicolas Fourt, Pacific Basin EconanicOXJperatioo, (Paris: OECD, 1983), p. 4.
8
Further, the restoratiOn of sovereignty in years following World War II are
among the most important experiences shaping the modem histories of the region. The
region's economic performance over many years has given it a sense of self-confidence
and pride despite the recent currency and fmancial difficulties in Southeast Asia.
Morisson et al point out that this has· in tum encouraged poor performers and stimulated
startling changes in economic policy in such countries as the Philippines and Vietnam in
the hope that they too will become high performance economies.
22
However, merely shared features in the region often do not inspire the
consolidation of a regional identity. Buzan points out that by many of the yardsticks of
understanding - based on one or more of the criteria of ethnicity, race, language, religion,
culture, history, economic or political cohesiveness - the states of East Asia lack a record
of regional consciousness. 23 To this end, some scholars have challenged the idea of the
Asia-Pacific region. Gerald Segal contencb that the Pacific is no more than a notional
artifact and not a coherent region deserving the hyperbole that it is subject to? 4 "There is
no Pacific community in a linguistic, religious, cultural, political, or ideological sense, nor
historically is there much evidence of regional consciousness". 25 Pekka Korhonen points
out that 'Pacific Asia' or 'Asia-Pacific' denotes the gradual orientation of Asian countries
towards the Pacific, whereby they derive a measure of group identity from this
orientation.26 It is more a functional than a spatial concept hence a specific list of
countries cannot be given. Some countries oriented themselves early and strongly to the
Pacific, like Japan; some did it later, like China.
Economic interdependence, which has been described as the binding force of the
Asia-Pacific region, does not ipso facto imply development of a greater sense of region.
According to Higgot, the yardsticks of 'regionness' also vary according to the policy
issues or what the dominant actors in a given group of countries at a given time see as
22 Charles E Morrison, Kojima Akira, Hans W. Maull, OxJperatianand Carmunity Buildingwith Pacific Asia: A
Report to 7he Trilateral Cmmission (New York: The Trilateral Conunission, 1997), pp.ll.
23 See Bany Buzan, "The Asia-Pacific: What sort of region in what sort of world?" in A. McGrew & C.
Brooks (eds.), 7he Asia -Pacific in the New World Order, (London: Routledge, 1998).
24
Gerald Segal, Rethinking the Pacific, (Oxford: Oarendon Press, 1990).
25 Lawrence Krause, "The Pacific Economy in an Interdependent World: A New Institution for the Pacific
Basin," in John Crawford and Greg Seow (eds.), Pacific Ecrmunic Cooperation: Su~ far Action, (Kuala
Lumpur: Heinman Asia, 1981).
9
their political priorities.27 In order to understand the proliferating multiple interpretations
of region, we need
to
distinguish between de facto structural e::onanic regionalization
(regional integration) and de jure institutiond e::onanic co-operation which is at the core of
understanding the events in the Asia-Pacific.28 Growing intra-regional trade and foreign
direct investment drives regionalization in East Asia. For this reason it can also be seen
as · structural. It is not necessarily policy driven by governments. Instead, the most
important driving force is the globalization of production networks. This has led
to
a
web of production, sourcing and distribution that is likely to accelerate. This is a stmctural
or
defacto explanation of regionalization. The globalization of technology, finance and
production networks, in which Japan has had a central role, is the key to understanding
this process. On the other hand de jure institutional cooperation refers to the forums which
influence governmental policy. This can take the form of loosely agreed or institutionally
sanctioned trade commitments between states to enhance cooperation in a range of
areas. There have been several such forms of cooperation in the Asia-Pacific including
bodies such as the PECC, PBEC the PBF and APEC.
Inoguchi Takashi attributes the consolidation of the Asia-Pacific region to several
intemat:ional forces. 29 He points out that while the Vietnam War, Watergate scandal, the
dollar crisis and the oil crisis exhausted the United States in terms of political will and
economic health, the Asia-Pacific region prospered in the aftermath of the war. 30 The
upward tum of the world economy coincided in the 1960s with the emergence of the
NIEs. It was during this period that they were able to switch from import substitution to
export-led industrialization, with open access to the US export market and Japanese
capital goods for import. In that direction, Taiwan started off early in the 1960s and
South Korea in the mid-1960s. Second, as the first oil crisis hit every country hard, the
Asia-Pacific region was particularly affected since most of those countries were not rich
26
Pekka Korhonen,]ap:m and Asia-Pacific Integration: Pacific Rcmances 1968-1996, (London: Routledge, 1998),
p. 3.
27 Higgot, n. 8, pp. 338-339.
28 See Yoshida M., Akimune I., Nohara M., Sato K., "Regional economic integration in East Asia: special
features and policy implications" in Vincent Cable and D. Henderson (eds.), Trade Blocs? 1he Future of
Regional lnter}"ation (London: Royal Institute of International Affairs, 1994).
29 Inoguchi T akashi, Japans Forei[F Policy in an Era of Global a,tl1lf!!, (London: Pinter Publishers, 1993), pp.
169-70.
30
See Robert Gilpin, War and O:ung! in Wortd Politics, (New York: Cambridge University Press, 1981);
Robert Gilpin, 1he Political Ecotvny of International RelaJions, (Princeton, New Jersey: Princeton University
Press, 1987).
10
in energy resources. But contrary to the expectation, the NIEs began to flourish in the
post-oil crisis period. They were able to make full use of their comparative advantage as
latecomers with low wages, long working hours, technological momentwn, intensive
capital utilization and good developmental planning. Thus, by the late 1970s, when the
NIEs joined Japan, the emergence of the Asia-Pacific region was visible and tangible. 31
Inoguchi further points out that the increasing integration of the regional
economies with the US economy in the 1980s has influenced the emergence of the AsiaPacific region. 32 Manufacturing patterns have become truly cross Pacific, with capital
technology, resources and labor factors all flowing freely across national borders. Trade
has thrived, with Japan-United States activity annually registering the largest transoceanic
volume and the NIEs-United States commerce steadily catching up. International
monetary interdependence became extraordinary in the 1980s. The acceleration of capital
movements between the United States and Japan in particular was enormous. The
economic management of both countries would have been difficult to conceive without
fuller coordination between· them. Despite the often-insurmountable problems, the
reality of inexorable economic interdependence and penetration is dearly evident. All in
all, the phrase 'the Pacific economy' has come to take on an authentic character. Not
only Japan and the United States but also the NIEs and the ASEAN countries have
begun to do more business with each other. Pacific dynamism has also attracted the
attention of Communist neighbors, including China, the Soviet Union, Vietnam and
North Korea, encouraging economic reforms and the opening to the West.
Besides this, the Cold War divisions too were gradually eroding in the region,
which influenced the international alignment patterns. In 1969 China and the Soviet
Union clashed on their common borders. In 1971 the United States and China
normalized diplomatic relations. In 1973 the United States and North Vietnam
negotiated an armistice agreement. In 1975 Vietnam was unified. In 1978 Japan and
China concluded a treaty of peace and friendship. In 1979 the Sino-Soviet treaty of peace
and mutual assistance was automatically terminated. Also in 1979 Vietnam occupied
31
See Frederic Deyo (ed.), The Political Ecorumy of tk New Asian Industrialism, (Ithaca, New York: Cornell
University Press, 1986).
32 Cf. Inoguchi. n. 29, p. 170.
11
Cambodia and China invaded Vietnam, two incidents involving Communist neighbors.
These developments complicated or blurred the image of the traditional cold war
antagonism between the Communist and the anti-Communist blocs in the Asia-Pacific
region. Though political uncertainties continue, economic vigor has become the
foremost feature of the region. 33
On the other hand, Charles Morrison points out that as compared to the \X'est,
regional cooperation in East Asia was a delayed event. He attributes this to the crisis of
leadership in the region.34 It was during the Cold War, that neither the United States nor
the Soviet Union was in a position to push Asian regional cooperation, although each
made prop6sals. Such efforts were inevitably seen as efforts to advance their own
political interests in a region where nonaligned countries were regarded as essential
participants in any credible regional schemes. Morrison further points out that the two
leading indigenous powers, China and Japan too were unable to advance credible regional
institutional schemes. In the case of China, the Cold War and some of its own policies
(economic self-sufficiency, support for communist insurgents in some neighboring
countries and the Cultural Revolution) predetermined its policies towards the region. On
the other hand, Japan's prewar promotion of a perverted form of Asian regionalism
undermined its credibility in Japan and made Japan suspect elsewhere in Asia as a
regionalleader.35
Some scholars however consider Japan as the focal point around which the idea
of the Asia-Pacific developed. Peter Drysdalt:: emphasizes that the initial impetus to
growing Pacific economic interdependence came from Japan's post war recovery, its
heavy industrialization, and its final emergence as a major economic power.36 In the last
15 years, vigorous economic development in the other market economies of East Asia,
and the cohesion of the ASEAN into an important regional force, have further
strengthened regional economic relationships and the · idea of 'Pacific economic
See Inoguchi Takashi, Tadanori to iklooku hanei shugj o lwete (Beyond Free Ride and One-CountryProsperity), (Tokyo: Toyo keizai shimposha, 1987); Inoguchi Takashi and Daniel I. Okamoto, (eds.), 7he
Political Econany ofJapan, Vol. II: 7he 01anging Jrztemat:imal Context, (Stanford,: Stanford University Press,
1988).
H Morrison et al., n. 22, p. 24.
33
Js
Ibid
12
cooperation' .37 At the heart of Pacific economic interdependence was a vast new trade
in raw materials, reciprocal trade in manufactured goods, and the facilitation of
investment flows. The exchange of manufactures between countries at different stages
of economic development within the region was also an important but essentially
secondary element in the structure of regional interdependence until recent years.
If it is acknowledged that interdependence is the key factor in promoting AsiaPacific Cooperation, then it may be asked why an international organization is
necessary to manage this interdependence. Proponents have advocated two main
reasons for this. Firstly, they point to certain national policies put into effect by several
countries in the region. For instance America's soybean embargo in the 1970s, Korea's
devaluation of its currency in 1974 and Australia's tariff hikes on labor intensive
manufactures as indications that national policy makers may adopt policies that could
have disastrous consequences on the economies of other states.38 Thus there is a need
to consult in order to avoid such policies. Secondly, the establishment of a Pacific
Community would help to counter the worldwide trend towards protectionism.39 This
trend has been particularly damaging for the advanced developing nations since access
to the markets of the industrialized countries for labor-intensive manufactures will
continue to be increasingly restricted. Many proponents believe that multilateral
negotiations on import concessions could succeed where bilateral bargaining has failed.
The expectation, or at least the hope, would be that the political economy of trade in
each western pacific country could accommodate import policy assurances and
concessions more easily when they were linked by international agreements to
opportunities for ftnher expansion of the country's most productive industries. Vested
interest in export expansion could be brought into direct conflict, and so help to
balance vested interests in protection.40
Peter Dtysdale, International Econanic Pluralism: Ecanonic Policy in East Asia and the Pacific, (Sydney: Allen &
Up.win, 1998) p.60.
37 Kiichi Saeki, (ed.), Kokusao kanky;m henka ni nil.on no taio: Nijuichi seki e no teig?n [The Search for Japan's
Comprehensive Guideline in the Changing World- National Priorities for the 21st Centwy1 (Kamakura:
Nomura Research Institute, 1978), p. 41; Kojima Kiyoshi has stressed this point in his writings on the
Pacific economy over the years. See Kojima Kiyoshi, Japan and a Pacific Frre Trade A ret, (London:
Macmillan, 1971).
38 John Crawford and Saburo Okita (eds.), Raw Materials and Pacific Ecanonic lnugration, (London: Croom
Helm, 1978), pp. 148-166.
39 Ross Gamaut, "Australia in the Western Pacific Economy," paper presented to the Wmter Schooi of the
New South Wales branch of the Economics Society of Australia and New Zealand, Sydney, August 1980,
p. 9. Cf. Rhondda M. Nicholas, "ASEAN and the Pacific Community Debate: Much Ado About
Something? Asian Suney, Vol. XXI, No. 12, December 1981, p. 1201.
36
13
Drysdale focuses on two other factors, which intensified the identity of the AsiaPacific region.
41
They include the slide towards slower growth in Western Europe. In the
1950s and 1960s Western Europe enjoyed rapid economic growth and structural
overhaul. But the oil crisis caused the Western European economies to stagnate. The
second factor includes the increased importance of economy in the trade and industrial
growth of developing countries of Northeast and Southeast Asia. This in tum was
stimulated by Japan's trade and economic growth and its impact on regional trade.
Countries such as the resource-rich group in Southeast Asia alongside Australia,
benefited from the opening up of these new trading opportunities. 42 The second
influence was the move towards the deliberate adoption of outward-looking, ·tradeoriented industrialization strategies to replace earlier protectionist strategies, first in the
Northeast Asian market economies, and more recently in some Southeast Asian
countries.43 The rapid industrial growth of South Korea and Taiwan dates from policy
initiatives taken between the late 1950s and mid-1960s and Singapore and Hong Kong
had little choice but to follow the same course. Trade orientation in Southeast Asian
industrial development strategies had come a decade later. Between 1965-1973,
Singapore was the fastest-growing non-oil producing economy in the world; South Korea
was the third and Taiwan was the fifth after Japan, all recording an annual real income
growth of more than 10 per cent. Even the Philippines, the slowest growing developing
country in the region enjoyed an annual rate of growth of 5.8 per cent which was on the
top third of the World growth league. It is significant to note the extent to which East
Asian growth has been sustained despite the oil crisis in the 1970s and the recessions that
followed. Considering this background, we should now examine the scope of this study.
SCOPE OF THE STUDY
This study takes a look at the phenomenon of regional cooperation in the Asia-Pacific
and Japan's role in these attempts. It seeks to review the Japan's approaches to regional
Ibid, p. 12.
Cf. Drysdale, n.36, p.63.
42 Ross Gamaut, "The Importance of Industrialization to ~utheast and East Asia to an Open Australian
Economy," in Peter Drysdale and Kojima Kiyoshi (eds), Australia- Japan Econanic Relations in Intemationd
O:mtext: Recent Experierue and tlx Prospects Ahead, (Austrilia-Japan Economic Relations Research Project:
Australian National University, 1978), pp ..98-111.
43 Lawrence B. Krause, "The Pacific Economy in an Interdependent World," in Kermit Hanson and
Thomas Roehl (eds), 7he Unit«1 States and the Pacific Econarry in the 1980s, (Seattle: University of Washington,
1980), pp. 7-9.
40
~~
14
cooperation in the Asia-Pacific from the end of the World War II to the formation and
working of APEC in the 1990s. It incorporates several attempts made by Japan to
establish a regional body and the reasons for such a policy. Additionally, it would
incorporate Japanese attitudes, policies and contributions to organizations preceding
APEC; the political considerations governing Japanese involvement with APEC. This
would include domestic and foreign policy motivations for its approach to regional
cooperatiOn.
The study will wager that Japan's interest in APEC can be linked to its desire to
offset the antagonism that the Asian nations felt following the World War. It also seeks
to secure its economic interests in the region through a combination of bilateralism and
multilateralism. However, the country's approach to APEC has dilemmatic dimensions.
It i~ anxious that the emergence and possibilities of APEC will not militate against its
relations with the ASEAN countries which it has cultivated assiduously. Besides this,
Japan's hamstrung approach to APEC affairs is related to the compet~tion between the
Ministry of International Trade and Industry and the Ministry of Foreign Affairs. The
politics of bureaucracy is in turn related to a system of quotas on which Japanese
business thrives. This will be the main bottleneck as regards the embrace of full trade
liberalization which APEC aims at from Japan's viewpoint. Hence, domestic
considerations which do not allow the opening of its markets will throttle Japan's
enthusiasm for APEC.
This study is divided into several sections. The first chapter looks at Japan's
relations with the region in the pre-World War II era. This includes an assessment of the
country's policies towards the region throughout the ancient times from Kofun, Nara
and Muromachi periods. Following this, the study continues into the T okugawa, Meiji,
T aisho and Showa periods. It seeks to establish the roots of Japan's relations with the
Asia-Pacific. The country's desire to establish a regional status can be traced as early as
the Meiji period when ideas for territorial acquisition began. A continuation of it is
evident in the Showa period with the establishment of the Greater East Asia
Coprosperity Sphere. Since this study seeks to demonstrate that the current Japan's
diplomatic conduct has its historical base, an overview of its political memory is not
without purpose
15
The second chapter focuses on Japan's post war era, namely its role m
institutionalizing regional economic cooperation till 1976. Following the postwar
reconstruction and the reparations, a surge in regional initiatives was evident. Several
Prime Ministers like Sato Eisaku to Miki T akeo took personal interest on the issue.
Hence, the non governmental organizations established in this era included the
Ministerial Conference for Economic Development of Southeast Asia (MCEDSEA) &
the Asian and Pacific Council (ASPAC). Prime Minister Sato also visited the ASEAN
countries and tried to establish a cordial relationship with the region. His efforts further
witnessed the setting up of the Asian Development Bank (ADB) which is considered a
landmark in Japan's Asia-Pacific Cooperation efforts. Among other proposals, the
Business community too took interest on the issue and succeeded in establishing the
Pacific Basin Economic Council (PBEC). It was also in this period that Professor Kojima
Kiyoshi's Pacific Free Trade Area (PAFTA) proposal was presented. Following Sato,
Tanaka Kakuei too tried to establish Japan's relationship with the ASEAN, however his
visit to the region was marked by anti Japanese riots which was a set back for the
country's efforts. Though Japan's resource diplomacy exposed its serious inadequacies,
Prime Minister Miki T akeo persisted advocating an Asia-Pacific Policy and even
proposed the Pacific Trade and Development Conference (PAFTAD).
The third chapter examines Japan's regional role between 1975 to 1988. Prime
Minister Fukuda who succeeded Miki gave importance to the ASEAN and outlined his
policies with the Fukuda Doctrine. In addition to Japan's search for an economic role,
this chapter also examines its attempt to play a political role in the Indochina crisis. In
the midst of turmoil in the region, another regional cooperation initiative, Organization
for Pacific Trade and Development (OPTAD) is also taken into account. Like Miki and
Fukuda, Ohira Masayoshi also expressed keen interest in the concept. His efforts led to
the establishment of the Pacific Basin Cooperation Concept (PBCC) which led to the
Canberra Conference in 1980 and the establishment of PECGthe following year.
It further coincided with Kojima's proposal to establish the ASEAN-Pacific
Forum. Meanwhile, other groups like PAFTAD continued their meetings. It is interesting
to note that Japan propagated its Flying Geese Theory of development both at the PECC
and PAFTAD meetings which caused considerable furore. The Post Ohira phase was
16
marked by unprecedented economic growth of the country or the bubble economy. This
had some serious impact on the region with large scale hollowing out of the industries
from Japan and their re-establishment in Southeast Asia.
Chapter four deals Mth the establishment of Asia Pacific Economic Cooperation
(APEC). It covers the changing international scenario with the end of the cold war and
the need to establish an alternative structure. In this scenario, Japan's economic policies
in the region have been analyzed. Subsequently, the country's role in establishing APEC
has been mapped including the efforts of Japan's Ministry for International Trade and
Development (MITI) and its cooperation with Australia. Thereafter, its responses and
contributions to APEC have been studied till1999, which reveals severe dilemmas both
within the body, and within the Japanese bureaucracy. APEC seems to be divided
between the Asians and Neo Liberals who differ on the goals of the body. This in tum
has led to the proposal for an alternative organization the East Asian Economic Group
(EAEG) by the Malaysian Prime Minister Mahatir Mohamad. Additionally, Japan's policy
towards .APEC for instance seems to be marked by an element of caution. In addition to
economic interests, it can be linked to the desire to offset the antagonism that the Asian
nations experienced in history, which incidentally was a fallout of Japan's self-identity.
Hence bilateralism and multilateralism that dominate Japan's policy towards the region is
essentially an emotional palliative for the excesses of its past.
Besides this, discord is further evident within the Japanese bureaucracy. The
differences between the Asianists and the pro West school of thought evident within the
bureaucracy continued throughout the Meiji era. These internal differences have
intensified skirmishes with the Ministry of Trade and Industry (MITI). The study reckons
that inter-ministerial differences have constrained Japan's approach towards APEC. The
politics within the bureaucracy and domestic considerations is an impediment to trade
libe:alization and will throttle Japan's enthusiasm for APEC. Lastly, Japan's policy
towards APEC is characterized by much ambivalence. It does not want the relations with
APEC to affect its relations with ASEAN, which is far more important than the former.
This study reveals how Japan has tried to balance its p0licies between the two
orgaruzattons.