[J–GLOBAL FORUM]Prosperity and security in East Asia

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[J–GLOBAL FORUM]Prosperity and security in East Asia

I would like to share with you this morning my thoughts on how the U.S., Korea and Japan can collaborate in order to maintain and promote economic and social integration among our nations for the overall stability and prosperity of the region.

We see in many parts of the world at the moment, signs of resistance and backlash over globalization. Symbolic was the collapse of the Geneva WTO trade negotiations in July 2008. ... Some candidates in the U.S. presidential primaries have accused free-trade agreements, such as Nafta and the pending US-South Korea FTA, of being the cause for the loss of millions of jobs among domestic labor forces.

An acceleration of reform for global competition seems to have become increasingly unpopular in Japan, due to discontent spreading among voters in stagnant rural economies. For example, in meetings I regularly hold in Matsuyama, the capital city of Ehime Prefecture, which is my election district, many of my closest supporters constantly express their gravest concerns towards increasing imports from China and the perceived economic disparity between Tokyo and the local economies, accusing the government of not doing anything to resolve these issues.

Today, Japanese politicians are pressured to pay more attention to income disparity and industrial protection against takeovers by foreigners than to emphasize the benefits of global competition. ...

Therefore, it is crucial that political leaders in Asia and the U.S. collaborate in a joint effort to push back such a backlash.

The key to the Asian economic success lies in the model of export-driven growth. In other words, Asian economies have engaged with the rest of the world by exporting goods and services. A unique characteristic of the Asian success is to keep their windows open to the world on the basis of international division of labor and the world trading system.

In fact, even amidst the Asian currency crisis of 1997, many Asian countries took advantages of foreign capital inflows to achieve economic recovery. In Japan, the Koizumi administration focused on privatization, deregulation policy, and introduction of foreign direct investment to strengthen banks’ capital in the early 2000s. The Abe administration further pushed the Japanese economy to open toward global competition in main industrial fields such as financial services, advanced education and airline services. ...

During the past 10 years, the increase of intra-Asian trade has outperformed that of world trade by a wide margin, demonstrating the depth and importance of economic integration among Asian countries. Therefore, it is essential that we, as leaders of our nations, work together to meet the challenges against globalization.

In view of these rising challenges, I offer my thoughts on three principles which I consider to be most important for the future of East Asia. The principles consist of three “nos.”

The first “no” is protectionism. A short-sighted protectionist approach to trade of goods and services would seriously hurt long-term prosperity in Asia, as well as in the U.S. Thus, let us continue to work together in our joint efforts to restart the WTO Doha Round trade negotiations as soon as possible. At the same time, I believe it is important that we push forward on our bilateral discussions for further economic integration.

The second “no” is a weak dollar. In Asia, the dollar dominates payment flows in intra-regional trade, to say nothing of investment flows. ... If the dollar value weakens, it would destabilize these activities in the short run.

The third and final “no” is isolationism, especially with respect to the U.S. presence in East Asia. ... Security in the region will not be achievable if the next president of the United States turns his back towards its global responsibilities by taking a hands-off policy towards East Asia.

What can we do to realize these three principles? We have always urged the U.S. to keep its interest in Asia assuming that it is only natural for the U.S., to listen to Asian democracies. However, we must always bear in mind that the Asian democracies must also succeed in convincing the U.S., especially the U.S. public, that its interests cannot be secured without a stable and predictable Asia.

What should Asian democracies do? We should have strong ties across all sectors which will enable us to work together in addressing threats to our prosperity, be it political or economic. Japan looks forward to working closely in particular with Korea as democratic partners. Without such efforts on our part, it will not be convincing to simply call upon the U.S. to remain engaged with Asia.

Building a more stable Asia based on democracy is our ultimate goal, while keeping in mind that transformation to democracy will not happen overnight and appropriate care given to differences among Asian countries.

*The speaker is former chief cabinet secretary and member of the Liberal Democratic Party, Japan

by Yasuhisa Shiozaki
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