APEC offers Japan chance to display leadership

Forum's 2010 host must show that it can be a good mediator

by Shinya Ajima

Kyodo News

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Flu strategy: Officials of Yokogawa Bridge Holdings Corp. – speak with a consultant about how to deal with the swine flu pandemic at its headquarters in Tokyo on Oct. 7.
KYODO PHOTO

The proposal, widely touted after Hatoyama took office in September, was generally welcomed when he showed up for the annual summit of the Asia-Pacific Economic Cooperation forum over the weekend in Singapore. But some experts say the seemingly favorable reaction may only be a result of the idea’s ambiguity.

Recent heated debates in APEC have mainly focused on which countries should be included in a future multilateral framework in Asia, pushing the attempt to seek what Hatoyama calls “fraternity” in the region to the verge of becoming no more than a competition for influence between the big economies.

Instead of defining the community concept, what Japan may first do is listen to smaller economies in the area and ensure that they benefit from regional economic integration.

The chance to show that Japan can be a good mediator will come soon, when Tokyo assumes the rotating chairmanship of the 21-member APEC forum and hosts its meetings next year.

APEC accounts for more than half of the global economic output.

The tasks for the chair in 2010 includes developing a comprehensive economic growth strategy, helping achieve sustainable and “inclusive” growth as proposed by Singapore, this year’s host, and enabling both developed and developing members and all segments of society to see the benefits of economic integration.

As the chair of APEC, Japan has to lead the fight against protectionism while promoting trade liberalization. Because free trade and globalization sometimes cause conflicts of interest, Japan must also review whether the zeal of APEC for globalization and free trade since its establishment in 1989 has caused any disadvantages to its less-developed members.

Seeking inclusiveness in future economic growth is a sign of APEC’s reflection on its past failures that have caused serious gaps in development among its members, said Junichi Sugawara, an official at the Mizuho Research Institute.

“As the APEC chair, Japan must not be the mouthpiece of powerful member economies. Now is the time when small developing countries should be listened to and involved in the process for further development,” Sugawara said.

On deepening APEC’s regional integration, Japan is better positioned than in the recent past. Its connection with other Asian nations has been enhanced in recent years. It holds annual summits with China and South Korea as well as with the 10-nation Association of Southeast Asian Nations and is also a member of the East Asia Summit, which groups those 13 countries and India, Australia and New Zealand.

The economic outlook suggests that being an active part of Asia is good for Japan. The International Monetary Fund said last month the region’s economy is bouncing back from the global crisis rapidly, projecting 2.8 percent growth in 2009 and 5.8 percent in 2010 against an earlier 1.2 percent and 4.3 percent rise.

Japan has concluded a free-trade agreement with ASEAN and will accelerate efforts to reach similar accords with China and South Korea.

In that regard, some analysts say the linkage between the 13 nations can be the start of Hatoyama’s East Asian community.

“Considering appropriate geographical boundaries, East Asia must be the 10 plus three,” said Liu Jiangyong, a professor in the Institute of International Studies at China’s Tsinghua University.

“We should start with that grouping and then make additional steps such as the expansion of the area of their integration or membership.”

The United States is widely seen to be pressing for Asia’s economic integration based on larger groupings like the East Asia Summit or APEC. But Liu said putting India or Australia in “East Asia” is simply a sign of Washington hoping to check China using its allies, warning any political intention could only hinder pure economic integration.

But Japan’s strong link with the United States complicates the situation.

“The Japan-U.S. alliance serves economic and political stability in Asia,” Hatoyama said Saturday in a speech to Asia-Pacific corporate executives. Just the day before, he confirmed that position with President Barack Obama, who visited Japan before flying to Singapore.

Some Japanese experts say that not only Japan’s wartime colonial history, but also its relatively early economic success, may have resulted in psychological distance between the country and its Asian neighbors.

Japan is the only Asian member of the Group of Seven advanced economies, which has led global finance, and the Group of Eight major powers, which has taken the initiative on significant international issues.

But the landscape has been changing since the latest economic crisis, which was mainly a result of the collapse of financial systems in developed economies, especially in the United States and Europe. To counter the turmoil, a larger grouping is emerging — the Group of 20 — also joined by such economies as China, India and South Korea.

“Honestly, Asian governments and central banks are not as rushed in attempting to fix something, compared with the U.S. and European authorities,” a senior Japanese official said on condition of anonymity.

“It takes a very long time. . . . Japan has to explain that to the U.S. and European governments as a representative of Asia,” the official said.