LONDON -- The other day a British businessmen, recently having visited Japan, recounted the words of a leading Japanese ship-owner. "Our ships" said this individual with a sigh, "are going fully loaded to Europe and America but these days coming back empty."

Of course, this oversimplifies, but the message is clear -- and for the Europeans especially chilling. The Asian world -- including notably a reviving Japan, and to a rapidly increasing extent, China, India, Malaysia, Thailand and Indonesia -- is supplying more and more of Europe's and America's needs, but the West is not reciprocating. The old and cozy image of trade being a two-way beneficial flow between East and West is fading fast.

There used to be a sort of superior view that the West, and Europe in particular, would do all the thinking, innovating and designing, and the East with its cheap labor would churn out the more basic items. In due course, the cheap labor would become more expensive as incomes rose and everything would be evened out again smoothly in the world trade balance.

Most of that theory was shattered long ago as it became apparent that Japan had begun to dominate world manufacturing and that the rest of Asia was following on behind. By the end of the 20th century it had become obvious that there was almost nothing the Europeans could do that rising Asia could not do better -- from building motorcars and skyscrapers to the most advanced developments in biotechnology, nanotechnology and the frontiers of industrial and scientific innovation.

America might still hold the lead in information technology and in military wizardry but American consumers, like their European counterparts, wanted Asian-made goods. Soaring Asian trade surpluses, and soaring piles of dollars and other Western currencies in Central Bank reserves attested, and continue to attest, to these powerful trade trends.

Until recently, those in the West seeking reassurance as they saw their markets undermined by Asian competition, comforted themselves with one further theory. Manufactures might be going east but in the new age of services and software the main skills and systems would stay in the West and serve rich Western markets. This was supposed to apply in particular to financial services, where London and New York still appear to command the global scene.

But the global communications revolution is beginning to chip away even at this picture. With the dramatic fall in the cost of both voice and picture transmission round the world it is ceasing to matter just where many services are located. Booking services, banking services, credit card handling, help-lines, travel services, all kinds of shopping inquiries, insurance arrangements -- all these and many more can be located "offshore" almost anywhere on the globe, as long as there is not much of a language problem and local labor is suitable and willing.

In the British case the trail leads mainly to India, although the Philippines have also attracted some offshore outsourcing. In India, where well articulated English is spoken, labor costs are low and the simple difference of hours means that nighttime inquiries in Britain can be met by helpful operators in Hyderabad or Bangalore or Bombay working at day rates. Indeed, some inquiry customers claim that they find English from India easier to understand on the telephone than the wonderfully thick accents from switchboards in Glasgow or Belfast.

Recently some of the big British clearing banks have decided to shift their remote services to the Indian subcontinent and this has triggered a fit of nerves. Some 400,000 people in Britain are said to be employed in these answering and inquiry services and many of them feel threatened. No wonder trade unions have been speaking out and demands for protection, never far absent from Western politics, are being aired with new vigor.

What is the answer? So far the British authorities have robustly rejected protective measures -- more robustly than their neighboring continental counterparts. The British instinct for free trade in all goods and services remains far more deep-rooted than, say, French or German inclinations toward both protection and regulation. Although inevitably unpopular with workers who are displaced, openness is the right strategic reaction since any moves toward putting up barriers, or forbidding outsourcing, merely raise internal costs and make the "protected" economy even more uncompetitive and vulnerable.

The thesis that it is all caused by cheap labor, and that one day wages in Asia will rise, is only partly valid. No one could possibly claim that labor in Japan was cheap -- it is some of the world's most expensive.

A deeper appreciation is now needed by Western governments that Asian success lies not just in labor costs but in the whole Asian cultural and social milieu, which is reinforcing attitudes that prove to be particularly adaptable and suitable for performance and efficiency in the information age. Work and leisure, learning and recreation, become inextricably woven, leading to motivations of the kind that Europe once knew in the industrial revolution but is now forgetting.

A decade ago I published a pamphlet with just this message. I called it "Easternization." Almost immediately afterward the Asian currency turmoil occurred and commentators rushed to denounce the argument and claim that Asia was "finished."

But the currency turmoil proved a temporary setback and the whole of Asia is now surging forward again on every front, filling not just their ships but also the air with goods and services for the West. To compete, the Western economies will have to learn from the East just as the 19th-century Asian powers sought to learn from the West. The Age of Easternization has truly arrived.