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News Release

Japan Must Provide Strong Leadership for Upcoming Summit

October 12, 1995

Contact:    Yoichi Funabashi    (202) 783-1000

Washington, DC—The potential "fusion" of Asia Pacific civilizations should propel the future course of the 18-member Asia Pacific Economic Cooperation (APEC) forum, which will hold its third annual summit meeting in Japan next month. Japan, the host of that meeting in Osaka, has a crucial role to play in this process and a strong interest in exercising effective leadership that will assure APEC's continued success. So argues Yoichi Funabashi, Washington bureau chief of Japan's leading daily newspaper, Asahi Shimbun, in a new Institute publication entitled Asia Pacific Fusion: Japan's Role in APEC.

Funabashi's new book is the first in-depth study of APEC. It draws on the author's interviews with heads of state, ministers, officials, and scholars and includes insights based on the leaders' conversations at the previous APEC summits in Seattle (1993) and Bogor, Indonesia (1994). In comprehensively covering APEC's six-year evolution, the author details pivotal events such as the intense diplomatic effort required for the simultaneous admittance of China, Taiwan, and Hong Kong, and tells all sides of the story, including the "challenge'' posed to APEC by Malaysian Prime Minister Mahathir.

Funabashi provides compelling evidence that APEC can no longer be dismissed as a mere "talk shop.'' The Osaka summit will mark the third consecutive year that APEC has brought the region's leaders together as equal participants to discuss economic matters of mutual interest. At the end of the Cold War, the Asia Pacific is characterized not by ethnic conflict (as predicted by some) but by a spirit of community building of which APEC is the most prominent embodiment. The cross-fertilization of ideas and practices in the region is made possible by increased business transactions, proliferating mass media, and educational exchanges. They have begun to spark a "fusion'' of Asia Pacific civilizations. APEC can further this fusion, overcoming the East-West and North-South tensions that have long polarized the region. Increased economic interaction is already helping to create a globalized Asia Pacific.

According to Funabashi, APEC has all the makings of an Asia Pacific success story. It is very different from the regional meetings of earlier this century: the European-dominated Washington Conference in 1921 that ultimately provoked Japanese militarists, the Greater East Asia Conference in 1943 that revealed Japan's desperate attempt to dominate the region, and the conference of Asian and African leaders in Bandung, Indonesia in 1955 that convened to resist control from the "North.'' Now the emerging powers of the world lie in markets of the Asia Pacific such as China, India, Indonesia, and South Korea. A new type of leadership is needed to manage the emerging balance of power between the United States, Japan, and China, as well as ASEAN and Europe. APEC can provide the forum in which to foster the entrepreneurial leadership required for the post-Cold War Asia Pacific.

Trade Liberalization

Trade liberalization has traditionally been an intensely emotional process fraught with ideological debate. However, APEC has managed to remove ideology from liberalization to a certain extent. Concerns among APEC members remain, brought to the fore by issues such as "comprehensiveness,'' "comparability,'' or the prospect of an all-Asian East Asian Economic Caucus (EAEC). Nonetheless, the bold goal of free trade in the region by 2020 set by APEC leaders at their 1994 meeting in Bogor is a testament to the consensus on basic principles. APEC members have recognized their own self-interest in open markets. An enthusiasm for individual, as well as collective, actions in APEC illustrates this growing recognition. APEC has already proved its ability to complement and stimulate the world trading system. It has held two special meetings of trade ministers, in Vancouver in 1990 and 1992, for the purpose of expediting the Uruguay Round's successful conclusion. Australian Prime Minister Paul Keating has said that "if it weren't for the APEC summit in Seattle [in November 1993], we wouldn't have got the GATT signed.'' According to Funabashi's analysis, challenges to liberalization within APEC lie in resolving three key questions:

  • How should liberalization and development cooperation be prioritized?
  • On what basis should most-favored nation (MFN) status be granted?
  • How should APEC liberalization relate to other liberalization processes?

Although liberalization is APEC's overriding goal, Funabashi concludes that it must be pursued in tandem with development and technical cooperation. Some members, usually developed economies, tend to stress the primacy of liberalization. However, rapid liberalization without cooperation has inherent dangers, some of which were illustrated by the violent protests in Indonesia in 1974 against the visit of former Japanese Prime Minister Kakuei Tanaka.

As for MFN, some members argue that conditional MFN, which forces nonmember economies to grant reciprocal concessions, is necessary to avoid free riding, while others contend that APEC must adhere to unconditional MFN in order to strengthen the World Trade Organization (WTO). Funabashi surmises that the debate is essentially a question of short-term tactics and long-term interests. Unconditional MFN, in keeping with the global trading system, is the best course. However, for practical reasons, APEC members should continue to exert subtle pressure on their European and other trading partners.

Finally, of the various models of APEC liberalization, Funabashi's preference is the "concentric circle" concept. Waves of liberalization emanate from various sources—global, regional, subregional, even bilateral—with each being both linked and autonomous. APEC, NAFTA, and the WTO will each exert pressure on the others to accelerate the process.

Japan's Role

The common perceptions of Japan's performance in APEC are rather bleak:

  • Japan prefers to follow rather than lead.
  • Intense bureaucratic rivalry debilitates Japan's participation.
  • Japanese policymakers are paralyzed over the proposal for an EAEC.

    Funabashi explains that this image has been shaped by a host of factors. Japan's Ministry of International Trade and Industry (MITI) was in fact a behind-the-scenes instigator in APEC's creation. However, a strong stance on liberalization was inhibited by Japan's Achilles heel of rice protection. The EAEC proposal arrived at a time of resurgent Asianist sentiment in Japan and brought to the fore a deep-rooted psychological dilemma: "To where does Japan belong?" This question, which has often been mistakenly framed as an either/or choice between the East (Asia) or the West (Europe and the United States), is asked with renewed urgency at the end of the Cold War as Japan tries to define its role in the world.

    As Japan strives to define this role, its interests in APEC are manifold:

    • to promote globalism in and from the region;
    • to contain US unilateralism and prevent Europe and the Western Hemisphere from becoming protectionist;
    • to strengthen ties with ASEAN;
    • to engage China in the region;
    • to ensure the US security presence;
    • to elevate Japan's status from a regional political power to a global political power by strengthening its ties with the Asia Pacific.

    In light of these interests, Funabashi recommends that Japan prioritize the US-Japan alliance as the anchor for the multilateral, regionwide net symbolized by APEC. Japan should harness the resources of the alliance, he argues, to further develop and strengthen APEC.

    Funabashi also stresses that it is crucial for Japan to put to rest the antiquated notion that Japan's destined niche is to bridge East and West. There are many instances in which Japan can serve as an intermediary to facilitate communication and understanding but the bridging role is not a viable objective. Japan must first delineate its own long-term interests and direct its energies toward perpetuating the nascent fusion of the Asia Pacific because a segmented region that requires a bridge will not be as conducive to Japan's pursuit of its numerous interests in APEC as will be an Asia Pacific united by fusion