High-Level Expert Group Meeting
14-15 March 2001
Seoul, Korea
Chaired by Malcolm Fraser
East Asia and the Pacific in the 21st Century:
Geopolitical and Economic Dimensions
1. East Asia and the Pacific enters the 21st century
recovering from the major financial crisis. Even so, much
work remains to be done to create a real sense of regional
unity and cooperation, which will allow the region
containing one third of the world's population to fulfil
the aspirations of those people.
2. There have been a number of developments that, if they
come to fruition, signal a bright future for the area. The
most important of these are:
- President Kim Dae Jung's ''Sunshine Policy'' has for the first time in half a century opened a path towards the effective reduction of tensions and possible reunification of the two Koreas.
- The international community with the United States as the sole super-power, overwhelmingly continues to pursue a one-China policy.
- China is on the verge of joining the World Trade Organization and the InterAction Council urges a speedy end to the remaining negotiations so that China may take its full place as a member of WTO.
- Japan is searching for a new commitment to a global role, but needs to solve economic and political problems at home before it can fully find its global voice.
- Indonesia is faced with serious internal difficulties, but a process of democratization appears to be making progress.
- ASEAN continues to evolve, although it has faced some problems in the aftermath of the financial crisis of 1997.
- The opportunity seems more ready than ever before for a regional forum of all the East Asia and Pacific states to get together regularly to discuss mutual problems.
- The countries of the region have become increasingly aware of the need to develop new financial instruments capable of responding quickly to unexpected future financial problems.
- The United States remains engaged as a cornerstone of regional stability, but its role needs to be more constructively defined in the current strategic circumstances.
3. Each of these policy issues faces difficulties that
will challenge the region. It is urgent for regional
governments to coordinate more and discover a greater
sense of cooperation in order to fulfil the high hopes and
aspirations of the two billion people living in East Asia.
Better cooperation will strengthen the economic
foundations, extend prosperity to the furthest reaches of
the region and allow East Asia and the Pacific to play an
important role in the world commensurate with its size and
economic importance.
The Korean Peninsula: Sunshine Policy
4. President Kim Dae Jung of South Korea has taken a bold
initiative in opening the way to dialogue and potential
reunification with North Korea. There is still a long road
to travel, which will be full of pitfalls. But the
important thing is that enemies on the two sides of a
peninsula divided for more than 50 years by a bloody war
have now started to talk.
5. The big powers, particularly the United States and
China, which were party to the conflict that blighted the
lives of so many people, now have a constructive role to
play in helping to keep the doors open and sustaining the
road to reunification. Washington, which maintains a
military presence in Korea, holds an important key and
should take more positive means to facilitate the
initiative fostered by President Kim.
6. Even though it may be necessary to test each step along
the way, the road that the two Kims have opened across a
bitterly divided land offers the best hope not just for
Korea but for the whole region.
7. Although the Korean economy has restored high growth,
financial reform, management reform of chaebols
(conglomerates), labor reform and public enterprise reform
should be undertaken energetically.
China
8. The world overwhelmingly recognizes the policy that
there is one China. Taiwan's future remains best as part
of China, but moves towards unity should be achieved
peacefully. The business community has recognized this,
and Taiwan and the mainland are increasingly linked
economically in a prosperous partnership that has seen $40
billion in investment and $25 billion a year in Taiwan
exports going to China.
9. The Taiwan Relations Act was designed to protect Taiwan
from unreasonable attack by China, but the Act was also
designed to facilitate negotiations in good faith between
China and Taiwan. Taiwan needs to respond to the
imperative for genuine negotiations.
10. China has increasingly opened its own doors to the
rest of the world, a move that was itself helped by the US
policy of engagement with Beijing. The transfer of
sovereignty over Hong Kong to China was achieved smoothly,
and the ''one country, two systems'' policy has worked
well, with Beijing keeping its promises of allowing Hong
Kong great autonomy. Unity with Taiwan is altogether a
bigger task, but one that should be tackled with
integrity. Mutual efforts are required to achieve peaceful
reunification.
11. The development of central and western China as
incorporated in the 10th five-year plan is welcomed to
narrow income gaps in the country. But to fulfill stable
growth and development, diverse structural reforms will be
required.
Japan
12. Japan's wish to play a bigger role in global affairs
has been handicapped by its growing internal problems.
Although the government sees the decade-long economic
stagnation is ending, there are uncertainties including in
consumer demand. While the government has placed top
priority in economic recovery, full-scale efforts in
structural reforms, including fiscal reform, financial
system reform and deregulation, are indispensable.
13. Japan is the world's largest provider of official
development assistance (ODA) and it wishes to remain so.
However, the government faces a growing long-term
financial burden, which has increased because of money
spent on propping up the faltering economic recovery and
is likely to be further strained by the aging population.
It means this will lead to increasing scrutiny and
prudence across all parts of the budget including ODA.
14. At the same time, Tokyo's wish for a larger diplomatic
role has been limited by lingering dissatisfaction in the
region for its failure in places like school textbooks to
tell the full story of Japan's occupation and conquest of
large parts of Asia during and before the Second World
War. Tokyo faces demands that it should apologize, as
openly as Germany did for the Nazi atrocities, or set up a
special commission that would try to examine the issue
thoroughly and honestly. The Government of Japan should
carefully consider ways in which it can set the record
straight and remove the historic feelings of resentment of
its neighbors.
15. Japan has a peace constitution, the principles of
which will be maintained in the new century. The
overwhelming consensus in Japan is and will be adamantly
opposed to the use of force to settle international
disputes.
Indonesia
16. Indonesia has maintained its place in the world
headlines as it has struggled with economic and then with
political crises. To its great credit, Jakarta remains on
the democratic path in spite of the enormous difficulties
with which it is coping daily. It is vital, not only for
the 210 million people of Indonesia, but also for the
peace and stability of the East Asia and Pacific region as
a whole, that the territorial integrity of the country be
maintained. But Indonesia needs greater support from the
outside world, especially in surmounting economic
difficulties. The Asian Development Bank and the World
Bank should consider providing a special emergency fund
which could be disbursed quickly to meet unexpected
contingencies.
ASEAN
17. ASEAN, which was formed at the height of the Cold War,
has survived and been expanded and remains an important
basis for regional cooperation. But the financial crisis
of 1997 and its aftermath have caused difficulties. ASEAN
needs to examine and strengthen its structures. It could
also play a catalytic role in helping to promote a wider
and stronger body that will give voice to the demands for
greater East Asia and Pacific cooperation.
18. The region should also strengthen multilateral
security cooperation, especially the ASEAN Regional Forum,
through greater efforts at confidence-building and
preventative diplomacy.
Greater East Asia Forum
19. The East Asia Pacific region remains the weakest in
the world in terms of its organizational structure,
especially in comparison to such areas as Europe and North
America. It is especially weak in relation to its economic
strength.
20. There is a need to develop a more structured system
that will embrace all the countries of the East Asia and
Pacific region. Creation of such a new regional body would
better help all the countries of the region to protect
their interests in responding to the challenges that lie
ahead and to maintain the great economic progress made in
the decades until 1997. There should be a meeting of all
heads of government of the East Asia and Pacific region at
least once a year as a forerunner for setting up an East
Asia Forum.
21. One of the new body's first tasks should be to examine
ways of promoting wider regional confidence and
security.
Asian Monetary Fund
22. The 1997 financial crisis and its aftermath
demonstrated the importance of a swift response in periods
of crisis when massive sums of capital - which have flown
in to help the rapid economic growth - suddenly moved out
again with massive destabilizing consequences. Under the
Miyazawa Initiative, work is being done on currency swaps
to enhance considerably the resources available to
countries facing unexpected pressures.
23. This work underscores the need for an Asian Monetary
Fund. Such a body would allow Asia to respond quickly to
financial emergencies in the region. It would also help to
set and enhance prudential standards, improve market
discipline and transparency across the whole region. It
would also promote regular meetings of finance ministers
and central bank governors from Asia. An Asian Monetary
Fund would not be a challenge to the global system, but
would be complementary to the IMF. It would allow Asia to
respond quickly in a crisis without having to wait for
help from the IMF.
24. In consultation with other Asian countries, Japan
should set up a Task Force to prepare for the
establishment of an Asian Monetary Fund complementary to
the IMF, with dual preventive and crisis resolution roles.
Its tasks should be to assist individual countries in the
region in avoiding crises; but if they occur, it should
work for their speedy resolution.
The Role of the US in Asia
25. The United States has played an important role in
assisting the development of the Asian region over the
last 50 years. But in the current changing strategic
circumstances, it is important to review the role of the
United States and to allow the countries of the region to
have a stronger voice in their own destiny.
26. In particular, Washington's decision to press ahead
with its anti-missile defense system needs to be
reexamined. Several technical studies have questioned the
effectiveness of such a defensive system. Ingenious
terrorist groups or rogue states will be able to get under
the cover of such a system by simple devices as sailing a
ship with a nuclear weapon into a busy city harbor or
releasing lethal anthrax germs in public places.
27. In addition, such a missile defense system will be
expensive, and it will also rekindle an arms race as other
nuclear powers seek to match and bypass the system.
28. Equally important, the decision to go ahead in the
face of skepticism and outright opposition from almost all
of its staunchest allies reflects a worrying tendency
towards unilateralism on the part of the United States.
This has also been seen in Asia on other matters where
Washington has taken decisions without consultation. Being
the world's sole superpower carries responsibilities to
maintain balance and peace in the world. The importance of
being consulted in advance is also why Asia needs to find
a stronger voice.
29. The United States, which realized the ''new economy''
(high growth rate and low unemployment rate) in the 1990s,
has entered an adjustment phase since the latter half of
2000. Since the impacts of the US economic deceleration on
the world economy, particularly to her neighbors and Asia,
are significant, great importance must be placed on
appropriate fiscal and monetary policy management.