2007 Annual Meeting

INTERAREA SESSION 189

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Asia and Europe:  Explaining Differing Paths of Regional Integration 

Organizer and Chair: Joel Campbell, Kansai Gaidai University

Discussant: Magali Gravier, University of Salzburg 

The post-Cold War era has brought about a restructuring of the international political economy, as increasing globalization of production and finance determine both economic choices and political alliances.  The development of regional integration in Europe and East/Southeast Asia, shown most clearly in the European Union (EU) and the looser constellation of ASEAN, ASEAN+3 and the East Asia Summit (EAS), illustrates the promise and difficulties of forming and expanding regional associations in the international system. It also demands a balanced examination of both traditional theories of integration and the “New Regionalism” that has swept the developing world since about 1990. The proposed panel will analyze the comparative political economy of regional integration in Asia and Europe, in light of the ongoing theoretical discussion of globalization.  As chair, Campbell will seek to stimulate audience participation in the panel by beginning the session with a brief discussion that lays out key political economic issues currently facing the EU and its Asian counterparts.  Paper presenters will address three key aspects of regional integration:  problems of adjustment to globalization and the political conflicts it engenders, constraints that hinder regional integration, and theoretical development of the concept of regional integration in light of the Asian experience.  First, Morita will take up the major political and institutional factors that have shaped the two regional groupings, focusing on Japan and China.   Then, Campbell will present the theoretical issues involved with the possible creation of an Asian Economic Community, which could result from the recent East Asia Summit (EAS) process.  Haba will examine the lessons of EU expansion, particularly as they apply to ASEAN’s new members of the 1990s and the advent of ASEAN+3.  Finally, Kim will present key issues involved in East Asian financial cooperation, with reference to European financial integration. As discussant, Gravier will discuss general themes and theoretical approaches to integration among the papers (in line with the lead-in discussion), and ask both the audience and panelists to comment on those themes.  The chair will reserve one-quarter of the panel time for audience discussion and questions.

Political and Institutional Processes in European and Asian Integration:  Most Similar, Most Different 

Ken Morita, Hiroshima University

Cross-regional comparisons of Europe and Asia indicate both similar and different political and institutional development.  First, timing and initial conditions of Asian integration were significantly different from those in Europe.  The process of European integration began in the 1950s, based upon the renunciation of war between Germany and France, and centering primarily on functional cooperation in economic fields.  Asian integration began with the creation of ASEAN in 1967, in response to Communist subversion, as a vehicle for settling mutual political problems and creating regional political stability necessary for institutionalization of new states. Second, European integration proceeded through stages of economic deepening from the 1960s to 1980s, culminating in the formation of an economic union from 1986 to 1992.  East Asian integration only became a key issue after the Asian financial crisis (1997-1998), and while there was no region-wide consensus on the proper political and economic role that either ASEAN or a wider regional organization should play, major agreements such as the Chiang Mai Initiative showed that Asians were becoming more mature about the possibilities of regional economic cooperation.  The main barriers to East Asian integration are deeply embedded in the Asian countries, and illustrate both the introversion and severe geopolitical competition that still define bilateral and intra-regional relations. We focus chiefly on China and Japan because the two countries are the main players in any pan-Asian integration project.  We analyze the impact of Sino-Japanese relations on East Asian integration.  We also consider the implications of Asian integration for future European integration, and the lessons of Asia for the “New Regionalism.”  We suggest that, since geopolitics as much as economics or globalization is driving Northeast Asian integration, the future of the Asian integration project will be determined by a mix of Realism (in the sense of international relations theory) and Rational Choice (from neo-classical economic theory).

The East Asia Community:  Political Economic Core of Asia, or Stillborn Dream?

Joel Campbell, Kansai Gaidai University

The process of creating a regional integration framework for all of East, Southeast, and South Asia has taken several major steps forward since the Asian financial crisis.  The ASEAN+3 process has brought the major nations of Northeast Asia together with ASEAN members in regular meetings, and efforts to forge bilateral and multi-lateral free trade agreements have made significant progress.  Now, India, Australia, and New Zealand have been brought into that process, and the eventual result could be a pan-regional common market within a generation—or so the optimists believe.  The road to such a common destiny, however, is strewn with obstacles, as geopolitics, great power interests, territorial disputes, and jealously guarded sovereignty may prevent the forging of a common Asian identity.  Meanwhile, Asian businesses have used the process of globalization to create an informal regional integration on their own. This paper looks at the major issues involved in the creation of any pan-Asian common market.  It suggests that the success or failure of this undertaking will depend on creation of a new structure for ameliorating regional disputes.  While the Japan-China conflict is the most serious obstacle to be overcome, a host of bilateral disputes throughout the region make Asian regional relations as tricky as ever.  The two giant Northeast Asian nations must seek a “Grand Bargain” that involves setting aside some of their most habitual political posturing, and due to a long history of mutual suspicion, this will not be easy. The paper also considers which of the major regional integration theories best describes the formation of an Asian economic community.  While neo-functionalism captures the essence of the “ASEAN way” that balances cooperation and non-interference throughout Southeast Asia, functionalism may provide the most useful way forward as the disparate Asian nations seek improved mechanisms for solving a range of thorny economic and especially political issues.

The EU Expands Eastward:  Economic Dissonance and Political Maturation

Kumiko Haba, Hosei University

Expansion has been a driving impulse of the EU since the end of the Cold War.  Of the three forces shaping the progress of any regional organization (bigger, deeper, better), expansion of the EU has been compared to a bicycle, i.e., if it does not keep moving, it will fall over.  Unlike in Asia, prospective members have been forced to adhere strictly to EU conditions for membership set forth in the Copenhagen criteria, especially economic openness, democratic government, and protection of human rights.  The EU rushed to include ten new members in 2004, but this largest ever enlargement of the group has changed the organization profoundly.  Most immediately, it has added a layer of complexity to the already strained EU institutional and policymaking structure.  Such complexity has made adaptation to the demands of globalization and maintenance of social welfare structures increasingly difficult. The experience of the EU’s expansion to Central and Eastern Europe should provide a basket of cautionary tales for Asia as it seeks to create an Asia-wide organization.  The diversity and poverty of economies, the immaturity of political systems, and the primitive state of human rights protection in the region have bedeviled efforts to integrate Eastern and Western Europe.  Perhaps the most severe difficulty is harmonization of ten essentially developing economies into a club of some of the richest countries in the world.  As the EU contemplates the next wave of expansion, involving even poorer nations such as Romania, Albania, and Turkey, the organization may lose its economic coherence altogether. The theoretical implications of this expansion are now only vaguely glimpsed, but clearly illustrate the weaknesses of any regional grouping as it grows bigger.  The debate within the EU over the future course of the European project, i.e., whether federalism or inter-governmentalism will determine the future of European-wide governance, also should be addressed by Asian governments as they seek to create an Asian Economic Community.

Progress of Asian Financial Cooperation:  Comparison with Europe and a Program for East Asia

Jin-Young Kim, Pusan National University

The purpose of the paper is to analyze the progress and problems of the Asian financial cooperation.  Since the trauma of the Asian financial crisis, in which the East Asian countries had no effective way to combat the financial meltdown on a regional level, East Asian governments have vastly expanded multi-lateral mutual assistance mechanisms.  The underlying assumption is that positive gains expected from financial cooperation have motivated East Asian countries (primarily through ASEAN+3) to promote and institutionalize it.  The paper focuses on three key areas of financial cooperation, i.e., the Chiang Mai Initiative, the Asian Bond Market Initiative, and a possible exchange rate coordination regime. In the first part the paper examines three key questions. What are the interests of states cooperating in financial regimes?  Is there a consensus on expected common interests of the Asian countries?  Progress of financial cooperation depends on a multi-level game of international economic relations, and thus has embedded within it a variety of decision points at each stage of heightened cooperation.  The second part the paper deals with obstacles that impede progress, such as a lack of consensus, the gap between long-term interests and short-term gains, and the lack of regional leadership.  It also explores possible ways out of these difficulties.  The The third part uses the European case as a comparative case, especially its exchange rate coordination regime. The European experience is useful from both policy and theoretical perspectives, and helps illuminate issues that will have to be addressed in the Asian case. Finally, considers progress toward East Asian nations’ stated goals, considering different conditions of East Asia.  The paper provides a variety of suggestions for deepening Asian financial cooperation.  These include giving greater power to the Asian Development Bank (ADB), creating a de facto Asian Monetary Fund through informal agreements, and employing the yen as a de facto regional currency.