If we are asked, whether there are any differences between Asian and European integration processes, our answer is yes. There are strikingly different sequences of classical functionalist and neo-functionalist processes and evidently different levels of strategic reliance on one or the other of these two patterns of integration.
Is Asia’s integration less functional than Europe’s because it follows similar patterns in a different sequence and with a different emphasis than Europe ? Our answer is no.
Many of the eminent Asian authors cited in our previous post and in the November 2007 issue of Internationale Politik—Global Edition refer to the European experience when analyzing Asian integration. Ong Keng Yong emphasizes the discerning use of “low politics” in functional cooperation and “high politics” on strategic issues. This is precisely the differentiation the American creators of neofunctionalist integration theory led by Ernst B. Haas had recommended to the Europeans for overcoming inevitable crises of trust in the process of building a community.
Ong Keng Yong and Qian Qichen underscore the tension between unity and diversity. This sounds like a variation on a European theme, though the differences between development stages and political systems are still much larger in Asia than in Europe. Both authors underscore the necessity of a step-by-step process similar to the “incremental” approach recommended by American integration theorists to European policy makers.
Nonetheless, the ASEAN Charter, which will be signed at the ASEAN summit in Singapore in November 2007, is a document that can be termed a “constitutional framework,” as it is by Ong Keng Yong. It will presumably go into effect before the European reform treaty, which, since the rejection of the European draft constitution, may no longer be called a constitution. Perhaps that is because ASEAN has a much leaner institutional structure than the European Union, doing without a supranational commission of the European type. The ASEAN Charter is content with a standing committee of the permanent representatives of member states in Jakarta, comparable to the European Union’s Committee of Permanent Representatives (COREPER) in Brussels. The secretary general has a mandate to monitor the implementation of ASEAN agreements and decisions.
Does this leaner institutional structure mean that functional integration and community-building in Asia have less potential than the same processes in Europe? This would be a premature conclusion. To be sure, the Asian case exhibits a sequence of economic integration and institution-building strikingly different from the European case. As early as 1997, intraregional trade accounted for 51 percent of total foreign trade conducted by all the states in East and Southeast Asia, surpassing NAFTA’s 45 percent and coming within range of the European Union’s 62 percent. Asia’s integration began with a classic functionalist pattern: enterprise-driven flows of trade and foreign direct investment even across customs boundaries.
By contrast, Jean Monnet’s Europe had to start with neofunctionalist strategy and the building of supranational institutions before two-thirds of the trade flows posted by European member states finally flowed into the bed prepared by the customs union, the single market, and the currency union. This difference is certainly not a sign of dysfunctional weakness in Asia’s pattern of integration.
Asia’s interest in creating institutional structures in the economic realm was first triggered as late as 1997 by the Asian financial crisis. Haruhiko Kuroda was among the authors of the Chiang-Mai initiative for cooperation on monetary policy, the response by ASEAN+3 to the sudden drain of international capital. It was reminiscent of the numerous neofunctionalist spillovers through which Europe rallied and converted dangerous crises into ever-higher levels of institutional integration.
If the enormous currency reserves held by China and Japan are added together, the swaps that the two countries can provide to the other ASEAN+3 countries have the potential to eclipse the resources of the International Monetary Fund by far. Initiatives to create an Asian bond market as a way to channel Asian savings into Asian investments are being continually enhanced. See the article “How ‘Asian’ will Asia be in the 21st Century” offered for download on our website.
In carefully weighed words, Kuroda describes the possibilities for cooperation on financial and monetary policy in Asia. The brevity and cautious formulation of his paragraph on a common currency basket for ASEAN or ASEAN+3 (the latter including Japan and China) is understandable after the stir caused last year among Western observers by his proposal for an Asian currency unit patterned on the European currency unit in an earlier phase of Europe’s monetary integration. But one needs to read between the lines. Kuroda comments that Asia, unlike Europe in the run-up to the currency union, has no anchor currency like the German mark. This is not a rejection of the idea of Asia’s having its own model of currency integration, however. He diplomatically leaves unsaid that Asia has not only one but two anchor currencies—China’s and Japan’s.
A “common currency” does not need to be a single currency like the euro; national currencies need not be surrendered. It can be based on a basket of several anchor currencies provided it is possible to overcome the kind of competition for political prestige seen in the period predating the European currency union.
The fact that the exchange rate between the yen and renmimbi has meanwhile become remarkably stable (and that both currencies tend to move parallel to the dollar and the euro) can be explained by the economic interdependence of the two countries. (China is now Japan’s most important trading partner, surpassing even the United States.) Japanese economists like Kuroda have not been the only ones who have been thinking about Asian monetary integration for some years. Chinese economists have been pondering it too, and they are encouraged by the American “father” of the theory of optimal currency areas, Robert Mundell. At a conference organized by Beijing University in May 2002 on the subject of Asian economic cooperation in the new millennium, he was asked whether Asia needed a common currency. His response: “My answer is yes.”
Are the prospects for conciliation between Japan and its Asian neighbors as good as those between Germany and its European neighbors ? Our answer is yes, although we hasten to add, particularly to our German compatriots, that Germany’s and Japan’s burden of history are not comparable, since Japan’s history does not contain anything like the Holocaust.
In his essay in the November 2007 issue of Internationale Politik, the Editor of the liberal Japanese daily Asahi Shimbun, Yoshibumi Wakamiya disagrees with European skeptics of Asian integration who are still inclined to forecast that any Asian integration attempt will run aground on the rocks of Japanese and Chinese nationalism. He points out that it was Shinzo Abe who broke the political ice on the economically so hot Sino-Japanese relationship at the beginning of his short premiership in 2006 by visiting Bejing and abstaining from worship at the Yasukuni shrine. Rather than discounting this success as the result of opportunistic tactics of a political novice, we should extend the analysis to the remarkable fact of the Chinese willingness to accept Abe’s conciliatory gesture. Seen from this angle , it looks like Hegels’s “cunning of history” that it was left to Abe, grandson of Nokusuke Kishi, and thus heir to a political family associated with Japanese nationalism, to reopen the path to Sino-Japanese reconciliation. Wakamiya describes the long sequence of Japanese efforts to address the burden of Japanese history in relation to China and Korea.
The task of reconciling Japan’s former wartime enemies is in good hands with the present Prime Minister, Yasuo Fukuda, who succeeded Abe in September 2007. He can be expected to revive the “Fukuda doctrine” of his father, Takeo Fukuda, who was the first to place national policy toward Japan’s neighbors on an ethical basis, when he was Japan’s Prime Minister in 1978. Together with Helmut Schmidt, Takeo Fukuda later founded the Interaction Council whose aim is the global promotion of an ethical orientation of policy.
Read more in our article “The Road to an Asian Community” offered for download on our website.
Tags: , "low politics" and "high politics", anchor currencies, ASEAN Charter, Asian bond market, Chiang Mai Initiative, common currency, COREPER, currency basket, currency union, customs union, enterprise-driven flows of trade and foreign direct inv, Ernst B. Haas, ethical orientation of policy, European constitution, European Union, foreign exchange reserves, Fukuda Doctrine, Haruhiko Kuroda, Helmut Schmidt, incremental approach to integration, Interaction Council, intraregional trade, Jean Monnet, NAFTA, neo-functionalist integration theory, neofunctionalist strategy, Ong Keng Yong, Qian Qichen, Robert Mundell, Shinzo Abe, single currency, single market, Sino-Japanese reconciliation, supranational institutions, swaps, Takeo Fukuda, Yasuo Fukuda, yen-renmimbi exchange rate, Yoshibumi Wakamiya
