Reflections on the Human Condition - Api-fellowships.org

It will not be easy but I believe that what we managed
to do with Southeast Asia, we can achieve with regard
to East Asia—if we have the commitment and if we
can sustain the stamina. The rewards are so great in any
case that we must at least give it our best shot over the
coming decades.
Asian Community of Cooperative Prosperity
Let me now turn to what I believe must be the second
item on our common agenda: the creation of an Asian
community of cooperative prosperity. Let us be clear.
The primary work for prosperity must begin at home.
There are many things that need to be done that only
we ourselves can do. Just as peace begins at home, so
does prosperity. But in the days ahead we must begin
to cooperate actively and aggressively on the economic
front.
Already, today, a highly integrated East Asian regional
economy is flourishing. In terms of intra-regional
trade, only the European Union and NAFTA are
more economically integrated. What has been
remarkable is that unlike so many other parts of the
world, where governments have burst blood vessels
trying to integrate their economies and have achieved
practically no regional integration, we in East Asia have
achieved massive economic integration with little effort
on the part of our governments. East Asia’s massive
economic integration has been driven mainly by the
private sector—the private sector, incidentally, of
transnational corporations from other regions as well as
from the transnational corporations of East Asia. This
pattern of private sector-driven economic integration is
productive. It is sustainable. It must not be supplanted.
But it is time for the governments of East Asia to lend
a helping hand.
Reducing tariffs to each other is generally
competitiveness-enhancing. If our corporations cannot
compete against each other, how can they be made strong
enough to take on the world? I have every confidence
that substantial forward movement can be made with
regard to the creation of the ASEAN-China free trade
area, now already scheduled to be completed within less
than ten years. I am very confident about the successful
negotiation of most of the trade and closer partnership
bilaterals and minilaterals that so many of the East
Asian economies are negotiating with economies near
and wide. These efforts should eventually lead to the
establishment of a single free trade arrangement covering
the entire region, which should then form the basis for
a global move to free trade. In general, the push toward
free trade mounted by these East Asian countries will
enmesh us all closer together, to our benefit and to the
benefit of a world that will increasingly depend on East
Asia as an engine for global growth.
But there is a long and important agenda on trade
facilitation to which East Asian governments must
contribute. Just as important as reducing taxes at
the border are such things as simplifying customs
procedures and generally reducing logistics costs. There
should be mutual recognition of industrial standards
and certification, streamlining of policies governing the
protection of intellectual property rights and integration
of information communication standards.
East Asia, where the world’s financial surpluses and
reserves are now concentrated, can also benefit from
greater financial and monetary cooperation. These
huge reserves attest to Asia’s rising economic power.
However, vast quantities of these reserves are exported.
If East Asian economies are to absorb the region’s
huge savings, more efficient capital markets need to
be developed, in particular the primary and secondary
markets for East Asian currency-denominated bonds.
This will also create a more balanced financial system
with banks and bond markets forming the two pillars.
An Asian bond market will also curtail the mismatch
between borrowing short in foreign currency and
lending long in domestic currency that contributed to
the severity of the 1997-98 financial crises.
We must of course continue to build many regional
institutions. But let me stress one: the establishment of
an Asian Monetary Fund, as a measure against future
financial crises. Preliminary steps have been taken in this
direction, notably through the Chiang Mai Initiative,
which created bilateral currency swap arrangements.
The next step is to enlarge the size of these bilateral
currency swaps.
The Asian Monetary Fund should not challenge nor
duplicate the IMF. It should have its eagle eye on
developments in East Asia each and every working day,
rather than only when disaster strikes or is about to
strike. It should have at least one relatively senior staff
looking at each regional economy instead of having one
(no doubt brilliant) senior economist covering a dozen
far-flung countries. This should ensure a deeper detailed
grasp of regional and local realities. It should be more
empirical and rooted in fact. There should be a little less
lecturing and a lot more learning and expertise.
Ref lections on the Human Condition: Change, Conflict and Modernity
The Work of the 2004/2005 API Fellows
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