Europe Envy in Asia

Journal of Asian Economics, Vol. 14, No. 6, February 18, 2004

Asian economies are taking part in a mating dance that has yielded an unprecedented number of free trade agreements. Initiatives between countries within Asia (Japan and Korea) and without (Singapore and the United States) abound, while region-wide initiatives emerge and expand. The Association of South East Asian Nations (ASEAN), the granddaddy of Asian regional groups, completed expansion of its free trade area last year and decided to move forward with an ASEAN Economic Community that would unleash goods, services, capital, and labor in the same way the European Economic Community did nearly 50 years ago.

This burst of activity accompanies a shift in Asia’s approach to economic integration. Prior to the 1997 financial crisis, Asia celebrated its spontaneous and market-driven approach to economic integration, known by the oxymoronic term "open regionalism." But after the contagious collapse of several regional economies, Asian political leaders sought a more formal, policy-driven regionalism characterized by preferential trade agreements. Naturally, they looked to the European Union (EU) as an established and successful model.

The lessons that the EU might hold for this new Asian regionalism are the focus of an issue of the Journal of Asian Economics titled "EU and Asia: Links and Lessons." In their introduction, editors Erik Jones and Michael G. Plummer argue that Asia’s newly assertive regionalism is inspired by the "EU example of success as well as a defensive reaction to integration elsewhere." Governments across the world seem to be preoccupied with what they call a "global regionalism zeitgeist": Of the nearly 300 regional trade agreements that the World Trade Organization (WTO) says will be in force by 2005, nearly two thirds were registered after 1995.

Yet contributors to the journal doubt the EU’s success can be repeated in Asia. Why? Because the "challenge of regionalism is nowhere precisely the same, the implications of economic integration are strongly mediated by domestic institutions, and the pursuit of regionalism is driven by motivations which are at times starkly different from one context to the next," the editors surmise. As with many mechanisms of global integration, one size does not fit all.

This pessimism comes across most strongly in an essay by James Angresano of the University of Trento in Italy. In "European Union Integration Lessons for ASEAN + 3: The Importance of Contextual Specificity," he argues that transplanting the EU model to Asian soil is neither feasible nor desirable. Market integration evolves in particular cultural and historical settings and is shaped by shared political and economic values, he observes. For example, China and Japan are characterized not just by their "strong unwillingness to give up sovereignty for integration purposes" but by their "ethnocentric social attitudes," which resist EU-style regionalization.

An important factor in the EU’s success has been its public credibility. In their essay on the legitimacy of regional economic institutions, Craig Parsons and J. David Richardson of Syracuse University point out that the EU, like the United States, gained legitimacy through the regulatory and judicial institutions that underpin its democracy. Asia’s political leadership must recognize that such institutions are a prerequisite for legitimate market integration, the authors argue. The traditional form of "open regionalism," with its heavy reliance on informal networks and processes, will only reach a "mild plateau and stagnate."

Although the volume is timely and comprehensive, its weakness may lie in what the editors call a "strong emphasis on political-economy considerations" at the expense of some important geopolitical concerns. In a 2002 article for the Atlantic Monthly, international relations scholar Charles A. Kupchan bemoaned the obliviousness of U.S. leaders to the EU’s challenge to American hegemony and worried about a "clash of civilizations" between "a West divided against itself."

Kupchan’s predictions may sound apocalyptic, but they could also profoundly influence how Asian political leaders perceive the evolving agenda of regionalism. If leaders welcome the EU model as a harbinger of a multipolar world that restrains U.S. unilateralism, then they may be willing to develop a distinctive pan-Asian voice á la the Group of 21 movement that emerged at the recent WTO deliberations in Cancún. The shape that this new movement assumes will direct the region’s development for generations.