Trade warfare and regional integration in the Pacific: The USA, Japan and the Asian NICs

Abstract

US Secretary of State's celebrated comment that the United States now regards Asia as a more strategic economic partner than Japan. A few months after the APEC summit, however, economic antagonism between the United States and Japan, the two superpowers in the group, reached a new level as Japan refused numerical targets for US and other foreign imports and the US responded by reviving 'Super 301', a provision in the US Trade Act that mandates retaliation against those perceived as 'unfair traders'. Moreover, the voices of dissent that had been overshadowed by the US drive to display consensus in Seattle reemerged with even greater vigour. China and several South-eastern Asian governments declared their opposition to the US efforts to turn APEC from a consultative body into a more formal trading block based on free trade. And Prime Minister Mohamad Mahathir's trenchant view that the USA was intent on turning APEC into an instrument to reassert US hegemony in a part of the world that is fast spinning out of the American orbit was gaining greater resonance. The East Asian countries' response to developments n APEC is conditioned by the reality that America's relationship to Asia in the past decade has been dominated by one central fact: trade warfare carried out in the name of free trade. From their perspective, the US design to transform APEC into a formal association based on ever freer trade would be tantamount to 'multeralising' and institutionalising the aggressive campaign that the USA has waged on a bilateral basis in the last few years. In these countries' view, that campaign has had, as its fundamental objective, the dismantling of protected markets, foreign investment restrictions, and state-assisted capitalism-the very mechanisms that, from their perspective, have been responsible for East Asia's economic success. A third attitude coexisted with the Asian 'newly industrialising countries' (NICS') opposition to a free-trade APEC and the USA's enthusiasm for it: Japan's lack of initiative in pushing APEC in any form. While the Japanese government gave ritual endorsements to the consultative body, it played no significant role in its economic diplomacy. As a Thai member of APEC'S 'Eminent Persons Group' put it, Japan's stance was marked by 'an unwillingness to speak out its mind' on the direction of the regional forum.'