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Manufacturing is still critical to the economy United States. Clyde Prestowitz, says it's time to start realizing the positive spillovers that manufacturing creates... Read more  

Events & Activities

Stephen Olson at Chinese Development Institute Conference


 Clyde Prestowitz giving presentation to CDI...


Steve Olson teaching trade negotiations at the Mekong Institute...


Stephen Olson to speak at upcoming workshop organized by the International Institute for Trade and Development on 

"Economics of GMS Agricultural trade in goods and services towards the world market"

Chiangmai, Thailand Sep 8-12.

(12/05/09) Prestowitz Quoted in Business Times Singapore

The Business Times Singapore

December 5, 2009

East Asia must pay up or grow up

Anthony Rowley. Tokyo Correspondent

THE 'Japanese are in motion', suggested veteran US administration official and economic pundit Clyde Prestowitz during a conference that I attended in Singapore this week. So they are, and much the same can be said about East Asia as a whole, although I would prefer to say that the region is 'in transition' - transition towards a new order as the old one fades away.

Whether you call it a turning point, an 'inflexion point' or even the beginning of a tectonic shift, that is where East Asia is at. Forces are at work on both sides of the Pacific Ocean that point to the end of the post-war order, as Mr Prestowitz and others such as Masahiro Kawai, dean of the Tokyo-based Asian Development Bank Institute, reminded us.

When Mr Prestowitz referred (during the Oxford Analytica Global Business Outlook Conference) to the Japanese being 'in motion', he was alluding to moves by Japanese Prime Minister Yukio Hatoyama to get China and South Korea on board with the idea of an East Asian Community, which could eventually develop into something like the European Union.

This is a sensitive issue, not just in Asian capitals such as Beijing and Seoul but equally, if not more so, in Washington where President Barack Obama has made it quite clear that the US intends to be in on the ground floor of any such move to formalise and institutionalise economic and perhaps political integration in East Asia.

Mr Prestowitz conceded, however, that by virtue of its geographical location, the US is not a 'natural member' of an East Asian Community (EAC). But he noted a 'certain tension' in the idea that East Asia can strike out in new economic and political directions that exclude the US while at the same time being dependent upon the global superpower for their basic security.

This is, of course, quite true, but it is also where the tectonic shifts that are taking place in the 'Pacific plate' (as we might call it) come into play. The issue is not whether East Asia can pursue more independent policies while relying on US military protection, but whether the US can any longer afford to underwrite the region's security.

The answer, according to Mr Prestowitz - which is obvious to anyone with eyes to witness the dramatic decline of the US dollar and the slide of the US into ever-deeper international debt - is that America can no longer afford to foot this bill (let alone the larger cost of maintaining some 750 military bases around the world).

What does this mean? It could mean, as Mr Prestowitz suggested, that Washington may soon have to ask Asian nations to pay more of the cost of maintaining US forces on their soil or on the high seas of this region.

But equally, it could mean, as he also conceded, that they might begin to ask themselves the question, 'do we need US troops?'

Dr Kawai pointed to a third element. Security cooperation could become an element of an East Asian Community, he suggested. If Asian policymakers are not yet taking such ideas seriously, then they should heed Mr Prestowitz's warning about the decline of US economic (and thus military) power and Dr Kawai's call for Asian regional security cooperation.

What, anyway, are the threats to Asian security? Once upon a time, they were from a military powerful Soviet Union, but no longer. This leaves only China and North Korea as the usually unidentified potential threats since no one seriously believes in the idea of a nuclear attack by India or Pakistan upon East Asia.

It is true that China's military build-up has been impressive and it is also true that some in South Korea yearn for their country to have its own Blue Water navy. But the lack of responsible attitudes towards mutual security arrangements are arguably fostered as much by the underwriting role of the US than by bellicose aspirations of individual Asian nations.

Even with the so-called 'rogue' state of North Korea, it is arguable that the legacy of the Korean War and the ongoing presence of large numbers of US forces in neighbouring South Korea and Japan contributes to a siege mentality in Pyongyang that might dissipate if a regional security force took over the role of US forces.

Under Mr Hatoyama's Democratic Party of Japan-led government, Tokyo has begun to question the need for such a large US military presence in Okinawa and, in that sense, Japan is indeed 'in motion' after decades of hewing to the status quo of a post-war Mutual Security Treaty with the US.

US military presence

In short, East Asia is approaching the point where it must 'pay up' for a continued US military presence or 'grow up' in the sense of forming regional security alliances. This would pave the way for the not too distant day when the US has to cut its military uniform according to the cloth it can afford, and allow East Asia to go its own way on regional integration.

Things are in motion on this latter front. Japan is expected to raise with China in the next few months the idea of a Japan-China free trade agreement, according to Dr Kawai. If this happens - and there is every reason to expect that it would, given the Japanese prime minister's enlightened approach on such issues - an important step would have been taken towards forming an EAC.

China would probably respond positively to such an approach, or so at least suggested one scholar of Chinese affairs during the Oxford Analytica conference. The problem up to now in contemplating a Japan-China FTA has been on the Japanese rather than the Chinese side. If the Japan-Korea FTA talks can be restarted (as Mr Hatoyama has pledged to do), and given that there is already a China-Korea FTA, then the missing links in an Asean+3 free trade agreement would have been supplied.

That would not be an East Asian Community in the European sense. But just as Europe started with cooperation in iron and steel or atomic energy, an Asian community would begin with free trade and investment, and build on from there to embrace everything from energy and environmental cooperation to monetary and financial collaboration as well as security.

The EAC would very likely begin with Asean+3 and later embrace Australia and New Zealand as well as India. What happens to other South Asian states and to the Pacific Islands is still an open question, but the EAC could grow to embrace them all in time, as the 27-member EU has shown.

But the US will no more be part of the EAC than it is of the EU. As Dr Kawai said in Singapore, no nation should demand to be invited to someone else's house.

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