Doctoral Dissertation The Year Two Thousand and Ten Japan s Strategy towards Regional Economic Cooperation --As Observed through its Participation in Asia Pacific Regionalism since 1960s Faculty-in-charge-of: Chief Examiner: Deputy Examiner 1: Deputy Examiner 2: Deputy Examiner 3: Lim Hua Sing, Professor, Waseda University Yamaoka Michio, Professor, Waseda University Taniguchi Makoto, Former Professor, Waseda University Hirakawa Hitoshi, Professor, Nagoya University Major: International Relations Graduate School of Asia-Pacific Studies Waseda University, March 2010 Yang Zerui, 4000S652
Abstract This dissertation attempts to analyze Japan s strategy towards regional economic cooperation through its participation in Asia Pacific regionalism since the 1960s. The analysis is based on Japan s participation in three continuous regionalism processes Asia Pacific regionalism from the 1960s to the 1980s; the APEC process in the 1980s and 1990s and East Asian regionalism from the 1990s to the present and tries to answer the following questions: 1, Whether Japan has a strategy towards regional economic cooperation; 2, If the answer is yes, what it is; 3, What is the reason for Japan s strategy towards regional economic cooperation; 4, Based on the past strategy, what is the implication for expectations of Japan in regional economic cooperation in current and future regionalism. The dissertation is organized into five chapters. Chapter I is the introduction of the study and introduces this dissertation s analytical framework and methodological issues. Chapter II to Chapter IV analyzes Japan s participation in regional economic cooperation from the 1960s to the new century. These three chapters provide empirical examination of Japan s participation in regional economic cooperation. Chapter II analyzes Japan s participation in Asia Pacific regionalism in the context of global regionalism in from the 1960s to the 1980s. Chapter III analyzes Japan s participation in the APEC process from the 1980s to the 1990s. Chapter IV analyzes Japan s participation in East Asian regionalism since the Asian Financial Crisis in 1997. Chapter V describes Japan s strategy towards regional economic cooperation and summarizes why Japan has this strategy. This dissertation concludes that Japan is a strongly strategic country on foreign policies and has a continuous strategy towards regional economic cooperation, and the strategy can be summarized as: 1, Japan should actively participate in all kinds of regionalism, which include regional discussions, activities, initiatives, organizations and institutions; 2, If a regional institution has been established, Japan hold be a dominant or influential role. In the institution s process, Japan should use its influence to lead the institution to a loose, forum-like mechanism, but not a well-organized, well-managed, effective binding institution. 3, If the institution is not in Japan s interests, or faces some breakthrough in institutionalization or negotiating mechanism opposed by Japan, Japan should use the mantra of Open Regionalism to affect the institution s process, such as enlarging the membership and discussion scope of the institution to make the institution weak, ambiguous, controversial and complicated. In other words, Japan s strategy towards regional economic cooperation can be partly summarised as Soft Regionalism or Functional Regionalism. What Japan needs is a limited regionalism an open but not closes, a voluntary but not binding, a functional but not comprehensive regional institutions. This kind of regional institution is in Japan s best interests. This dissertation also tries to explain the reasons for Japan s strategy on regional economic cooperation, and gives economic and political reasons. Economically, Japan is the No. 2 economic power in the world, its economic interests exist globally, rather than regionally. Politically, Japan is the military and II
strategic ally of the United States, and so Japan could not support a strong regionalism, given the fact that the US is generally opposed to any exclusive regional institution in the Asia Pacific. Soft regionalism in the Asia Pacific on the one hand helps Japan to engage the United States in the Asia Pacific region, and on the another hand avoids isolation by the exclusive European Union and NAFTA. As Japan is actually afraid of any strong institutionalized regional regime, any expectation on Japan s aggressive, radical role in regional economic cooperation is unrealistic. Some implications of expectation for Japan in the region are suggested: 1. On Asia Pacific Regionalism: Japan will be generally actively participate in all levels of Asia Pacific regionalism and play a critical role; 2. On Regionalism s Principles: open regionalism, voluntarism and flexibility which were successfully used in APEC and EAS will be the main three principles that Japan will hold in the new regional institutions; In other words, Japan will welcome any regional institutions if it is non-binding, non-negotiating; 3. On APEC: Japan will continue to support the Osaka Agenda and enjoy APEC s loose institutionalization, and could not support APEC s FTAAP initiative. 4. On East Asian regionalism: Japan could not sincerely support the process of APT and EAS, EAFTA is far from Japan s interests, and so, Japan will once more lead the APT and EAS process to a loose, soft regional mechanism as with APEC. 5. On bilateral FTAs, Japan will be somewhat active in seeking FTAs with unimportant trade partners and resources countries for the purpose of defense and competitiveness. But in the short-to-middle term, Japan could not have FTAs with its most important trade partners such as China, US, EU and South Korea, if political consideration were not to change. This dissertation provides these predictions that they might be tested in regional economic cooperation processes in the future. But with the changing global and regional situation, Japan s strategy towards regional economic cooperation also needs to develop. As regional expectation of Japan s greater contribution has increased since the 1980s, how to balance multilateralism and regionalism is really a difficulty faced by the Japanese. Anyway, Japan s engagement in the region should be encouraged. III
Contents Page Abstract II Abbreviations V Acknowledgements VIII Chapter One: Introduction of the Study 1 1.1, Research Questions, Previous Studies and Conceptual Definitions 1 1.2, Analytical Theory and Methodology 16 1.3, Expected Contributions and Analytical Framework 23 Chapter Two: Japan and Asia Pacific Regionalism: 1960s-1980s 26 2.1, Global Regionalism and Asia Pacific Regionalism 26 2.2, Japan s Foreign Policy and Foreign Economic Policy 31 2.3, Japan and the U.S. in the Asia Pacific 47 2.4, Japan in Regional Institutions before APEC 52 2.5, Japan and Functional Regionalism: ADB as a Case Study 61 2.6, Arguments on Japan in Asia Pacific Regionalism 1960s-1980s 64 2.7, Conclusion: Japan in Asia Pacific Regionalism 1960s-1980s 67 Chapter Three: Japan and APEC Process: Late 1980s-1990s 69 3.1, New Regionalism in the Asia Pacific and Japan s Contribution 70 to the Establishment of APEC 3.2, APEC s Structure, Activities and Principles 79 3.3, Japan s Policy towards APEC and its APEC Policy-making 88 3.4, Japan s Policy towards APEC TILF in the context of its FTA Strategy 98 3.5, Japan s Policy towards APEC ECOTECH in the context of its ODA Strategy 107 3.6, Arguments on Japan in APEC 1980s-1990s 117 3.7, Conclusion: Japan in APEC 1980s-1990s 122 Chapter Four: Japan and East Asia Economic Cooperation: 1990s to 2000s 123 4.1, East Asia Regionalism since 1990s and Historical Review on Japan in East Asia 124 4.2, Japan s Reaction to the Proposed EAEG and EAEC 137 4.3, Japan in New Process of East Asia Regional Cooperation after ASIAN Financial Crisis143 4.4, Japan s Bilateral FTAs: Progress and Problems 152 4.5, Arguments on Japan in East Asia Regionalism: 1990s to 2000s 158 4.6, Conclusion: Japan in East Asia Regionalism 1990s to 2000s 162 Chapter Five: Conclusions 163 5.1, What is Japan s Strategy towards Regional Economic Cooperation 165 5.2, The Reasons Behind Japan s Strategy 166 5.3, The Implications for Expectation on Japan in Regional Economic Cooperation 168 Reference 170 IV
Abbreviations ABAC APEC Business Advisory Council ADB Asia Development Bank AEM ASEAN Economic Ministerial Meeting AFTA ASEAN Free Trade Area AIA ASEAN Investment Area AID New Asian Industrial Development Plan APT ASEAN Plus Three APEC Asia Pacific Economic Cooperation ARF ASEAN Regional Forum ASEAN Association of Southeast Asian Nations BMC Budget and Management Committee (of APEC) CAPs Collective Action Plans CEFTA Central Europe Free Trade Area CIIS China Institute for International Studies CTI Committee on Trade and Investment (of APEC) DRC Development Research Center of China EAEC East Asia Economic Caucus EAEG East Asia Economic Group EAFTA East Asian Free Trade Area EAIA East Asian Investment Area EAS East Asia Summit EC European Community ECOTECH Economic and Technological Cooperation (of APEC) ECSC European Coal and Steel Community EEC European Economic Community e-iap electronic Individual Action Plan (of APEC) EPA Economic Partnership Agreement EPG Eminent Persons Group (of APEC) ESCAP Economic and Social Commission for Asia and the Pacific (of UN) Euratom European Atomic Energy Community EVSL Early Voluntary Sectoral Liberalization (of APEC) FDI Foreign Direct Investment FTA/ FTAs Free Trade Agreement/Area, Free Trade Agreements/Free Trade Areas FTAA Free Trade Area of the Americas GATT General Agreement on Tariffs and Trade GEACS Greater East Asia Co-Prosperity Sphere IAFTA Indo-ASEAN Free Trade Area IAPs Individual Action Plans (of APEC) IDE Institute of Developing Economies V
IIE's Institute of International Economics IMF International Monetary Fund IPR Institute of Pacific Relations JAFTA Japan-ASEAN Free Trade Area JCIE Japan Center for International Exchange JERC Japan Economic Research Center JICA Japan International Cooperation Agency JIIA Japan Institute of International Affairs KAFTA Korea-ASEAN Free Trade Area KIEP Korea Institute for International Economic Policy LDCs Less Developed Countries LDP Liberal and Democratic Party (of Japan) MAPA Manila Action Plan (of APEC) MERCOSUR Mercado Común del Sur (South Common Market) MFN Most-Favored Nation MITI Ministry of International Trade and Industry (of Japan) MOFA Ministry of Foreign Affairs (of Japan) NAFTA North American Free Trade Agreement NATO North Atlantic Treaty Organization NGOs Non-governmental Organizations NGROs Non-Governmental Regional Organizations NIEs Newly Industrialized Economies NIRA National Institute for Research Advancement of Japan NRI Nomura Research Institute NSC National Safety Council (of the US) NTBs Non-tariff Barriers NTMs Non-tariff Measures OAA Osaka Action Agenda (of APEC) ODA Official Development Assistance OECD Organization for Economic Cooperation and Development OECF Overseas Economic Cooperation Fund (of Japan) OEEC Organization for European Economic Cooperation OPTAD Organization of Pacific Trade and Development PAFTAD Pacific Trade and Development Conference PBC Pacific Basin Cooperation PBEC Pacific Basin Economic Council PEC Pacific Economic Community PECC Pacific Economic Cooperation Council PFP Partnership for Progress RTAs Regional Trade Agreements/Areas SAARC South Asian Association for Regional Cooperation SEA Single European Act SMEs Small and Medium Enterprises VI
SOM TILF UN UNESCO UR WEU WTO Senior Official Meeting (of APEC) Trade and Investment Liberalization and Facilitation (of APEC) United Nations United Nations Educational, Scientific and Cultural Organization Uruguay Round West European Union World Trade Organization VII
Acknowledgements I am grateful to Professor Radtke Kurt, my former supervisor of master course and Ph D course in Graduate School of Asia Pacific Studies, Waseda University during 1998-2003. He guided me hand-by-hand on how to write a high quality Ph D dissertation, and how to be a qualified scholar. Even after he retired from Waseda University, he continued to guide me and encourage me to believe my Ph D dissertation and research on this issue was valuable. Most appreciation goes to Professor Lim Hua Sing, who is my supervisor of Ph D course after Professor Kurt s retirement. I read Professor Lim s books and papers from late 1980s, and had a dream to become his student ever since then. This dream comes true. Professor Lim is not only a teacher, but also a parents-like friend to me. Without his guide and help, I could not complete my Ph D studies. I am also grateful to Madame Emiko Kaneko, Mr. Yuji Kaneko (both were Secretary General of former JASCAA International), Mr. Jiro Sato (current Secretary General of ASJA International), Ms Yukako Ayusawa, Ms Aya Adachi (both from ASJA). JASCAA and ASJA provided full financial support to my master and Ph D courses, and made me a comfortable family-like life in Japan. On a personal level, I wish to thank my parents, and to my wife, Li Jing and my two children, Yang Yi and Yang Danyan for their enthusiastic support and endless understanding. Without the foregoing, the Ph D dissertation would not have been completed. Yang Zerui February 2010 VIII