Toward Greater Integration of East Asia


Key note Address for the inauguration
                                                                      of the East Asia
Forum, Seoul, December 16, 2003


It is my pleasure to share with you some of my thought on the progress and conditions for greater economic cooperation and integration in East Asia. It is also a great privilege and honor for me to meet such renowned intellectuals from the industry, government, and academia representing 13 nations in East Asia  and I heartily congratulate on the inauguration of the East Asia Forum currently held here in Seoul.

Challenges and Opportunities of East Asia

We are well aware that in the wake of global trend of FTA and the spread of regionalism in Europe and the US since about 1980s, East Asia, which is one of the three pillars of the world economy, was left on the fringe of regional economic cooperation.

Regional economic integration requires two locomotives; market and institutions. East Asian countries have made great strides in the market-led economic integration. Compared with other regions, however, inter-governmental cooperation to lay the institutional foundation for the integration is still in its nascent stage. In this light it is particularly significant to inaugurate the East Asia Forum, the first cooperative project recommended by the East Asia Study Group.

I believe that East Asia already has the practical foundation for greater economic integration. First of all, the regional share in the world trade, which is a barometer for economic integration, recorded 36.4 percent in 2001 which is comparable to 38.2 percent of the US, Canada, and Mexico in 1990 before concluding NAFTA.


Second, the intra-industry trade in our region, which is deemed as the basis of economic integration, account for 25% of the world trade in 2002, comparable to other economic blocs, thanks to the increase in FDI and technology transfer to the region.

Third, China’s phenomenal economic growth is exerting great impact on the economic relations among countries in the region, calling for closer and expanded economy cooperation in the region for mutual benefit .of all countries.  

Looking back at the progress of regional economic integration in the world, however, political and cultural factors are equally important for economic integration. The driving force behind launching of EU was, in my view, the values of Christianity shared by the Europeans for more than 1000 years since the Roman Empire. The formation of European Union would not have been possible without the common cultural and religious foundation. The same is true with NAFTA regarding the US and Canada.

By contrast, the sense of identity is rather weak in East Asian Community because of, among others, cultural and religious diversity. Islam, Buddhism, Confucianism, coexists in our region but they are not without common value such as, filial devotion, the royalty to the community, high value attached to education, and patriotism. These traditional value are now facing great challenge from western culture characterized by individualism. However, I believe, we can forge cultural identity on the basis of common value of Asian society. 

Second, political rivalries limit economic cooperation between countries with historical antipathy stemming from past wars. There are territorial issues between Japan and Russia and between other countries in the Southeast Asia. The territorial divisions between Chinese mainland and Taiwan and between two Koreas are major source of uncertainty in the regional security. In particular the nuclear ploy in the North Korea is common concern for all countries in the world.

Fortunately however, history provides an answer to the problem. European geopolitical history has been even more complex than that of East Asia, and the antagonism and rivalries between countries was no less intense than in East Asia. For example the relation between France and Germany was as bloody as that of China and Japan in the past. Yet deep seated political animosities have been overcome through integration, leading to the establishment of European Union. Another example is found in East Asia. Korea was colonized by Japan for 36 years until her defeat in the World War II ending in 1945. But the two countries today enjoy renewed friendship and close cooperation because of continuation of economic interaction and growing interdependence. In short, the lesson of history is that close economic integration between countries and regions make future wars impossible.

Conditions for Greater Integration of East Asia

Let me now turn to some necessary conditions which, I think, are essential for successful economic integration in our region. Firstly, it is important to recognize common goal of economic integration. For instance, we have to realize that trade liberalization is aimed at common interest of all nations. According to a research conducted by the World Bank, 24 developing nations that liberalized trade and integrated into the global economic system during 1970-1990 far outpaced countries that did not in terms of economic growth rate, average life expectancy, and education. It is a well-known fact that China and India in East Asia was able to increase the share of exports in GDP dramatically, thereby achieving rapid economic growth as a result of their liberalizing policies.

Secondly East Asia also is required to redefine its role in the world economy. Today its total output approximates that of Europe and North America; Its trade with the rest of the world is as large as that of other blocs, Its monetary reserves are far larger than theirs. This implies the need for reviewing the legitimate role of East Asia in the world economic affairs Currently East Asia is under-represented in most of the international institutions including IMF and World Bank. This situation should be remedied so that East Asia can play a proper role commensurate with its economic progress.

Thirdly, East Asia at the same time has greater obligation to shoulder as a responsible partner of the other two economic blocs –North America and EU. In particular, East Asian countries should play a constructive role to bring the Doha Agenda of the WTO to a successful conclusion. I agree with the view that the Doha Agenda has the potential to speed up growth, raise incomes, and reduce poverty, and all countries have an interest in its success.  I am hoping that rich countries reduce border protection and subsidies in agriculture, and reduce protection on manufactures. Low-income countries need help from industrialized countries to reduce reliance on trade preferences and increase competitive exports.

Fourthly, we may consider the possibility of restructuring [ASEAN Plus Three] into a substantial regional body. We would like to see a strong regional institution in place to lead the region toward closer cooperation and deeper integration. In line with Prime Minister Mahathir’s suggestion of East Asian Economic Group (or Caucus) a decade ago, we may restructure ASEAN+ 3 into a single unified entity consistent with the goal of greater economic integration in East Asia. 


Finally, there has been much talk about regional cooperation and integration. But what is important is not to subscribe NATO by which I mean No Action Talk Only To quote an observation, “APEC is seen to be weakening as an economic forum. In addition, there are numerous other forums, task forces, committees, and working groups that are often referred to as ‘talk shops’ and are attributed with little real accomplishments.” This is a warning that whatever institution we may contemplate, it must be well structured and effective in attaining its goal.

In closing let me congratulate once again the inauguration of the East Asia Forum with the hoped that it will take up regional issues for study and discussion and find ways and means of expanding and deepening regional integration in East Asia.

Thank you for your attention.