Concert of Asia in Crisis

The often maligned aspiration for a “Concert of Asia” appears to be even more unlikely this year as Japan and China trade barbs at the UN and spray water cannons at each other over the Senkaku/Diaoyu Islands in the East China Sea.  Meanwhile in Southeast Asia, China has succeeded in fracturing the unity of ASEAN ministers over disputed territorial claims in the South China Sea. Even though these conflicts are unlikely to lead to war, the disputes matter because they influence whether the region will become increasingly bi-polar or whether an international institution/society will be permitted to develop in order to manage, or ideally “tame and sublimate,” competition between states.

In the broader historical perspective, the current conflicts are relatively minor compared to the confrontations witnessed during the Cold War in Northeast and Southeast Asia.  Moreover, in the current situation some states are working to defuse tensions — although no party is blameless.  For example, Japan — as a state — continues to act with a measure of restraint, even if some Japanese conservatives see an opportunity for publicity and self-promotion.  It is worth noting that Japan immediately expelled, as opposed to detaining and convicting, the Chinese activists from Hong Kong who landed on the disputed islands in mid-August. Japan’s decision to purchase three of the disputed islands from private owners was also an attempt to diffuse bi-lateral tensions by foiling a campaign by the conservative Tokyo Governor, Shintaro Ishihara, to purchase the islands for the Tokyo Metropolitan Government through public donations.  That Japan may have exacerbated tensions by purchasing the islands directly instead of simply restraining Ishihara could be understood as either a miscalculation or an attempt to finish unpleasant business before China’s leadership transition is consolidated with the hopes of repairing relations once the new administration takes power. Of course, it is understandable why the Chinese would view the entire purchase drama as a “farce” since this was likely the end result desired by Ishihara in the first place. Notably though, ever since the fallout of the nationalization of the islands, Japan has not escalated tensions by bringing in SDF ships.

Ultimately, even if neighboring powers are exploiting the Chinese regime’s weakness during its leadership transition, China is harming its own strategic interests if its bickering or muscle flexing means that regional powers will increasingly ask the US to add more substance to its “pivot” toward Asia.  Of course, the situation is still in play and states are not mechanical actors; ASEAN may still be able to manage and regulate the conflict in its neighborhood, China and America are tied together economically, and not all Asian powers will line up behind the US despite their concerns about China.  But China is increasingly hemming itself in.  As Cheong Suk Wai writes regarding China’s claim to the lion’s share of the South China Sea:

“… China is now in a Catch-22 situation: on the one hand, if it does not fend off claimants, its increasingly nationalistic population will see its leaders as shrinking Chinese territory; on the other, China is party to the 1982 UN Convention on the Law of the Sea (Unclos), and its insistence that it owns most of the South China Sea would go against Unclos and anger its neighbours. Either way, China cannot win.” (The Nation [Thailand], 29 September 2012)

China does not have an interest in exacerbating tensions from a strategic or economic vantage point, but its need to distract its domestic population from corruption scandals by fueling nationalist rage may wag the dog.  Stated another way, it may be China’s domestic weakness as well as its growing military and economic strength which terminates the prospects for a Concert of Asia and promotes greater regional polarization.


ASEAN+6 In the Lead

It’s time for the annual Asian multilateral alphabet soup round up… 

Long story short: APEC’s proposed Free Trade Area of the Asia Pacific (FTAAP), the US backed Trans-Pacific Partnership (TPP), and the Chinese backed Tripartite Agreement all appear to have lost some of their thunder to the ASEAN+6’s decision to begin negotiating the Regional Comprehensive Economic Partnership (RCEP) next year.

In fact, if the ASEAN+6 negotiations are substantively successful and not riddled with exceptions clauses it will create the largest economic bloc in the world, the Asian Economic Community (AEC), by 2015.  A couple of the working groups have already met for a few rounds of discussions.  The advantages of the RCEP in the eyes of regional developing countries and emerging markets most likely stem from the open accession format, the inclusion of all regional powerhouses under the leadership of ASEAN, and the exclusion of America’s intellectual property rights agenda.
As one might expect, the intense political tensions which have wracked East Asia in recent months have  spilled over to most trade negotiations in the region. The Tripartite Agreement reportedly might be stalled because of the intense political tensions between China, Japan, and South Korea. Similarly, China is unlikely to be included in the TPP so long as Vietnam has veto power over the admission of new members. In fact, the whole point of the TPP appears to be as a mechanism to give members a slight tariff advantage over China so few if any have a strong incentive to bring China into the group. New life may be breathed back into the TPP if President Obama defeats Governor Romney in the Presidential elections.  But the highly secretive character of TPP negotiations and the exclusion of Russia, China, and India in the TPP makes the initiative suspect in the eyes of the major Asian powers regardless.  Japan remains an observer to the TPP and domestic protectionist pressures particularly in the agricultural sector are likely to inhibit full Japanese participation in the future. 
The mystery then is why the ASEAN+6 negotiations seem to be moving forward while other agreements appear stalled. The ASEAN Secretary General, Surin Pitsuwan even noted that there was no sign of tension and even some cordial relations between the trade ministers from China, Japan, and South Korea who all sat next to each other at a recent meeting in Cambodia. China, Japan, and South Korea all gave their endorsement for the RCEP.  An obvious assumption is that the ASEAN+6 agreement is highly diluted or merely a lowest common denominator agreement. However, by its own (opaque) scorecard, ASEAN claims to have achieved 67.5% of its members’ commitments toward paving the way for the Asian Economic Community in the last three years. Nevertheless, by all accounts the most contentious issues lie ahead.  In particular, it remains to be seen whether the regional powers will be willing to extend to one another the kinds of bargains they have made individually with ASEAN. Perhaps the key to forging an agreement in these politically tense times is letting ASEAN take the wheel instead of any one of the major powers.

India: The “Dispensable Nation” in Southeast Asia?

I remember once when I was exploring the Indian hill station of Shillong in Meghalaya, I read a random factoid in a guide book which said the town was geographically closer to Hanoi than Delhi.  It was not actually very difficult to believe that in the remote states of Northeast India, the gravitational pull begins to shift towards Southeast Asia. I also knew that India’s Nicobar Islands were less than 100 miles from the coast of Indonesia. Myanmar and Singapore were once part of British India. Etc., etc… Those random factoids make it seem that regional integration between India and some of the dynamic countries of ASEAN is both natural and inevitable. In reality, however, due to protracted insurgency in India’s northeast, a relatively closed regime in Myanmar, and a general focus on trade with Europe and America, the prospects for regional integration have seemed unrealistic for decades.  Nevertheless, with the adoption of India’s “Look East” policy in 1991, there have been some efforts to enhance ties between India and ASEAN over the years which are beginning to bear fruit — the real question is whether India will shift its posture to exploit these opportunities to shape the architecture of Southeast Asian regional integration.

The main goal of the 9th India-ASEAN Summit this year was to prioritize a services and investment pact set to be completed by March 2012, which would pave the way for an India-ASEAN Comprehensive Economic Cooperation Agreement.  The 2009 India-ASEAN Free Trade Agreement in goods has already come into effect; current trade between India and ASEAN is about $50 billion and rising very fast. Visa on arrival facilities in India for ASEAN nationals has also been established. Of course, as even intra-ASEAN trade is riddled with non-tariff barriers and financial investment impediments, these kinds of trade agreements may not be sufficient to open up markets until there is genuine support for free trade by states in the region. But from a long term perspective these kinds of agreements are essential to at least begin the process of integration. The 2005 Comprehensive Economic Cooperation Agreement between Singapore and India, for example, has led to an exponential increase in investment and trade.
From a political perspective, there is increasing warmth between India and its ASEAN neighbors. It may be worth noting that India invited Susilo Bambang Yudhyono to be the guest of honor at India’s Republic Day parade this year. Some commentators believe that strong bi-lateral relationships with countries like Indonesia and Singapore may be benchmarks for India’s ability to engage with ASEAN states more broadly.
The reasons for India’s interest in these emerging markets and resource rich countries like Indonesia is perhaps obvious at a time when the West is in recession and the competition for access to energy is intense.  Indian energy firms and even some manufacturers are already heavily invested in ASEAN members like Indonesia and Singapore.
However, ASEAN members’ interest in India appears to mainly be driven by a desire to purchase additional insurance against China’s growing influence particularly in the South China Sea. India has a dog in the fight with China because Indian and Vietnamese firms have signed agreements for oil and gas exploration off the coast of Vietnam. There has even been tension in recent years between the PLAN and Indian Navy off the coast of Vietnam. But, of course, the real balancing occurred simply by inviting the US to participate in the East Asia Summit (EAS).  The US quickly helped to foreground security issues that highlight tensions between ASEAN states and China. India by contrast continues to appear indecisive as it remains concerned about being dragged into a confrontational American containment strategy directed against China. India’s fear about being used as a pawn in an American game are valid, but India needs to clearly decide the role that it wants to play in Southeast Asia. If ASEAN is vital to India as a source for energy and a market for Indian goods, then a more robust posture is required. While China will rightfully defend its own interests, it is quite sensitive to the limits of its power and has already demonstrated that it does not wish to trigger a hard containment strategy by alarming all of its neighbors (see Goldstein, Rising to the Challenge, 2005).
Of course, some ASEAN members also see India as a lucrative market. Singaporean firms, for example, have invested in India’s technology parks, telecommunications, and manage some of India’s infrastructure, including major seaports and airports.  Singapore is the second largest source of FDI in India with a cumulative investment of around $18 billion and it is India’s 8th largest trading partner.  India is Singapore’s 10th largest trading partner, and with $16 billion invested in Singapore, India is the second largest Asian investor after Japan (Business Times Singapore, 11/19/11). But Singapore’s relations with India remain exceptional for the most part.
Even with some progress on liberalizing trade with Pakistan in recent weeks, India future lies as much in the East as within South Asia given the lack luster integration within the Subcontinent so far. India needs to make its markets more attractive to a broader range of ASEAN members if it hopes to be able to have much influence in shaping the regional architecture. This is will probably require, at the very least, simplifying licensing requirements which act as Non-Tariff Barriers. Politically, India can free ride on America’s willingness to confront China for now, but a stronger level of leadership will be needed as the US declines. 
India remains “the dispensable nation” in Southeast Asia, but it probably cannot afford to be so.

[Cross-posted from Humayun]


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