Competing Conceptions of Economic Regionalism - APEC Versus EAEC in The Asia Pacific

Competing Conceptions of Economic Regionalism: APEC versus EAEC in the Asia Pacific
Author(s): Richard Higgott and Richard Stubbs

Source: Review of International Political Economy, Vol. 2, No. 3 (Summer, 1995), pp. 516-
535
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Review of International Political Economy 2:3 Summer 1995: 516-35
Competing conceptions of
economic regionalism: APEC versus
EAEC in the Asia Pacific
Richard Higgott and Richard Stubbs
Department of Government, University of Manchester and Department of
Political Science, McMaster University
ABSTRACT
Dramatic economic growth in the Asia Pacific has given rise to a both a
scholarly and policy oriented debate about the most appropriate organi-
zational form within which any dialogue over the nature economic policy
coordination in the region might take place. The most visible exercise in
regional economic dialogue over the last few years has been via the evolu-
tion of the Asia Pacific Economic Cooperation Forum (APEC). APEC's
increasing international profile does not, however, pass uncontested. Some
states, and most vocally Malaysia, exhibit a preference for a more 'Asian'
and less 'Pacific' form of regional economic dialogue via the putative East
Asian Economic Caucus (EAEC). This paper examines APEC and the EAEC
as exemplars of two competing conceptions of regional economic cooper-
ation. The paper demonstrates that enhanced economic dialogue in the
Asia Pacific cannot be understood simply in rationalistic, utility maxi-
mizing terms. Questions of politics, culture and identity are also shaping
up to be extremely important. The outcome of this contest over how an
understanding of 'region' in the Asia Pacific will be constituted over the
long term is yet to be determined.
KEYWORDS
Asia Pacific; APEC; economic regioalism; identity.
INTRODUCTION
The breakdown of the overarching structures which underpinned and

ordered international relations around the world during the Cold War
has forced state policy makers to re-evaluate their place in the inter-
national system. As a consequence, the issue of 'region' has regained a
new salience in foreign policy making in general and foreign economic
policy making in particular. In the Asia Pacific questions of regional
? 1995 Routledge 0969-2290
ARTICLES
economic cooperation have become a major item in the foreign policy

agendas of many states. The consequent debates also gave rise to a
growing interest in the region as a laboratory for enhancing scholarly
understanding of the nature of international economic cooperation
(Higgott et al., 1993; Mack and Ravenhill, 1994).
While the theory and practice of economic cooperation in the Asia
Pacific run in tandem at one level, they are seriously at odds with each
other at another. Essentially, the disjuncture between theory and prac-
tice arises because different historical experiences, differing ideologies
and different expectations among the policy elites of the region have
provided us with at least two distinct conceptions of the very idea of
'region' itself. These conceptions address such basic issues as the bound-
aries and membership of the region, and the form and extent of
cooperation to which member states aspire.
In empirical terms, these issues are at the heart of the debate between
those (especially following its first summit in Seattle in November 1993)
who see the Asia Pacific region in terms of the wider definition of
Asia-Pacific Economic Cooperation (APEC), and those, exemplified in
the Malaysian desire for an East Asian Economic Caucus (EAEC), who
envisage a narrower definition of the region. This analysis provides a
comparison of these two conceptions or visions of regional economic
cooperation in the Asia Pacific. In so doing, it highlights two very
different understandings of the notion of 'region' that are emerging.
APEC and the EAEC are in effect engaged in a struggle to constitute
the 'voice of the region' on international economic matters.
This analysis is concerned with both the empirical and the theoretical
aspects of Asia Pacific regionalization. In particular it seeks to shed light
on current theorizing about regional economic cooperation in inter-
national relations scholarship. The Asia Pacific represents an important
location for undertaking a process of empirical widening and theoret-
ical deepening of our understanding of the processes of international
economic cooperation that have developed in much of the Atlantic-
centric literature on cooperation over the last two decades (Milner, 1992).
More specifically, this analysis notes the importance of taking account
of the political, historical and cultural dimensions of regional economic
cooperation that have not been given sufficient attention in the growing
literature on economic regionalization.
The paper is divided into three sections. The first section details the
evolution of APEC and what drives its development. The second section
reviews the history of the EAEC and the factors which support its
promotion. The third section attempts an analysis of the cross-cutting
factors which influence the way in which the states in the Asia Pacific
evaluate the competing conceptions of the region embodied in APEC
and the EAEC.
517
COMPETING CONCEPTIONS OF ECONOMIC REGIONALISM
ASIA PACIFIC ECONOMIC COOPERATION
Narrative discussions of the development of economic cooperation in

the Asia Pacific over the last two decades now abound (Drysdale and
Patrick, 1979; Kojima, 1971; Palmer, 1991; Reiger, 1989; Woods, 1993).
The main milestones were the establishment of the Pacific Basin Econ-
omic Council (PBEC) in 1967, the setting up of the Pacific Trade and
Development Conference (PAFrAD) in 1969, and the development of
the Pacific Economic Cooperation Conference (PECC, now Council)
through the 1980s. All of these initiatives eventually culminated in the
inauguration of APEC at the first ministerial meeting in Canberra in
November 1989. The founding members were Australia, Canada, Japan,
New Zealand and South Korea, the United States and the six members
of the Association of Southeast Asian Nations - Brunei, Indonesia,
Malaysia, the Philippines, Singapore and Thailand. In November 1991,
in a face-saving formula that emphasizes that it is economies rather coun-
tries that are members, China, Taiwan and Hong Kong were brought
into the fold. Mexico and Papua New Guinea were made members at
the Seattle summit in November 1993 and Chile was admitted at the
Jakarta summit in November 1994 (US Department of State, 1993). Since
its inception, then, APEC has become a principal vehicle for economic
dialogue in the Asia Pacific region. Ministerial meetings and more
frequent, highly structured, senior officials' meetings and work
programmes are now regular features of APEC. A small secretariat was
established in Singapore in late 1992 and President Clinton, at the urging
of Australian Prime Minister Paul Keating, called the first APEC leaders
summit in Seattle in November 1993. Hence, in a surprisingly short time
APEC has moved the member governments down the road towards
greater interaction and a modicum of institutionalization. However, by
no stretch of the imagination can APEC yet be called an institution or
indeed a regime (Higgott, 1993).
What conception of the Asia Pacific region, then, does APEC embody?
In essence APEC is very much a creature of the rise of economic liber-
alism (Gill, 1994). Central to APEC is a belief in market-led integration
and the seemingly tautological notion of 'open regionalism'. This has
given rise to what two leading economists and exponents of APEC, Peter
Drysdale and Ross Garnaut, extrapolating from the dynamic economic
growth of the region, call the beginnings of a 'General Theory of
Integration' for the Pacific (Drysdale and Garnaut, 1993). They contrast
their approach with 'institutionalist integration' or a discriminatory
model of regional economic cooperation characteristic of the evolution
of the European Community. They provide empirical evidence to
support the view that overall there are significant gains to trade to be
had from unilateral liberalism in the region - what they call the
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'prisoner's delight!' They also make the point that there is more than
one route to economic cooperation and that, indeed, economic cooper-
ation is a means to an end, rather than an end in itself. This economistic,
market-led approach can be bolstered from within the liberal institu-
tionalist approach to international relations theory (Keohane, 1989) by
suggesting that structural realism's assumptions of anarchy, especially
its assumption that states attach more importance to relative rather than
to absolute gains, need not invariably determine the attitudes and poli-
cies of states towards cooperation. In current jargon, agency is also
important (Wendt, 1987; Wendt, 1992).
Clearly, then, APEC is seen as an opportunity to demonstrate the bene-
fits of economic liberalization. In Biersteker's terms, it appears to be an
attempt to extend the 'triumph' of neo-classical economics (Biersteker,
1992). Indeed, one of the factors originally prompting the establishment
of APEC was fear of the emerging geographically discriminatory
arrangements in Europe and North America. Allied to this were concerns
about the possible collapse of the Uruguay Round of the GATT and the
growing conflict between the United States and Japan. The formation of
APEC was viewed as a way of countering the protectionist tide which
was perceived to be on the rise. As a result, the membership of APEC
tended to be thought of in inclusive rather than exclusive terms. The
more economies that could be tied to an open market-led regional
arrangement, the better. Hence, the large number of diverse and
geographically dispersed members of APEC. For the advocates of APEC,
the important point has been that APEC be seen as a stepping stone on
the way to true global liberalization.
This market-led conception of the Asia Pacific, which in good part
prompted APEC's formation and currently drives its development, is
supported by a growing cooperation among a group of academics
(mainly economists), business people and government officials which
exhibit some of the principal characteristics of an epistemic-like com-
munity. Members of this group exhibit a broadly shared set of normative
and principled beliefs, combined with an internalized and self-validating
set of causal and methodological principles and common policy goals.
The group operates within a set of formal, semi-formal and informal
institutions and networks centred around PBEC, PAFTAD, PECC and
most recently APEC. In a period of dramatic historical change and uncer-
tainty, these institutions and networks provide the framework within
which to broker a set of policy options drawn from the group's norma-
tive beliefs and amenable to their causal and explanatory principles
(Haas, 1992) While any formal identification of the community would
certainly be resisted, PAFTAD, PECC, PBEC and the other organizations
and informal processes of regional interaction provide the locus for the
reinforcement of shared cooperative norms. It is also accurate to suggest
519
that a common causal methodology and policy project - to promote

regional economic cooperation in the Asia Pacific - can be identified
within the community and is encapsulated in the aims of PECC (Higgott,
1993; Woods, 1991, 1993). Moreover, this policy enterprise underwent a
process of expansion throughout the 1980s. The development of APEC,
and the consolidation of PECC's role as the research and support arm of
APEC, have become a major agenda item of the 1990s. It is in the common
policy enterprise that the linkage between normative beliefs and causal
knowledge are fused. Indeed, PECC's charter stresses the organization's
'pragmatism' and 'policy orientation' (Article 3:1) and APEC is seen
as the principal vehicle for moving open regionalism forward in the
1990s. In addition, PECC's members argue that its tripartite structure pro-
vides leverage on official policy development and implementation
(Pacific Economic Cooperation Committee of Australia, n.d: 28) Evidence
of the influence of this epistemic-like community may be gleaned from
the composition of the Eminent Persons Group of experts. Appointed by
APEC in 1992 they produced a report entitled A Vision for APEC: Towards
an Asia-Pacific Economic Community (APEC, 1993). Seven of the eleven
members were or had been professors of economics, many of them are
associated with the work of independent public policy institutes (think
tanks), and all of them had, in one form or another, been involved in
government at senior levels and, of course, with PECC.
Advocates of APEC are particularly interested in building on the
obvious success of the region's economies. The details of this growth,
most notably the economic stature of Japan, are well documented. Now
the world's major creditor nation, Japan's share of world GNP grew
from 5 per cent to 18 per cent between 1950 and 1990 (Drysdale and
Garnaut, 1993 ; International Monetary Fund, 1994: 116-19). During the
same period, the size of its economy rose from 10 per cent of that of the
USA to just over 60 per cent. The original Newly Industrialized
Economies (NIEs) - Singapore, Hong Kong, Taiwan and South Korea -
have grown at an even faster rate than Japan over the last two decades
and have even managed growth rates of 5-7 per cent in the trough of
the global cycle. The second-wave NIEs, notably Malaysia and Thailand,
have been similarly successful. More recently, China has averaged real
GDP growth in excess of 10 per cent. Using IMF Purchasing Power Parity
equivalent weightings, China's share of world output was estimated at
6 per cent in 1990, making it the world's third largest economy
(International Monetary Fund, 1994: 116). Moreover, as the exhortatory
literature on economic cooperation in the Asia Pacific constantly tells us,
if North America (but not Latin America) is included in our notion of
the Asia Pacific, then the region produces close to 60 per cent of global
GDP. By 1992, APEC members in the aggregate accounted for 41.2 per
cent of total world exports and almost 40 per cent of world imports.
520
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Intra-regional export concentration has increased from 53.3 per cent in

1981 to 65.1 per cent in 1986, flattening out to remain fairly steady at
66 per cent up to 1992 (Australia, 1993). Overall, then, the key for APEC
advocates is the extent to which expanding volumes of trade are able
to knit the region together.
Yet it is important to note that while the APEC vision of Asia Pacific
regional economic integration has a political goal - to encourage the
spread of the neo-liberal economic creed in a broadly defined Asia Pacific
region - it is essentially apolitical. The market-led theories of integra-
tion and cooperation which drive APEC are underwritten by too simple
a notion of rationality and have little or no theory of politics to sustain
them. The political understanding of the market-led approach does
not extend much beyond a recognition of the role for government as the
limited provider of public goods of a market-enhancing nature, on the
one hand, and the obstructive role of rent-seeking groups in country-
specific and sector-specific economic liberalization, on the other. As yet,
nowhere in the literature on international economic cooperation in the
region is much attention paid to the political linkages between these
domestic and international dimensions of cooperation. Similarly, there
is no sense of the extent to which common historical experiences and
shared cultural values can establish the outer boundaries of regional
economic integration.
The high water marks of APEC activity to-date were the Seattle
Summit of November 1993 and the Jakarta Summit of November 1994.
In substantive terms little came of the Seattle meeting. Other than a
rhetorical commitment, enshrined in the Vision Statement, to 'expand
economic dialogue', agreement was also reached at Seattle to: (i) hold a
second summit in Jakarta in 1994 - perhaps the most important outcome;
(ii) convene a meeting of APEC finance ministers; (iii) approve a work
agenda on trade and investment matters and set up a permanent
committee on trade and investment; and (iv) establish a Pacific Business
Forum. Items (ii), (iii) and (iv) could almost certainly have been achieved
without a summit.
The Jakarta summit resounded with atmospherics similar to Seattle.
Its major outcome, a motherhood commitment, driven by the US and
Australia, to reach full trade liberalization by 2020 (albeit 'indicative and
non-binding' for Dr Mahathir) lacked any detail. While clearly ahead of
Asian elite opinion, the proposal could go ahead because of the vague-
ness of it. The details and a more specific timetable for this process are
due to be worked out at the 1995 Osaka summit. If, as they say, the
'devil is in the details' then Osaka could be crunch time for APEC. If
past experience is to be our guide the details will be fudged. Despite
pressures from the western members of APEC such as the US
and Australia, the 'Asianization' of APEC - in which the preference for
521
an Asian approach to regional cooperation built on consensus building

and 'hearts and minds' elite bonding at the expense of what a leading
regional policy figure calls a Cartesian emphasis on legalism, form and
contractual obligation - can be expected to continue apace (Sopiee, 1994:
2). Two summits on, the need to define the structure of APEC rather
than the substance of its activities still remains the number one, but most
difficult, priority.
In effect, the summits at best confirmed the inevitably gradualist
nature of any future evolution. Both Seattle and Jakarta were, to borrow
the language of Europe, exercises in widening rather than deepening.
Moreover, the rhetorical euphoria failed to mask real differences
amongst members over the respective agendas for APEC and over the
range of differing views about the organization of the region in the
closing stages of the twentieth century.
THE EAST ASIAN ECONOMIC CAUCUS
EAEC has been very much overshadowed by the recent high profile of
APEC. Indeed, its aims and agendas are not well conceived, not well
articulated and little understood outside of the region. Datuk Seri Dr
Mahathir Mohamad, the Malaysian Prime Minister, first made his
proposal for an East Asian Economic Grouping (EAEG) in December
1990. Later, after concerns were expressed that the EAEG sounded too
much like a trade bloc, it was renamed the East Asia Economic Caucus
(EAEC) with greater emphasis put on its role as a consultative group
for the discussion of regional economic issues. Mahathir proposed that
the membership should include the ASEAN states - Brunei, Indonesia,
the Philippines, Malaysia, Singapore and Thailand - Taiwan, Hong
Kong, South Korea and Japan. He later added China and the countries
of the Indochina region to the list of possible members. It was not,
Mahathir argued, a new idea in that South Korea had proposed an
Asian Common Market in 1970 and Japan an Asian Network in 1988
(Saravanamuttu, 1992: 7). Despite this, the EAEC proposal was given a
rough reception especially by the Bush administration which put
pressure on Japan and South Korea to reject the idea. Japan was in any
case ambivalent. While recognizing that Japanese interests lay in
expanded economic links with, and perhaps in the long term even a
leadership role in, East Asia, the government did not wish to jeopardize
Japan's special relationship with the United States. Within ASEAN,
Indonesia, in particular, was wary of the proposal. The Indonesians did
not even wish to consider any arrangement that might be seen to re-
inforce the disintegration of the global economy into trading blocs.
Mahathir, however, continued to push the idea and it was agreed to at
the 1992 ASEAN summit in Singapore. However, no consensus was
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reached as to how the EAEC was to be established in practice. As a

consequence, after much diplomatic activity by the Singaporeans, the
EAEC was formally accepted as a caucus within the APEC framework
at the June 1993 ASEAN Foreign Ministers' Meeting.
On what conception of the Asia Pacific region does the EAEC build?
Importantly, of course, it is one which includes the Asian economies and
excludes the non-Asian countries of Australia, New Zealand, Canada
and the United States. It is meant to be an Asian-only caucus or 'East
Asia without the Caucasians' as it became known in some regional capi-
tals. Interest in an emerging EAEC is, therefore, rooted in a view of the
Asia Pacific region which highlights very different aspects of the growing
regional economy to that emphasized by the proponents of APEC and
which at the same time has crucial political, historical and cultural
dimensions to it.
Rather like APEC, the EAEC proposal was a response to challenges
coming from the global economy. But, unlike APEC, the EAEC was
geared as much to combating the political power of the US and Europe
as it was to advancing the cause of economic liberalism. The proposal
for an EAEC and the timing of the announcement was clearly tied to
the Malaysian government's frustration with the lack of attention being
paid to Malaysian, and indeed ASEAN, concerns in major international
negotiations such as the Uruguay Round of the GATT. Faced with a
consolidation of Europe and the prospect of a North America Free Trade
Agreement and with ASEAN not yet able to act as a counterweight, in
terms of its lack of progress in developing a free trade area, the obvious
alternative was to look for a wider East Asian organization that could
take on the other two main economic regions. Once it became clear that
there was little support for any regional trading arrangement, Mahathir
emphasized the need to have 'a strong voice for East Asian countries in
trade negotiations with the rest of the world, particularly the EC and
NAFTA' (Saravanamuttu, 1992: 7). He later noted that with the EAEC
having 'a population of more than a billion, with huge economic clout,
people will have to listen' (Mahathir, 1993: 11).
Certainly, at a strategic level, EAEC is seen to offer a more inde-

pendent Asian voice than is possible within APEC. As Malaysia's
finance minister, Anwar Ibrahim, put it: The East Asian Group
should be able to sit with North America or Europe on an equal
footing. This would not be possible if we relied on APEC because
the US and Canada also belong to the North America free trade
area. We would say we have a platform to deal with one monster
(the US) and another monster (Japan). Small countries have to be
smart in dealing with large nations.
(Camroux, 1993: 33-4)
523
Moreover, Malaysia will not willingly see ASEAN eclipsed by the

evolution of APEC - a fear shared by other members of ASEAN. This
fear has not been and is unlikely to be assuaged by assurances from
non-ASEAN members of APEC.
In a similar vein, it also has to be understood that there are elements
of North-South politics involved in support for EAEC as a potential
counterweight to US hegemony. Mahathir was instrumental in estab-
lishing the group of fifteen developing countries which first met in Kuala
Lumpur in 1989 to promote South-South economic ties. Moreover,
Mahathir has been seen as a leader in defending the South's and indeed
Asia's, interests on issues such as the environment and human rights
(Nossal and Stubbs, forthcoming). He has consistently railed against
American hegemony and what he sees as attempts by the North to
'subject us to imperial pressures' (Vatikiotis, 1992: 22; Mahathir, 1991).
Mahathir's interest in developing the EAEC is, therefore, consistent
with his concern not to have the United States dictate economic policy
in the region. This clearly has some attractions for a number of regional
governments.
While much of the literature on the trends in regionalization in the
global economy has centred on trade flows, the increasing regionaliza-
tion of the area encompassed by the EAEC has essentially been based
on production networks. And as Linda Low notes, this 'trend of rising
economic linkages among the ASEAN countries and between ASEAN
and the other Asian-Pacific economies, based on a web of production,
sourcing and distribution, is likely to accelerate' (Low, 1991: 378).
The flexibility and efficiency that comes with the building of networks
of subcontracting firms has become a crucial ingredient in the manu-
facturing structure of the EAEC region. In particular, Japanese companies
have been playing prominent roles in acting as hubs in the establish-
ment of networks both within and among the countries of the EAEC
(Aoki, 1992: 91; Machado, 1992: 178). But Japanese companies are not
the only ones which operate in terms of networks. Overseas Chinese
firms, too, conduct much of their business in this way. Lam and Lee,
for example, note that an 'extensive network of subcontracting relation-
ships among firms in an industry is a common pattern in Chinese
business' (Lam and Lee, 1992: 111). Hamilton refers to Taiwan and
South Korea as 'network based economies' and points out that 'this
type of organizational structure differs from Western "firm-based
economies"' (Hamilton, 1990: 4). In other words there is good reason
to believe that the operation of the private sector will tend to integrate
the EAEC region. And, while some key Western companies are devel-
oping a capacity to integrate into regional networks, overall the network
based economies of Asia may serve to limit the extent to which
the region develops strong production links to the predominantly
524
ARTICLES
'firm-based economies' of the United States, Australia, Canada and New

Zealand (Stubbs, 1994a).
This particular mix of business and culture is unique to the EAEC
region. It is reinforced by events that have drawn the region together
over the last fifty years or so. While it is possible to explore the common
historical experiences of parts of the Asia Pacific region in past centuries,
what is most germane to the argument being developed here is that the
colonial aspirations of Japan, the hegemonic goals of the US, and
the search by Japanese companies for a low-cost export platform after
the Plaza Accord of 1985 led to the appreciation of the yen, have all
provided the region with an important set of relatively recent common
historical experiences. The period of Japanese colonization proved useful
as a model for state-directed development in the post-World War Two
period (Cumings, 1987: 54). This trend was continued after the Second
World War when as front line states in the battle against Asian com-
munism - Japan, the four newly industrializing economies (NIEs) of
South Korea, Taiwan, Hong Kong and Singapore, as well as Thailand
and Malaysia - had their political economies moulded by the exercise
of American hegemony and the imperatives of the Cold War (Stubbs,
1989; Stubbs, 1994b). These economies benefited from large amounts of
US aid, and the general regional prosperity created by the Korean War
and later the Vietnam War. Strong, centralized states were created as
resources were mobilized to confront the communist threat. These
bureaucratic, interventionist states (World Bank, 1993) had links to the
private sector and repressed labour unions. Their economic success,
which began to materialize in the 1960s and 1970s, was reinforced by
the dynamism of the Japanese economy. Japanese companies looked to
their neigbours for cheap labour, land, and currencies, in order to combat
rising costs at home. After the Plaza Agreement of 1985 and the forced
appreciation of the yen, the main beneficiaries of Japanese foreign direct
investment (FDI) were initially South Korea, Taiwan and Hong Kong
and later Singapore, Malaysia, Thailand, and Indonesia.
This common experience has tended to reinforce a perception of
shared attitudes and values across these countries. As Mahathir has
noted, 'this group of countries seems to have something in common
both with regard to attitudes towards economic development and also
culturally' (Mahathir, 1993: 11). Certainly, the EAEC makes a great
deal more sense in terms of shared attitudes and values than does a
wider APEC. This point is forceably made by one scholar-cum-activist
who, interestingly, has generally been critical of Mahathir. Chandra
Muzaffar sees APEC as a vehicle for the US and other non-Asian coun-
tries of the Pacific to 'hitch a ride' with the more dynamic Asian
economies. For him, the economic dynamism of the Asia Pacific is in
reality Asian dynamism:
525
As a concept, 'Asia Pacific' makes little sense. Unlike East Asia or

South Asia or Southeast Asia, it has no shared history or common
cultural traits. Asia Pacific is not even an accepted geographical
entity. The US has vast economic ties with Europe but is not part
of the European Community which jealously protects its own
historical, cultural and political identity. Similarly, Japan is deeply
involved in the US economy but it is not part of the North American
Free Trade Agreement. It is only in the case of Asia, more specif-
ically East Asia that there is a concerted attempt to suppress its
collective identity and thwart its legitimate quest for a common
identity.
(Chandra, 1993: 13)
Chandra is clearly not alone in seeing the appending of 'Pacific' to 'Asia'

as an attempt to incorporate Asia into a larger unit in which the US
maintains the principal role.
COMPETING CONCEPTIONS OF REGION
APEC and the EAEC represent alternative political-ideational constructs

or 'imaginings' (Nonini, 1993: 176; Anderson, 1983) which their respec-
tive proponents hope will serve particular goals. The issue is then which
of these two 'inventions' best serves the governments and people of the
region. For countries like the United States, Australia and Malaysia,
which are avowed advocates of one or the other vision of the region,
the answer is clear. For other countries of the Asia Pacific region, espe-
cially those which have been named by Mahathir as eligible members
of the EAEC, the choice is not so easy. In deciding which conception of
the region to embrace a number of cross-cutting factors have to be taken
into consideration.
Obviously a key player in the competition between APEC and EAEC
is Japan. From the beginning Japan was invited by Malaysia to lead the
group. However, Japan treated the initial request with considerable
caution for a range of obvious reasons. Three are worth noting: first,
American opposition; secondly, sensitivity to the views of East Asian
states, less keen than Malaysia on the prospect of such a leadership role
for Japan; and thirdly, and most importantly, the instrumental concern
about the signals such a group would send to a global economy when
the viability of most of the member states economies were dependent
on 'global' as opposed to simply regional trade. The last thing Japan,
and the other major regional NIEs would want to do is give any incen-
tive to Europe and North America to turn any further inwards in their
trade policy and risk the possibility of losing their most important
markets.
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Moreover, there is a crucial security concern that Japan shares with

its East Asian neighbours. The US is seen as still playing an important
role in regional security - with regard to North Korea for example -
and the Japanese would not wish to endanger American commitment
to the region by helping to expand the role of the EAEC (Rapkin, 1994).
Equally, Japan recognizes that many of its neighbours tolerate its
expanded regional economic role and growing military capability only
because the US maintains its security links to Japan and in a sense, there-
fore, guarantees Japan's good behaviour. This is yet another reason for
Japan and other East Asian governments to be wary of supporting EAEC
as long as the US opposes its development.
Significantly, however, Japan did not directly scupper EAEC at its
inception. Japan exhibited none of the public hostility to the concept
that was to be found among policy makers and APEC proponents
in the excluded 'Asia Pacific' countries such as Australia, Canada and
the United States. While Japan does not want to be seen extending its
writ over the region in a predatory fashion, Japan's foreseeable agenda,
as Johnson argues, '... is to resume responsibility for its own foreign
policy and to begin to shape the world in which it lives rather than
simply adjusting to it' (Johnson, 1992: 25). More importantly, it takes its
role as the major economic power in Asia more seriously now than at
any time in the past. For example, MITI's advisory role in the develop-
ment of export oriented industrialization in Thailand, Malaysia,
Indonesia and the Philippines has grown since the mid-1980s and
Japanese policy advice represents a clear alternative to traditional
American doctrines of economic development.
For the time being at least, Japan has carefully avoided responding
directly to Dr Mahathir's invitation to lead the EAEC as an Asian
alternative to European and North American blocs. Yet there is
evidence that the Malaysian conception of EAEC is beginning to be more
favourably viewed in Tokyo. The potential for Japan to subscribe
to Mahathir's vision of EAEC should not be understated. First, not
only is its position becoming more important in the region as it replaces
the US as the principal absorber of Asian manufacturing products,
the region is also becoming a much more important destination for
Japanese exports. Between 1986 and 1992, the US as a destination
for Japanese exports declined from 38.9 per cent to 28.5 per cent of
total exports while Japanese exports to Asia rose from 22.7 per cent
to 33 per cent of total exports. A continuing appreciation of the yen
against the dollar is likely to confirm this trend (Nikkei Weekly, 17
January 1994). Growing Asian markets will act as a substitute for
an increasingly expensive American market. By extension, the pros-
pect of some kind of yen bloc emerging in the region becomes
stronger.
527
Secondly, the significance of Japan as an investor in the East Asian

region, particularly since the mid-1980s, should not be underestimated
(Donnelly and Stubbs, forthcoming; Stubbs, 1992). Japanese FDI in the
Asia Pacific region increased markedly especially in the wake of the
Plaza Accord. The dramatic increase in the value of the yen vis-a-vis
the dollar (from 238:1 in 1985 to 128:1 in 1988) produced a rapid rise
in the cost of Japanese exports which, in turn, forced Japanese manu-
facturing companies to relocate 'offshore'. Initial investment went to
Korea and Taiwan. But as the Korean won and the New Taiwan dollar
also began to appreciate, the ASEAN region became an attractive alter-
native. A number of factors were of significance in this trend. First,
Japanese companies had knowledge of the ASEAN region; second, reces-
sions in 1985 and 1986 saw ASEAN economies opening out to FDI as a
source of finance for future growth; and third, Singapore, Malaysia and
Thailand especially had reasonable levels of infrastructure, fairly well
educated populations, relatively efficient bureaucracies and stable
governments interested in export oriented industrialization. Prior to the
Plaza agreement, annual Japanese FDI in ASEAN was about US$900
million. By 1989 it had risen to US$4.6 billion. During the five years
1988-92 the cumulative total was US$19 billion (ASEAN Centre, 1993).
Japan was not the only Asian investor in ASEAN. Indeed, in 1990-91
Taiwanese investment in Malaysia exceeded that of Japan.
Thirdly, increased economic tension between the US and Japan,
has meant that, at least at a rhetorical level, Tokyo has become less
wary of an expansion of discriminatory regional trade in East Asia.
Washington's more aggressive trade policy towards Japan runs the
risk of having exactly the opposite effect to that intended. In addi-
tion the rising level of trade friction combined with the Clinton
administration's interest in giving APEC a higher profile has engendered
concern in Japanese official circles that APEC will become a vehicle for
advancing US trade policy. Compounding this unease on the part of
the Japanese is the US commitment to NAFIA. NAFIA's aims may
be non-discriminatory, even GATT consistent, but at best NAFIA
signals, as the APEC Eminent Persons Group Report noted, I... that the
United States - the traditional leader of the global trading system -
may be "going regional" or at least hedging its bets' (APEC, 1993: 17).
At worst it signals an American preference for a state-centred power-
based approach to economic relations rather than a rules-based system.
At the very least it makes the international trade regime more comp
cated. Logically, it distracts the US from other trade-opening,
system-reinforcing economic diplomacy (Kreuger, 1993). As a conse-
quence, NAFTA at the very least offers rhetorical advantage to those
who would favour a reciprocal, restrictive 'Asians only' option such as
the EAEC.
528
ARTICLES
Japan's ambivalence, when faced with a possible choice between a

strengthened APEC and and an emerging EAEC, is echoed by most of
the other countries of the region. Their objections to EAEC have been
rooted in Mahathir's lack of consultation with his erstwhile partners;
their exposure to subsequent diplomatic pressures, especially from the
United States; and fear that it would add to the momentum for the deep-
ening of regional trade arrangements which, as major exporters, would
not be in their interests (Low, 1991: 376-7).
However, as APEC has developed and as the region's economy
has grown apace, attitudes to the EAEC have slowly begun to change.
While APEC as a consultative forum has some appeal, the possibility of
a deepening of the organization is considered with some trepidation
by many members. They clearly have concerns about the extent to which
the United States might try to use APEC as an added vehicle for
imposing on others its notion of fair trade. In particular the smaller,
developing countries of the region are concerned that the US will raise
'social dumping' issues, such as human rights, labour standards,
and environmental standards, and attempt to force changes on highly
successful domestic economic practices. Significantly, the summit
rejected the longer-term vision of the study of the Eminent Persons
Group for an Asia Pacific Economic 'community'. The concept of
'community' evoked uncomfortable thoughts of the European
Community among the smaller members of APEC. Moreover, when
written as a Chinese character 'community' translated as 'organization'.
Both readings set alarm bells ringing. ASEAN leaders rejected
categorically the possibility of APEC impinging on the sovereignty of
member states as the EC does on its members' sovereignty. And the
Chinese character for 'family' was substituted to make the docu-
ment acceptable to the Chinese (Far Eastern Economic Review, 2 December
1993: 12).
Suggestions for a faster track institutionalization were also opposed.
Again, the resistance was strongest amongst the smaller members,
such as Indonesia and Thailand. These states felt that the larger players,
especially the US, would dominate any Asia-Pacific-wide trading group
in the near to medium-term future. On this issue the Chinese foreign
minister, Qian Qichen, advocated a gradualist approach and even gave
implicit support to EAEC: 'The Asian region could have many forms of
cooperation within it' (The Nikkei Weekly, 23 November 1993). China was
concerned not to be seen siding with the USA in support of the wider
regional organization at the expense of EAEC. The smaller East Asian
and Southeast Asian players will need to act in concert if they are to
resist either greater institutionalization or attempts by the US, assisted
by the Australians, to set the regional agenda for them. Undoubtedly,
group cohesion will become essential if they are to withstand what David
529
Rapkin calls the 'negative use of structural power' by the USA

for that matter (Rapkin, 1994).
In weighing the merits of the two competing conceptions of the Asia
Pacific region the Asian members of APEC are also having to take into
consideration the question of identity. Certainly, the search for some
kind of 'Asian' identity is becoming an increasingly forceful aspect of
Malaysian policy. This quest is being replicated in other, neighbouring
countries. To some extent this expression of an 'Asian' identity is viewed
as a reaction to the way in which the US is treating the region. As
Mahathir puts it:
In East Asia we are told that we may not call ourselves East Asians
as Europeans call themselves Europeans and Americans call them-
selves Americans. We are told that we must call ourselves Pacific
peoples and align ourselves with people who are only partly
Pacific, but more American, Atlantic or European. We may not have
an identity that is not permitted, nor may we work together on the
basis of that identity. [TJhe East Asian Economic Group or EAEG
was proposed, not as a trade bloc, but as a forum for the nations
of East Asia to confer with each other in order to reach agreement
on a common stand for a common problem caused by the restric-
tive trade policies of the rich.
We are perplexed to find that ... merely to have a voice in inter-
national affairs is being opposed openly and covertly by the very
country ... [the US] ... which preaches free trade.... One is
tempted to suspect racist bias behind this stand.
(Camroux, 1993: 6)
Yet there is also a positive dimension to some of the discussions of the

emergence of an 'Asian' identity. The emphasis on family and the
responsibility of the individual to the collectivity is clearly considered
important (Mahbubani, 1994, 1995; Zakaria, 1994). But whatever the
emphasis, to a certain extent the notion of an 'Asian' identity is an exer-
cise in invention, seen by leaders, who advance such notions, as a way
of stemming the intrusion of Western cultural and moral values systems
without rejecting the dynamic aspects of Western economic and tech-
nological modernization. However, if the search for an 'Asian identity'
is an exercise in invention it is no less so than the invention of the notion
of 'the Pacific' (Dirlik, 1992, 1993). Moreover, it is no less legitimate and
may prove to be no less powerful. There are wider questions of cultural
conflict between the West and Asia working themselves out in the polit-
ical processes in the region. This can also be seen in the increasingly
vociferous way in which some states of the region are resisting the
imposition of Western notions of human rights and what they see as the
excesses of the decadent West and the shifting balance of power between
530
ARTICLES
the old industrialized countries and the newly industrializing ones of

the East Asia region.
This question of an 'Asian' identity is also beginning to emerge in
Japan. Here too it is partially a product of the actions of the US. For
example, in 1991 the Japanese ambassador to the US noted that any free
trade arrangement that diminshed access to the North American market
could well see Japan opting for a stronger more exclusionary approach
to regionalism in East Asia 'along the lines suggested by Mahathir'
(Murata, 1991). Similarly, commenting on the importance of what has
been labelled 'neo-Asianism' in Japanese policy, one of the senior nego-
tiators in the 1993-94 'framework talks' with the US, Eisuke Sakakibara,
noted 'Japanese history since World War II is a history of American-
ization. It's time to think about post-Western civilization. We have to
stop being afraid of the US' (Nikkei Weekly, 17 January 1994). Perhaps
most strikingly of all, in late 1994 the Keidanren, Japan's most influen-
tial business group, came out in favour of the EAEC (The Nikkei Weekly,
19 December 1994: 2) This reassesment of the issue of Japan's identity
is also being raised as a consequence of the evaluation of the country's
role in the post-Cold War world. Some senior Japanese bureaucrats see
the advantages of Japan being more closely tied to an economically
dynamic Asia rather than to US that is perceived to be 'in decline' and
less popular with the Japanese population than in the past. Hence, while
APEC still has many influential supporters in Japan, an EAEC vision of
the region has some appeal.1 The Japanese government, just like a
number of other governments in the region, still has to come to grips
with how it will deal with the two competing conceptions of the Asia
Pacific.
CONCLUSION
For the foreseeable future, then, the two conceptions of the Asia Pacific
regional economy embodied in APEC and the EAEC can be expected to
compete with one another. It is important to note that it is not simply
a contest to see which of two contending levels of economic organiza-
tion is the most 'rational'. By the canons of international trade theory
APEC clearly wins. It is clearly the child of western-educated, interna-
tional trade economists steeped in the methodology of positivism and
utility maximizing rationalism. But its success cannot be guaranteed.
Economic cooperation cannot be explained simply in rational, or ratio-
nalist, market-driven terms that emanate from a like-minded community
of scholars and practitioners. It is important that the political, historical
and cultural dimensions of economic regionalization also be taken into
consideration. Yet equally clearly, there is no inevitability about the
emergence of an EAEC rooted in production networks, cultural values
531
and common historical experiences. Following from Alexander Wendt's

argument that 'there is no "logic" of anarchy apart from the practices
that create and instantiate one structure of identities and interests rather
than another', and that, 'Anarchy is what states make of it' (Wendt, 1992:
395), we conclude that regional economic integration is what states make
of it.
Hence, translating conceptions of economic regions - whether they be
in the Asia Pacific or Africa or an expanded Europe or North America
- into developed institutions able to manage the integration process, is
dependent on the political will of the member states. And while econ-
omistic conceptions of market-led integration and open regionalism
clearly have powerful explanatory capability and political appeal, as the
Asia Pacific region shows, they cannot always overcome other factors
which suggest different boundaries, membership and goals for a region.
Exercises in institution building are not simply the outcome of states
engaging in rational utility maximizing processes. They can also be, by
their very act, exercises in the internationalization of 'new understand-
ings and roles ... [and] ... shared commitments to social norms' (Wendt,
1992: 417). Indeed, attempts at identity building, pace EAEC, should not
be dismissed lightly. EAEC represents an historically and culturally-
rooted cut into the Asia Pacific region which has considerable resonance
for a number of East Asian governments. While neo-liberalism is a major
force in contemporary global affairs clearly it will not go unchallenged.
NOTES
An early draft of this paper was presented to the Panel on Critical Perspectives
on Regionalization, 35th Annual Convention, International Studies Association,
Washington DC, 28 March-i April 1994. Thanks to Professor David Rapkin,
University of Nebraska, for his constructive comments on the paper.
1 Part of this appeal is ironically populist and related to the activities of Dr

Mahathir. The Malaysian Prime Minister through his continued tweeking of
the tail of western governments in Australia, Great Britain and especially
the US with the publication of his co-authored book with Shintaro Isihara,
The Asia that can say 'No' is very popular in Japan. This has undoubtedly
enhanced the appeal of the EAEC in some quarters (see Ishizuka, 1994 and
Smith, 1994).
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Competing Conceptions of Economic Regionalism - APEC Versus EAEC in The Asia Pacific

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Competing Conceptions of Economic Regionalism - APEC Versus EAEC in The Asia Pacific

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Competing Conceptions of Economic Regionalism: APEC versus EAEC in the Asia Pacific

Author(s): Richard Higgott and Richard Stubbs

Asia Pacific; APEC; economic regioalism; identity.

The breakdown of the overarching structures which underpinned and

? 1995 Routledge 0969-2290

economic cooperation have become a major item in the foreign policy

ASIA PACIFIC ECONOMIC COOPERATION

Narrative discussions of the development of economic cooperation in

that a common causal methodology and policy project - to promote

Intra-regional export concentration has increased from 53.3 per cent in

an Asian approach to regional cooperation built on consensus building

THE EAST ASIAN ECONOMIC CAUCUS

reached as to how the EAEC was to be established in practice. As a

Certainly, at a strategic level, EAEC is seen to offer a more inde-

Moreover, Malaysia will not willingly see ASEAN eclipsed by the

'firm-based economies' of the United States, Australia, Canada and New

As a concept, 'Asia Pacific' makes little sense. Unlike East Asia or

Chandra is clearly not alone in seeing the appending of 'Pacific' to 'Asia'

COMPETING CONCEPTIONS OF REGION

APEC and the EAEC represent alternative political-ideational constructs

Moreover, there is a crucial security concern that Japan shares with

Secondly, the significance of Japan as an investor in the East Asian

Japan's ambivalence, when faced with a possible choice between a

Rapkin calls the 'negative use of structural power' by the USA

Yet there is also a positive dimension to some of the discussions of the

the old industrialized countries and the newly industrializing ones of

and common historical experiences. Following from Alexander Wendt's

1 Part of this appeal is ironically populist and related to the activities of Dr

Anderson, Benedict (1983) Imagined Communities: Reflections on the Origin and

Washington, DC: International Monetary Fund, May: 16-18.

Saravanamuttu, Johan (1992) 'Malaysia's foreign policy in the Mahathir period

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