proposal

(Project of the Kajima Institute of International Peace)

The Future of the Asia-Pacific Region

Fellow, the Meiji Institute for Global Affairs
Former Minister for Foreign Affairs

Introduction

We are concerned about whether this region can continue to enjoy peace, security and prosperity. Present governance seems to be at stake.

It would be helpful for us to think about the future governance framework we would like to have, reflecting the possible political, economic and other developments in the region. Back-casting from there, we would know what we should be working on now so that we would have a desirable governance for peace, stability and prosperity in the region in the future.

Future Regional Picture

The following seems to be a fair picture for the time period above.

On the power shift between the U.S. and China, it would continue, but the shift would not make China a super power like the U.S. in the sense that the US exceeds other powers in almost all respects.

There are three reasons. First, China needs to deal with its structural difficulties, such as accumulating debts, an aging society, a declining labor force, and social security concerns. It will need to overcome them taking many more years than is commonly expected. China will be able to handle the problems better than Japan. But, for Japan, it has meant about 20 years of economic stagnation.

Second, as many research results elsewhere indicate, the Asia-Pacific region has many fast-growing economies such as India, Indonesia, and Mexico. They will be following in the footsteps of China in economic growth. This is a natural outcome of the countries taking open and liberal economic policies, blessed by such an international regime. As time passes, China will be facing increased competition from other regional countries. This diversity or plurality is, in fact, a strong asset for the region; competition is a source of progress.

Third, the relative decline of the U.S. would continue, but its overall strength would continue in overall military capacity, technology, per capita income and soft power and so on. As long as the U.S. has its national interests in the region, it will continue its presence there as long as it is capable.

On the question of economic developments, the region will continue to be fast-growing and become increasingly more interdependent among nations, not only in economy, but finance, technology, communication, and so on if the international economic order continues to be open and liberal.

Issues to Overcome

Tensions would increase in the region with peaks and troughs as before, mainly because of the continuing power shift and the associated lack or inadequacy of governance enforcement.

The U.S. and China would continue its rivalry relationship, (e.g. South China Sea and the OBOR), but at the same time, would need each other more to deal with risks (e.g. North Korea and climate change.) Smaller countries, including ASEAN members would continue to be pressured between the two large powers.

In the meantime, issues like North Korea could emerge, showing a declining enforcement capability of the international community.

Tensions would also increase because of the negative aspect of deepened interdependence. While increased interdependence could raise the threshold to use forces to settle issues, if not eliminate the use entirely, it could be used to coerce others.

In the past, the U.S. has assumed the largest cost of creating and maintaining the international public goods and other developed countries contributed. In the future, emerging countries have large economies, but still have a smaller per capita income. A major governance question for the future would be a smooth and responsible provision of the international public goods.

No country would be able to construct and maintain international public goods single-handedly because of the increased costs of the international public goods, of fiscal constraints of developed countries, and of lack of human and other resources of emerging countries even if they have an will to take responsibilities.

Future Governance Framework

Given the above picture, what can countries of the region do to maintain peace, stability and prosperity? It is time to start serious discussions on the regional framework for the desirable governance and on how we go about repairing the present and building new elements.

I believe that, in the future, peace, stability and prosperity will be maintained by a group of capable and willing powers or countries, networking with each other. I would like to call this order or structure "Pax Amicitia," meaning peace by the coalition of countries. Such a regional power structure can be called "a networked power structure." If this is to be so, as we have seen, this region will have several able and willing countries: the U.S., China, India, Japan, Indonesia, Mexico and so on. Actually, there is no reason to assume that this power structure is limited to the Asia-pacific region only; it would be the model for the whole world, in fact.

How can we establish such an order or a structure in the region?

Certain conditions need to be met for the structure to be acceptable by the countries of the region.

First, major countries in the region need to take part. This means that the U.S., China, India, Japan need to participate.

Second, we need to have a good governance framework covering not only security, but also the economy, and others. Peace, stability and prosperity are integral international public goods.

Third, existing cooperation frameworks need to be used as building blocks, especially the East Asia Summit, the ADMM+, the APEC and the functional cooperation frameworks. These are regional assets and keys to a community building.

Fourth, ASEAN's past role in establishing regional cooperation frameworks need to continue and to advance. ASEAN has placed an importance on the "centrality" concept from the inception. This concept has been instrumental in creating various cooperation frameworks in the Asia-Pacific. At the same time, ASEAN and other countries in the region will need to modify the way the concept is applied to various existing institutions to meet speedier and more efficient decision making needs.

Fifth, the region cannot create a hard-security regional institution anytime soon. Nor can the East Asia Summit become a binding decision making institution in a few years. It will take time and it is necessary to move step by step.

Sixth, management of the new governance framework should be democratic. It follows that a dynamic power shift must be reflected in the internal management structure.

Seventh, business, civil society, and academia are crucial partners for building and maintaining peace, stability and prosperity. They should be incorporated.

From the above properties, we can draw an approach. The East Asia Summit is the core institution, as it includes all the relevant leading nations of the region. Starting with strengthening the existing and new functional cooperation in all fields, including maintaining open and liberal international economic order, and combatting non-traditional issues, we will go up to the higher level of governance, regarding hard-security and core institution building, capable of decision-making, developing the East Asia Summit.

The reason for this practical approach comes from the diversity of the region. The region has no inherent principle for unity, like the EU, but has shared common interests or merits through past cooperation and liberal and open economic order. Therefore, a realistic approach would be suitable to build a sense of a community.

The process should start by Track Two discussions and a report, possibly entrusted by the EAS or initiated privately with the assistance of foundations.

Japan's Contribution

First, Japan should become more resilient. Japanese population will continue to decline and become more elderly. Our GDP will not be No.3 anymore. Given these certain changes, we need to make Japan more innovative, and resilient so that we can continue to contribute to the region and to the international community as well as to governance building. For that, special attention should be given to education, fostering internationally competitive young people.

Second, Japan should contribute to maintain and strengthen existing and new cooperative work. It is in Japan's interest, also, to have fast-growing regional countries not fall into a middle-income country trap and to strengthen ASEAN's integrity. It could lead projects such as aging society and social safety network to share its experiences with others; they would have similar problems in the future.

Third, Japan should offer its wisdom to future governance framework construction as it has done before in moving regional cooperation forward such as the ARF and the APEC. Japan should propose and take a leadership in establishing a Track Two Wise Persons Group to discuss the future governance of the region.

It may take a long time for countries of the regional to come to an agreement, but the process, itself, will work to have peoples and nations to contemplate our desirable future governance and to create deterrence for frictions.(See charts below)

proposal