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5.1 Introduction

The rise of China, the decline of Japan, and the ambivalence of the United States are at the heart of the shifting balance of the East Asian region. South Korea has also longed for a balancing role among its giant neighbors, albeit with limited success. Despite its structural limitations, the Association for Southeast Asian Nations (ASEAN) has shown a certain degree of institutional resilience and adaptability in the emergence of “ASEAN+X” forums such as ASEAN+1, +3, +6, and +8. The complex balance of power and interests in this region does not allow for a single pacesetter, thus motivating these countries to consider sharing (and competing for) regional leadership and influence with each other through the ASEAN+X forums.

The aim of this chapter is to explore the economic-security nexus in several prominent minilateral forums in East Asia: ASEAN+1, ASEAN+3, and ASEAN+6/8 (also known as the East Asia Summit or EAS). This study also examines America’s new appetite for Asia–Pacific minilateralism centered on the Trans-Pacific Partnership (TPP), and eventually the Free Trade Area of the Asia–Pacific (FTAAP), in light of the non-traditional security implications for East Asian countries. For some adherents of such minilateral forums, the decade-long perception among Asians that Western arrangements, either regional or global, discriminate against them has rekindled the notion of an exclusive East Asian bloc or a new regional hierarchy centered on China, as promoted by former Malaysian Prime Minister Mahathir bin Mohamad. Yet, the likelihood of the formation of a more exclusive region is slim at best, leaving the institutional contours of East Asian regionalism in flux.

With East Asian countries’ interest in economic regionalism surging dramatically at the turn of the new millennium, East Asia scholars have recently joined the debate about whether and to what extent economic policy and security might be connected. For them, many preferential economic arrangements that involve East Asian countries aim to secure wider foreign policy and strategic objectives, rather than purely economic goals. From this perspective, it would indeed be surprising if countries sought economic arrangements devoid of any political-security calculations and if such arrangements did not have international political-security consequences (Aggarwal and Koo 2008, Aggarwal and Urata 2006, Capling 2008, Harris and Mack 1997, Koo 2011, Mochizuki 2009, Pempel 2010, Shirk and Twomey 1997, Sohn and Koo 2011, Solís and Katada 2007, Taylor and Luckham 2006).

Postwar Asia’s efforts at regional integration, both in economic and security terms, have revolved around the US approach to the economic-security nexus. For a long time during the Cold War period, security considerations overshadowed US economic interests in the region under the San Francisco alliance system. However, two external shocks in the 1990s—the end of the Cold War and the outbreak of the Asian Financial Crisis (AFC)—reversed this trend, placing economic policy at the forefront of the economic-security nexus. America’s neoliberal economic triumphalism during this period catalyzed East Asia’s embrace of minilateral arrangements for a variety of strategic and diplomatic purposes—from confidence-building among countries with little contact with one another, to winning diplomatic points over regional rivals, to establishing an international legal personality—while leaving the US outside such minilateral forums. At the same time, some countries in the region have begun to pursue bilateral economic arrangements with the US and the EU to draw extra-regional powers into the region (Koo 2011, Sohn and Koo 2011).

This chapter claims that a variety of ASEAN+X forums have emerged in response to America’s de-securitization of economic policy and that such minilateral forums aim to pursue “nested linkages” to existing economic and security institutions, but with mixed results. It will be highlighted that the ASEAN+X framework for the economic-security nexus has largely failed to deliver what it has originally promised in both substantive and tactical terms, mainly due to the clear lack of leadership, either hegemonic or collective, within the region. Most recently, US entry into the EAS dialogue and promotion of the TPP and FTAAP frameworks are creating a new, complex interplay between intra-regional and extra-regional forces with regard to the economic-security nexus. Activities within these various minilateral forums have thus far been too amorphous, both in terms of economics and security, to really talk about their substantive performance.

The remainder of this chapter unfolds in four sections. Section 5.2 examines the security-embedded economic relations during the Cold War period under American hegemonic leadership and then explains East Asia’s responses to the de-securitization of US economic policy in the 1990s and early 2000s. Section 5.3 then explores the ASEAN+X framework with a focus on its promise as an economic-security platform. Section 5.4 analyzes the rivalry between China and Japan, on the one hand, and the ambivalence of the US on the other, the combination of which has led the ASEAN+X forums to focus primarily on membership issues rather than deal with substantive regional issues. Section 5.5 investigates America’s latest re-engagement in East Asia in a context of re-securitizing its economic policy and its implications for the future of ASEAN+X framework. Section 5.6 concludes that if a tangle of regional institutions continues to compete for attention and resources, the East Asian region is more likely to become further polarized than to experience greater integration.

5.2 The Securitization and De-Securitization of US Economic Policy and the Rise of the ASEAN+X Forums

Security problems within East Asia arise where global and regional uncertainties and competition meet.Footnote 1 East Asia was always at the crossroads of Cold War tensions between the US and the Soviet Union. At the outset of the Cold War, hostile geo-strategic circumstances and historical animosities shaped unique institutional pathways for East Asian countries to manage their economic and security ties. In the virtual absence of an alternative mechanism at the regional level, economic and security relations were governed through a combination of US-centric bilateral and multilateral arrangements and informal networks based on corporate and ethnic connections in the economic arena (Aggarwal and Koo 2008, Cumings 1997, Grieco 1997, Katzenstein 1997). Yet, the mix of bilateral and multilateral institutions and the subordination of economic policy to security during the Cold War period began to face severe challenges in the 1990s. Against the backdrop of fluid geopolitical and geo-economic environments in the post-Cold War period, East Asian countries have sought to construct regional alternatives (with mixed records) in response to the relative decline of US influence in, and commitment to, the region. The de-securitization of US economic policy became much evident when it chose to use the AFC as an opportunity to push for neo-liberal economic policy reforms in its longstanding economic partners. For East Asian countries, the AFC was a painful wake-up call to seriously consider embedding their economic ties to security cooperation, both traditional and non-traditional, at the regional level.

5.2.1 Security-Embedded Economic Relations During the Cold War

The San Francisco system, codified largely through the 1951 San Francisco Peace Treaty between the Allies and Japan, provided East Asian countries with a unique institutional mix of bilateralism and multilateralism.Footnote 2 In pursuit of security-embedded economic stability, the system offered the US’s East Asian allies access to the American market in return for a bilateral security alliance. Alliances in East Asia tend to be bilateral, leaving security coordination at the minilateral level under-institutionalized. Together with large US military forces stationed in Japan, South Korea, the Philippines, South Vietnam, and Guam, these bilateral security treaties became the backbone of America’s hub-and-spokes strategy to contain Communist forces in East Asia. The US also encouraged East Asian countries to participate in broad-based multilateral forums in both trade (e.g., the General Agreement on Tariffs and Trade) and security (e.g., the United Nations), both of which were underwritten by US hegemony (Aggarwal and Koo 2008, 3–4).

The US was willing to provide global public goods because it considered these trade and security institutions to be beneficial to its own national and strategic interests. But the US also defined “its interests broadly and in a sufficiently inclusive manner that other countries felt able to sign on to a vision that stressed the importance of due process and the rule of law” (Higgott 2004, 158). This system, which proved relatively beneficial for most East Asian countries, created few incentives for them to develop exclusively regional economic arrangements until the end of the Cold War. At the same time, bitter memories of Japanese and Western colonialism, heterogeneous policy preferences and strategies, and cultural diversity also reinforced the preference against formalized regional organizations (Aggarwal and Koo 2008, 3–7). It was no coincidence that many proposals for more exclusive East Asian economic blocs—such as the Pacific Free Trade Area (PAFTA), the Pacific Trade and Development Conference (PAFTAD), the Organization for Pacific Trade and Development (OPTAD), and the Pacific Economic Cooperation Conference (PECC)—largely failed during this period (Katzenstein (1997, 8–16). Established in 1967, ASEAN also showed a low degree of institutional capacity in both security and economic matters.

5.2.2 East Asian Responses to the De-Securitization of US Economic Policy

The end of the Cold War visibly weakened American and Russian influence in the region, while strengthening the strategic position of China. As T.J. Pempel aptly puts it,

America’s strategic goals were subtly redefined in geo-economic terms as opposed to geo-strategic terms, largely as a function of the Clinton administration’s concentrated focus on advancing the process of globalization and economic liberalization and the Clinton administration’s underlying conviction that economic growth and closer economic interdependence would go a long way toward reducing the chances of military conflicts throughout the world (Pempel 2010).Footnote 3

This sudden shift in America’s strategic calculations regarding economic relations put greater and more pointed market-opening pressure on its East Asian allies, the latter of which had previously focused on rapid growth that relied on import protection, industrial policy, and export promotion under America’s nuclear umbrella. In its promotion of the idea of fair trade, the Clinton administration adopted an aggressive approach to pry open East Asia’s traditionally protected markets. Although US alliance relations remained fundamentally intact, the separation of the economic agenda from security policy was clearly manifested in a series of trade disputes between Washington and its East Asian allies (Goldstein 1988, Tyson 1990, Irwin 1997, Conti 1998). This meant that East Asian countries had to shoulder more of the burden of maintaining the global economic regime.

This trend became more evident in the aftermath of the AFC, which had a profound impact on the way East Asian countries perceived global and regional economic institutions. Some Western commentators argue that the US still moved to bail out crisis-ridden East Asian countries, which undermines the “American de-securitization” hypothesis.Footnote 4 However, for many East Asian countries, the US was no longer a benign hegemon willing to provide economic and military public goods free of charge. Furthermore, as Heribert Dieter points out, many in East Asia began to feel pushed away by the so-called Washington Consensus, which aggressively promoted the policies of deregulation, privatization, and liberalization as the prerequisites for economic development (Dieter 2009, 76). The IMF loan package resulted in a region-wide resentment of the Washington-dominated agency.Footnote 5

With the global trading mechanism of the GATT/World Trade Organization (WTO) offering no salient solutions for trade-dependent East Asian countries, the perceived injustice or unfairness of the global financial architecture enshrined in the IMF made it politically easier for the leaders of crisis-ridden countries to seek regional alternatives. One major alternative for the affected countries was to secure preferential access to each other’s markets and create more diversified regional financial safety nets. Yet the impact of the AFC on regional integration has been contradictory. While the crisis fuelled the emergence of ASEAN+3, it gravely weakened both ASEAN and APEC (Webber 2001, 358). ASEAN has contributed to the dissemination of the regional norm of the ‘ASEAN way,’ which emphasizes sovereignty, non-intervention, consensus, inclusion, and informality, and thus to bringing the great powers—especially China and the US—to the table in the post-Cold War strategic transition in East Asia (Goh 2011). However, ASEAN remains an inherently modest organization with only scattered signs of institutional deepening and widening.Footnote 6 Aptly pointed out by John Ravenhill in this volume, the APEC forum has remained an essentially consultative body since its creation in 1989, with most members continuing to prefer loose family-type linkages to more formal institutional structures.Footnote 7

At the end of the 1990s, the US became more ambivalent about the regional attempt to create exclusive economic agreements. In the early 1990s, the proposal of the East Asian Economic Group (EAEG) by then-Malaysian Prime Minister Mahathir faced strong American opposition, due to fears that an exclusive regional bloc could undermine the leadership role of the US and foster a split between East Asia and North America. In the aftermath of the AFC, however, the US did not immediately reject the ASEAN+3 process initiated by thirteen East Asian countries, presumably because it saw little strategic benefit to weaving a web of preferential economic arrangements with East Asian countries. It was in such a political-economic context that the ASEAN+X framework emerged, alongside a series of bilateral FTA initiatives targeting the region both internally and externally.

5.3 The Core Elements of the ASEAN+X Framework

5.3.1 ASEAN+3

ASEAN+3 is the cornerstone of the ASEAN+X framework. In the immediate aftermath of the AFC, the existing regional organizations in East Asia, ASEAN and APEC, were widely seen to be falling apart. At the same time, East Asia witnessed the emergence of ASEAN+3, which was designed to promote closer integration between Northeast and Southeast Asia. The AFC fostered the rise of ASEAN+3 because it greatly strengthened perceptions of mutual economic interdependence and vulnerability in East Asia and resentment toward the West and the US.Footnote 8 ASEAN+3 replicates ASEAN’s norms of consensual decision-making and mutual non-interference in member states’ domestic affairs. It has remained a consultative organ, in which the participating members exchange views on a wide range of issues, but without making any binding policy commitments. Nevertheless, the web of relations among the 13 member countries has developed steadily since the first summit meeting in 1997. Not only heads of government, but also finance, economics and foreign ministers, central bank governors, and senior government officials in related domains have started meeting regularly to address a wide range of issues (Webber 2001, 340–5).

The first significant, concrete product of ASEAN+3 was the Chiang Mai Initiative (CMI), which was agreed upon in Thailand in May 2000. It was proposed by Japan and accepted cautiously by China, which, along with the US, had opposed Japan’s earlier, more sweeping proposal for an Asian Monetary Fund (Moore 2007, 49–50, Ravenhill 2008, 46). The CMI aims to establish a regional currency swap facility to enable the member countries to shield themselves better against any future financial crises. It was initially dismissed for involving only limited amounts of financial resources and requiring most swaps to be congruent with, and nested to, IMF regulations. Its mechanism was also characterized as vague and ambiguous, and some critics raised fundamental questions about its relevance for regional monetary affairs because its mere existence did not by itself alter the fact that the East Asian countries’ primary response to the AFC was unilateral (Dieter 2007, 129, Webber 2010, 319).

Nevertheless, the CMI has since offered an opportunity for regional financial collaboration that has simultaneously reduced Asian dependence on the US dollar for financial reserves, currency baskets, and international transactions. As of today, a total of US$120 billion is available, and in May 2009 the CMI was successfully multilateralized, creating a collective centralized reserve fund, with a single contractual agreement, allowing one stop shopping for needed funds. The CMI has also initiated a regional surveillance mechanism called the Economic Review and Policy Dialogue. The Plus Three countries, namely China, Japan, and Korea, have provided technical assistance and training for the monitoring of capital flows in East Asia’s less developed financial systems. Also, they have begun to develop an enriched Asian bond fund through their regional central banks, while the CMI has collectively pushed a separate Asian Bond Market Initiative (ABMI), although it is unlikely that all of these CMI efforts will evolve into horizontally linked exclusive regional institutions (Pempel 2010, 217–218).

From the perspective of institutional design, ASEAN+3 has aimed to pursue “nested linkages” to existing institutions in both substantive and tactical terms.Footnote 9 ASEAN+3’s earlier substantive linkages to existing institutions are illustrated by the Joint Statement on East Asia Cooperation issued in November 1999 at the 3rd ASEAN+3 Summit in Manila, in which members committed themselves to promoting economic, financial, social, and political dialogues “with a view to advancing East Asian collaboration in priority areas of shared interest and concern.” The joint statement also endorsed, among others, the Chinese Five Principles of Peaceful Co-existence, the principles of the UN Charter, and the ASEAN Treaty of Amity and Cooperation (TAC) (Aggarwal 2010, 27). Such substantive linkages are genuine and inevitable under the fluid geostrategic and geoeconomic environments in today’s East Asia.

At the same time, the ASEAN+3 grouping also displays tactical linkages to the extent that China and Japan compete with each other for regional leadership. In order to court Southeast Asian countries on their sides, the two regional giants have tried to tie together a variety of regional issues—including trade, finance, money, energy, environment, and terrorism—within and outside the ASEAN+3 framework. The China-ASEAN and Japan-ASEAN FTAs are the byproducts of such tactical linkages. ASEAN+3 also provides evidence that the linkage strategies of both China and Japan are reactions to the declining US-centric linkage framework. As will be discussed below, the rivalry between China and Japan on the one hand, and the ambivalence of the US on the other, have led East Asian countries’ linkage strategies to mainly focus on membership issues rather than tackling more substantive regional concerns.

5.3.2 ASEAN+1

Although the ASEAN+3 process has continued since its creation in 1997, China surprised observers with its decision to negotiate an ASEAN+1 agreement—i.e. the framework agreement on ASEAN-China economic cooperation—which came into effect on January 1, 2010. Guided both by non-traditional security considerations and by economic motivations, the China-ASEAN “strategic partnership” has become an institutionalized process, as manifested by an annual cycle of summits and high-level meetings.Footnote 10 Some analysts welcome such developments as positively affecting the strategic and political future of East Asian regionalism.Footnote 11

ASEAN’s raw materials and energy resources proved to be vitally important to China’s future economic growth. China’s political initiatives and intrinsic interest in an FTA with ASEAN reflect the growing need for an insurance policy to secure the supply of raw materials and energy resources. At the same time, a number of non-economic considerations have been critical. In particular, China views cementing political and economic relations with ASEAN as an opportunity to vie for regional leadership. Indeed, ASEAN holds the key to China’s security, as ASEAN shares extensive land and maritime borders with China. About three-quarters of China’s energy imports go across the South China Sea. China also acknowledges that ASEAN may have the upper hand determining which of today’s budding regional arrangements will prevail in East Asia (Kwei 2006, Lin 2008, Yang 2009, Arase 2010).

For ASEAN countries, following China’s lead may be prudent when one considers the economic window of opportunity. In fact, shared vulnerability accounts for why China and ASEAN are drawn to an ASEAN+1 mechanism. Most ASEAN governments remain politically fragile, have limited capacities, and depend on economic growth for political legitimacy; these governments are more subject to non-military threats than to traditional ones. Despite simmering tensions in the South China Sea, China thus makes a great partner for a marriage of convenience to ASEAN.Footnote 12

China’s move toward ASEAN has prompted and intensified a regional rivalry. In particular, Japan quickly followed with its own framework accord with ASEAN in 2003, with implementation beginning in 2009. From 2007 to 2008, Japan made two proposals with an intention to drive a wedge into the ASEAN+3 framework favored by China: (1) a Comprehensive Economic Partnership in East Asia (CEPEA) to be pursued within the EAS and (2) a Japan-ASEAN Comprehensive Economic Partnership Agreement (JACEPA) involving free trade, investment, technology transfer, human resource management, and other economic areas presented as a full package of long-term, legally-binding developmental benefits, as opposed to the partial packages that China had offered to ASEAN. Japan also funded the Economic Research Institute for ASEAN and East Asia (ERIA), inaugurated in Jakarta in 2008 with an aim to serve as an East Asian OECD, to undertake policy research for regional economic integration (Terada 2010, 81, Goh 2011, 291).

South Korea also signed a framework agreement on comprehensive economic cooperation with ASEAN in 2005.Footnote 13 During his visit to Indonesia in March 2009, South Korea’s incumbent President Lee Myung-bak launched an ambitious diplomatic initiative, dubbed the “New Asia Initiative,” that envisions South Korea as a regional leader able to speak for Asian countries in the international community. The principal candidates have been Southeast Asian countries. In the second half of the 2000s, ASEAN emerged as South Korea’s third largest trading partner after China and the EU, while South Korea’s investment in ASEAN soared from US$500 million to US$3.6 billion, making ASEAN South Korea’s second biggest investment target after the US. As the two sides marked the 20th anniversary of the Korean-ASEAN Dialogue Partnership, ASEAN pressed for even more cooperation through Lee’s New Asia Initiative. To enhance cooperation in economic development, South Korea plans to triple its official development assistance to ASEAN by 2015 (Koo 2009a).Footnote 14

5.3.3 ASEAN+6 and +8

Japan initially proposed the ASEAN+6 framework as an expanded East Asian regional concept, despite the existence of ASEAN+3. The impetus behind the expanded framework was provided by Japan’s Prime Minister, Junichiro Koizumi, who advocated the addition of Australia and New Zealand as core members in the process toward the creation of an East Asian community (Terada 2010, 72). The ASEAN+6 proposal evolved into the launch of the EAS in December 2005 following the ninth ASEAN+3 summit held in Kuala Lumpur. The EAS was supposed to elevate the ASEAN+3 process to a high-level dialogue on political-security and economic issues. Along with Indonesia and Singapore, Japan successfully lobbied for the inclusion of Australia, India, and New Zealand as part of its push for universal values and open regionalism, and in an implicit move to deter potential Chinese domination within the EAS. China gained Malaysia’s consent for giving the ASEAN+3 meeting—rather than the EAS—the primary responsibility for building the East Asian Community (EAC), leaving a question mark over the future of EAS as well as potential polarization of the region. This rivalry has resulted in two East Asian groupings—namely the ASEAN+3 and +6—with overlapping mandates for regional cooperation in finance, energy, education, disease, and natural disaster management (Goh 2011, 390–391).

In the meantime, there have been two structural changes in the East Asian political economy, which have created gloomy prospects for the development of ASEAN+6. Firstly, the US initially supported the materialization of the original EAS mechanism, specifically in the ASEAN+6 format. However, it became disappointed at having been excluded from market integration schemes. As discussed in Sect. 5.5 in more detail, the US subsequently decided to push for the FTAAP as a spinoff of APEC. In essence, three economic superpowers now compete with each other through contending visions of Asian integration: ASEAN+3, ASEAN +6, and the FTAAP. Secondly, the global financial crisis, which represents both the eroding international influence of the US and the growing international role of China with the world’s largest foreign reserves, has catalyzed a demand for financial cooperation rather than trade liberalization, an area that the original ASEAN+6 mechanism did not entail as part of a cooperative agenda (Terada 2010, 86).

As a result, the US and Russia have been invited to join the ASEAN+6, creating an ASEAN+8 forum (or an expanded EAS).Footnote 15 The two new member countries participated in the sixth EAS summit held in Indonesia in November 2011. The expanded EAS summit continues to be a forum for dialogue on broad strategic, political and economic issues to promote “common security, common prosperity, and common stability” (Wihardja 2011). In the context of a world trying to devise a new global order following the 2008 global economic crisis, the EAS is in the midst of an evolving and increasingly convoluted regional architecture. At the same time, the EAS should avoid bipolar dominance of the agenda,Footnote 16 while managing regional challenges that need to be contained: the Thailand-Cambodia dispute, security issues on the Korean Peninsula, maritime issues, terrorism, piracy, transnational crime, pandemics and natural disasters.Footnote 17

5.4 The ASEAN+X Framework at a Crossroads

Now a tangle of regional institutions competes for attention and resources, and that as long as the ASEAN+1 and +8 approaches continue to coexist with ASEAN+3, the East Asian region will become more polarized before it experiences greater integration. At the core of East Asia’s integration lies a close and cooperative Sino-Japanese relationship, particularly during a time when the role of the US as a hegemonic broker between the two regional giants continues to wane. In theory, larger membership may expand both the security and economic interests of the members. In practice, however, the consequent dilution of common purpose has served no members thus far (Cook 2008, 296 and 303).

The seemingly promising start of ASEAN+3 cooperation has attracted the attention of some prominent East Asia scholars. Most notably, Richard Stubbs identifies the ASEAN+3 process as the materialization and formalization of the EAEC, implying that an identity-based East Asian regionalism has grown out of the 1990s debates about “Asian values” and has now reached a next evolutionary stage (Stubbs 2002, 453). Similarly, Richard Higgott believes that the growing cooperation among the ASEAN+3 states would be built upon “the development of a sense of regional identity in a more tightly defined East Asian context” (Higgott 1999, 97–99). Heribert Dieter and Richard Higgott also interpret ASEAN+3’s first experimental steps towards establishing regional currency swaps and financial monitoring as a sign of a deepening sense of regional consciousness which stands in opposition to the Anglo-American view on global economic organization as represented by the IMF (Dieter and Higgott 2002, 32).

ASEAN+3 members have attempted to increase their cooperation, most recently at the 14th ASEAN+3 Summit in Bali, Indonesia in November 2011. The summit reaffirmed the ASEAN+3 process as the main vehicle to achieve the long-term goal of building an East Asian community and recognized the mutually reinforcing and complementary roles of the ASEAN+3 process and regional forums such as the EAS and the ASEAN Regional Forum (ARF). Aside from economic cooperation, the summit meeting highlighted the ongoing need for cooperation and some progress in areas of non-traditional security, such as transportation safety, food security, pandemic disease protection, energy supply, the rights of women and children, and natural disaster recovery.Footnote 18

In terms of institutional strength, ASEAN+3 continues to expand its issue scope, similar to APEC. For instance, ASEAN+3 members signed a commitment of the ASEAN+3 Emergency Rice Resources (APTERR) in Jakarta in October.Footnote 19 However, ASEAN+3 remains inherently weak, which has clearly been demonstrated by the lack of sustained cooperation on the part of the great powers—especially China and Japan—that is crucial for the creation of a stable regional society of states to advance East Asian collaboration in priority areas of shared interest and concern. In particular, the ASEAN+1, +6, and +8 approaches have co-existed with the ASEAN+3, thereby distracting the locus, as well as the focus, of collective energy. Muddied by renewed uncertainties about US security commitments after the 9/11 attacks, power competition and balancing by Japan and China within and across regional institutions intensified with the round of “institution-racing” (Goh and Acharya 2007, 7).

The implications of the East Asia Summit are even more distracting for the ASEAN+3 process. No one really focuses on building or reconciling the ASEAN+3 forum as a strong regional institution since the debate primarily revolves around membership scope. From one perspective, the East Asian Vision Group’s proposal that the annual summit meeting of the 13 member countries be transformed into an East Asian Summit was realized more swiftly than its protagonists initially envisaged. Yet the EAS’s creation aggravated interstate rivalry within the region (Webber 2010, 318).

While most ASEAN+3 states embrace a broader Asia–Pacific perspective, Malaysia and China appear to be promoting more exclusive forms of East Asian regionalism. Within ASEAN+3, China is aggressively pushing a strong China-ASEAN axis, whereas Japan is seeking to balance China’s efforts and step up its political and economic cooperative profile in the region. The additional +5 countries—Australia, New Zealand, India, Russia, and the US—were admitted to the EAS, while China and other supporters of a narrower EAS were assured that ASEAN+3 would remain the primary vehicle for promoting closer cooperation in the region.

It is remarkable that Japan and China managed to agree to limited monetary cooperation through the CMI in an attempt to ward off any repetition of the AFC. The two countries have forged closer economic ties and are now each other’s most important economic partner. In general, however, political wariness and rivalry have characterized postwar Sino-Japanese relations. Diplomacy continues to fail to ease deep mutual suspicions. So-called “cold politics and hot economics” has thus become a defining feature of their bilateral relations (Koo 2009b).

The essentially unresolved membership issues and the relationship of competing minilateral forums indicate divergent views on China’s regional role and complex economic-security implications for its neighbors. To China, ASEAN+3 offers an ideal institutional platform to raise its profile and image in the region, as it imposes few economic and political costs, while presenting an opportunity to diffuse concerns about the China threat. Although committed to cooperation within the ASEAN+3 framework, Japan prefers opening up the forum as much as possible, primarily due to its strategic opposition to China’s leadership. In a similar vein, South Korea has welcomed ASEAN+3 as the basis for an increasingly institutionalized regional body for economic, political, and security cooperation. Despite its growing economic interdependence with China, however, Korea’s ultimate political and economic reliance on the US ensures Korea’s continued Asia–Pacific orientation.

Last but not least, the ASEAN+X forums provide a welcome opportunity for ASEAN to improve its credentials as a core, albeit a soft one, for East Asian regionalism. China has reiterated that ASEAN should remain in the driver’s seat, with others largely agreeing to this idea.Footnote 20 ASEAN was able to take the lead in ASEAN+3 thanks to the continued Sino-Japanese rivalry and security competition across Northeast Asia. As David Jones and Michael Smith point out, “a shared sense of weakness rather than strength facilitated ASEAN’s capacity to transform the regional order,” leading to a discourse that was “conducted according to the non-legalistic, consensus-oriented ASEAN way that represented a distinctive alternative to European styles of diplomacy.”Footnote 21 To be sure, ASEAN has helped to partially institutionalize power relations within the ASEAN+X framework, while representing the voice of smaller countries in regional economic and security management. However, what ASEAN has achieved in this regard is “well short of the kind of sustained cooperation on the part of the great powers that is so necessary to the creation of a new stable regional society of states” (Goh 2011).Footnote 22 Furthermore, with respect to the membership issue of minilateral forums, ASEAN is divided, leaving Malaysia almost isolated on the matter (Hund 2003, 394–395, 400–406).

5.5 Re-securitization of US Economic Policy and the Future of ASEAN+X

Undoubtedly, China has been the principal motor of growing economic cooperation in East Asia, particularly in the aftermath of the AFC. At the same time, China’s neighbors have reacted to its rise by expanding their ties to other states to hedge and secure themselves as much autonomy as possible vis-à-vis Beijing (Kang 2007). During the first decade of the new millennium, such regional dynamics have made regional minilateralism, which was in part the region’s response to the de-securitization of America’s economic policy toward the region, largely irrelevant. The fact that most East Asian countries support the participation of the US (along with India, Australia, New Zealand and Russia) in ASEAN+8, while also soliciting America’s continuing military and economic presence, indicates that strategic considerations outweigh others when it comes to defining the economic boundaries of the region.

In effect, security considerations have once again become a significant factor behind US economic policy in recent years. The Bush administration securitized the neoliberal economic agenda and its foreign economic policy in the context of its changing view of sovereignty and security in contemporary global affairs. In particular, US trade policy under the Bush administration changed dramatically in the post-9/11 world and in turn became the driving force behind the changes in global trade dynamics under the rubric of “competitive liberalization.” President Bush’s first chief trade policymaker, United States Trade Representative (USTR) Robert Zoellick, articulated a trade policy orchestrated around competitive liberalization in which global, regional, and bilateral trade negotiations would complement and reinforce each other. Zoellick had long seen trade agreements as having geopolitical as well as trade significance (Zoellick 2001). This view clearly found resonance in the Bush White House. The Bush administration explicitly reminded countries that contemplated an FTA with the US of the strong connection between security and economic cooperation (Koo 2011, Sohn and Koo 2011). US approaches to reengaging East Asia are two-fold: bilateral and multilateral.

First of all, the US turned its eyes to ASEAN in pursuit of an ASEAN+1 agreement. Responding to criticism that the US was distracted with the war on terror while China was heavily investing diplomatic and economic capital in Southeast Asia, the Bush administration in November 2005 announced a joint vision statement on the ASEAN-US enhanced partnership. It agreed in principle to start negotiating an ASEAN-US trade and investment facilitation agreement. In addition, the US began to pursue FTA projects with individual ASEAN countries: Malaysia and the Philippines in late 2002 and Thailand in July 2003. In 2003, the US successfully concluded an FTA with Singapore (Aggarwal 2010, 33). For the US, it was particularly important and timely to engage ASEAN countries both individually and collectively in order to help shape ASEAN initiatives for East Asian regionalism in a way that did not weaken American regional influence (Mochizuki 2009, 62). The US has continued its overtures toward ASEAN, signing the TAC in 2009, and working with the ASEAN-US Trade and Investment Framework Arrangement (TIFA). These efforts have paid some dividends, with endorsement by most ASEAN members that the US should become a member of an ASEAN+8 agreement.Footnote 23

With APEC faltering in its effort to promote open trade, the US sought to revitalize APEC through various ideas, most prominently the FTAAP and then the TPP. Under the Bush Administration in 2006, the US shifted its position to support the FTAAP, an idea in which it had previously shown little interest. This approach has been promoted by the APEC Business Advisory Council (ABAC), an officially recognized organ created by APEC in 1995 that has been an advocate for the creation of a free trade area among APEC members since 2004. Prior to the 2006 summit in Vietnam, the US showed little interest in such an accord. But shortly before this summit, in a speech in Singapore, President Bush endorsed the idea of pursuing an FTAAP (Aggarwal 2010, 31).

The US-led FTAAP may make it difficult for East Asian countries to vigorously promote the ASEAN+X framework because some key members of APEC have developed an interest in the FTAAP through their initial participation in the TPP. Although American motivation for TPP participation was not to secure export markets, as evidenced by the relatively small size of markets in the original four members (discussed further below), the US regards TPP as a model for the FTAAP because the former aims to be a high-quality FTA under which tariffs on all products would be eliminated by 2015. If other countries, as Australia, Peru and Vietnam already have, seek to become involved and if the “TPP+X” negotiations begin, then the critical mass towards the formation of an FTAAP may be reached. However, it is unlikely that FTAAP negotiations will materialize any time soon. The institutional and bureaucratic capacities in many East Asian countries are inherently limited, making it difficult for them to simultaneously engage in multiple negotiations (Terada 2010, 86–87).

Given the prospective future distribution of power in the region, both demographically and economically speaking, China’s neighboring countries have strong incentives to bind extra-regional powers to East Asia. Likewise, many in the region already recognize that US engagement is critical to this goal because no other country or combination of countries can balance a growing China (Goh 2003). The continuing importance of the US as a provider of security and vital economic partner in East Asia underscores the defining feature of future East Asian regionalism, namely its “porousness” (Katzenstein 2005, 21–30).

By signaling its intention to join the ASEAN+8 and working to cement its relationship with ASEAN to a more strategic level, the US appears to be shaping regional architectures in a way that will be more inclusive and trans-Pacific in nature (Fergusson and Vaughn 2010). One part of the porous economic and strategic architecture in the region is the Trans-Pacific Partnership (TPP), a free trade agreement that includes countries on both sides of the Pacific. Initially coming into effect in 2006, TPP originally consisted of Brunei, Chile, New Zealand, and Singapore. The US, Australia, Peru, and Vietnam have committed themselves to joining and expanding this group. To the US, TPP will be an important vehicle that could be used to shape its own regional agenda with the objective of leveraging TPP towards an eventual FTAAP. However, the road toward US-led trans-Pacific regionalism is likely to be a bumpy one. To say the least, China has shown little interest in joining the TPP (let alone the FTAAP) so far. Also for the US, an accord that promotes a complete free trade with China would be a political non-starter owing to current domestic political dynamics in the US and concerns about the massive US trade deficit in the context of the current global financial crisis.

5.6 Conclusion

This chapter has explored the evolution of the economic-security nexus in prominent minilateral groupings in East Asia—the ASEAN+X forums—against the backdrop of America’s neoliberal economic triumphalism during the 1990s and its re-engagement in the region after the 9/11 attacks. The main claim of this chapter is that the ASEAN+X forums emerged in response to the de-securitization of American economic policy and that these forums have aimed to pursue “nested linkages” to existing institutions. However, the ASEAN+X framework for the economic-security nexus has largely failed to deliver what it originally promised in both substantive and tactical terms, mainly due to clear lack of leadership. It is no coincidence that a variety of regional forums are rich in rhetoric but poor in substance. For instance, one of the few achievements of the ASEAN+3 framework has been the multilateralization of the Chiang Mai Initiative (CMI). However, CMI’s vision to create a strong regional monetary fund has not been matched by clarity of thought or action. America’s latest entry into the EAS dialogue and its promotion of FTAAP/TPP further complicates the future of ASEAN+X framework.

With multiple minilateral forums vying for institutional space, the issue of how these arrangements may be nested or horizontally linked with some systematic division of labor remains an open question. This chapter’s primary focus was ASEAN+3 and its relationship with other ASEAN+X forums. In establishing the ASEAN+3 framework in 1997, ASEAN created the first exclusive East Asian institution in which China and Japan would have to share leadership. In the atmosphere of antagonism and disillusionment with the perceived disregard of the US and the IMF during the AFC, ASEAN+3 leaders reached a consensus, though tentative, on an exclusive East Asian regional community. However, this consensus broke down at the turn of the new millennium, complicated by the uncertainties about America’s security commitments to the region after the 9/11 attacks and by worsening Sino-Japanese relations.

For some optimists, fluid geo-economic and geo-political conditions have created an institutional ecosystem in which only the fittest institutions can survive.Footnote 24 For others, the ever-intensifying rivalry between Japan and China within and across regional institutions has led to a vicious cycle of “institution-racing” (Goh and Acharya 2007). As Christopher W. Hughes points out, Japan has been using ASEAN+X forums to deflect China’s bids for regional dominance by deliberately over-supplying regionalism. For its part, China has engaged in institutional self-binding, but exclusively vis-à-vis its smaller ASEAN neighbors, while remaining ambivalent on how these forums impact its potential restraint vis-à-vis Japan and the US (Hughes 2009, 855).

In conclusion, the heart of the problem is a profound uncertainty among major regional players about where their infant minilateral relationship may lead. In many respects, East Asian countries and the US are in the same bed. Their economies have increasingly become interdependent. From climate change and economic recovery to traditional security matters, countries in this region need to work in concert. Yet, with a tangle of regional institutions competing for attention and resources, East Asian regionalism will remain in flux.