Table Speech

EU and the East Asian Community

June 02, 2010

Mr. Toshiyuki Takano
Senior Advisor, ITOCHU Corporation
Former Japanese Ambassador to Germany

1.EU and the crisis in Greece
 I made a farewell greeting in August 2008 to the President of the European Central Bank in Frankfurt when I left my post in Germany. The President noted that the Euro, celebrating its 10th Anniversary in the following year, was successful in all aspects, bringing economic growth and employment. That was 1 year after the subprime mortgage crisis broke out in the US.

 This year, financial crisis in Greece is becoming critical, to which 30 billion EURO  assistance was decided in March, followed by additional assistance worth 860 billionEURO in May. Formation of the EU surely brought economic development and increased productivity to Europe. Yet, when the discussions come to Euro or financial assistance, I keep hearing reservations on the following three points from my German colleagues.

 The first argument is that political unification should be the prerequisite for sound management of financial assistance. In fact, a certain opinion poll showed that 86% of Germans are against assistance towards Southern European countries.

 Secondly, some question whether the stringent fiscal discipline and consequent shrinking economy will give positive economic impact to the world as a whole.

 Lastly, some argue whether further unification of the EU or liberalization will actually realize balanced economic development or abolish disparities within EU or Europe as a whole.

2.History of the EU
 I have just raised some reservations on the EU, but let me now touch upon the significance of this 60-year-initiative of unifying Europe in the context of contemporary history. Today, you can travel without passport control within the EU. Young people enjoy the economic and social advantages of the EU, enabling them to choose from European-wide options for their studying or working places. Actually as many as 30% of those living in Germany identify themselves as Europeans, rather than Germans.

 Looking back on the history, 60 million Europeans were killed during the 1st and 2nd World Wars, equivalent to the population of the UK or France. The two aspects concerning “war” and “peace” gave birth to the EU. Firstly, the French and Germans, who experienced tragic land wars twice in their lifetime, were determined never to engage in warfare on their continent, eventually leading to the unification of Europe. Secondly, fear against Soviet communism and the emergence of countries behind the “Iron Curtain” during 1946 - 1948, ranging from Poland to Bulgaria, resulted in European unification to build up a bastion against Communism.

3.Emergence of Discussions on East Asian Community
 Turning on to Asia, there is no such strong momentum to form a community in Asia to date. ASEAN celebrated its 40th Anniversary in 2007. A new goal was set out to form a single common market by 2015, but this is 20 some years behind Europe as they formed the common market by the Maastricht Treaty in 1992. Although ASEAN is recognized in the international arena today, the possibility of forming an East Asian Community started to be discussed just recently, with Chinese and Japanese political leaders referring to FTA, EPA, ASEAN+3 or ASEAN+6. Leaders in Asia are not so concerned about the issue of “war and peace” nor threatened by an external gigantic political force, like the Soviet Union was once to Europe.

 Today, Asian countries enjoy emerging position in the world economy, with rising nationalism. The establishment of a common Community necessitates relinquishing some sovereignty and such moves are thwarted by nationalistic forces.

4.Restrictions and Challenges facing the East Asian Community
There remain various unsettled security and territorial issues, concerning North Korea, Taiwan, the South China Sea, the Indian subcontinent and so on. Also, the “history issue” still lies between Japan and South Korea, China and other countries. We must keep learning lessons from “what happened in the past.”

 Political structures among Asian countries are not uniform. Yet, a common system based on democracy, rule of law, human rights, or market economy is vital to a Community.

 Asian countries have also achieved different levels of economic development, generating disparity as high as 60 times, which hampers market unification and free flow of goods, services, financial and human resources. Diversified religious and cultural backgrounds can also become an obstacle.

 We should not ignore the influence and attitude of the US over the Asian Community. The US once assisted the formation of ASEAN, to defend Burma, Thailand and Malaysia from the political and military threat of Communism. Time has changed and today, the US is not happy to form a Community limited to East Asian countries, which may possibly exclude the US.

5.The Stance of Japan
 First of all, we must question whether we are ready to open up our market, economy and society to make financial or technological assistance for the fellow countries within the Community. It is our obligation as one of the top economic runners in Asia.

 Secondly, Japan must seek ways to balance out politics and security, a challenging task to maintain the “power balance” within East Asia, while keeping the Japan-US Alliance. Europe succeeded in balancing out its security structure NATO and its economic structure EU.

 Two current movements towards globalism and regionalism will surely continue to flow in the future. Japan, an aging society with a declining birth rate, suffers from decreasing population. Therefore we must be determined and ready to seek a way out, by pursuing coexistence in Asia.