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President Obama's trip to East Asia over the next two weeks comes at an important time in Asian regionalism. East Asian governments have been moving on several fronts toward regional cooperation and, while some skepticism might be justified, the rest of the world would be wrong to dismiss these developments as inconsequential. The United States, Europe, and other regions have an interest in an East Asia that is open to the rest of the world and composed of states at peace with one another. Yet, US policy toward Asia as a region, as distinct from individual states or issues, has been unclear.
The new Japanese Prime Minister, Yukio Hatoyama, has reinvigorated regional discussion of an East Asian economic community and a regional currency. While he has not achieved consensus on such lofty objectives, there are now several groups working on more realistic and concrete cooperative projects. The states of the Association of Southeast Asian Nations (ASEAN) have recently ratified a new charter, strengthening their institutions, and are about to implement the first phase of a free trade area. ASEAN plus Japan, China, and South Korea (ASEAN+3) are on the threshold of creating a common fund for fighting financial crisis, called Chiang Mai Initiative Multilateralization (CMIM). Amounting to a proto-Asian Monetary Fund, the CMIM could raise concerns about its future relationship to the International Monetary Fund (IMF) and lead to a possible realignment in the global financial architecture.
In principle, the United States and the rest of the world cannot object to Asian regionalism. After all, the United States created the North American Free Trade Agreement (NAFTA) and Europe created the European Union. But non-Asians can insist that Asian regionalism support multilateral trade and financial regimes. If Asian governments were to sever the link that now exists between the CMIM and the IMF, they would need first to develop a regional capability to specify appropriate conditions for loans and operate cooperatively with the IMF. Regional surveillance and any serious discussions over macroeconomic policy and exchange rates that ASEAN+3 might hold in the future must not provide cover for a return to the precrisis disequilibrium. Rather the goal should be to contribute to the adjustment of global payments imbalances.
At the same time, the United States has recently acted more constructively vis-à-vis Asia in ways that address concerns that motivate regionalism. Washington has supported the redistribution of quotas and voting rights in the IMF toward Asian member states and backed the introduction of more flexible loan facilities. The Federal Reserve extended swap facilities to Japan, Singapore, and South Korea during the recent crisis. President Obama's decision to meet with the ten ASEAN leaders during his trip is a further step in the right direction. The administration should go further by advancing stalled bilateral trade deals with individual countries and breathe new life into the Asia Pacific Economic Cooperation (APEC) forum.
President Obama should make a clear statement of US policy toward Asian regionalism that contains three essential points. First, he should clearly articulate US support for Asian regional cooperation and the development of Asian institutions. Second, that support should be conditioned on Asian regional arrangements supporting economic openness and revival of the world economy while rebalancing international payments. Third, he should advance initiatives that ensure the United States continues to play a robust role in Asian trade and finance.