Thank you Mr. Chair, it is my great honor to be here to meet distinguished people and discuss how we can promote the idea of Northeast Asia Economic Community.
I very much appreciate the preparation work done by all those who worked hard to make possible this 2016 Annual Conference of the Northeast Asia Economic Forum. Let me also express my sincerre appreciation for Jilin University’s warm hospitality for hosting the Forum and receiving us today.
I understand that various discussions have been held at the Forum over the years about how the idea of Northeast Asia Economic Community could be promoted and realized.
I am sure that they are going to provide extremely valuable theoretical groundwork when politicians someday eventually decide to go for official talks to realize Northeast Asia Economic Community.
But today, how many of us here are optimistic about the possibility of Northeast Asia Economic Community? I think very few nowadays. Especially after Brexit.
Up until Brexit, things were going all right for those who believed in integration. At least it looked that way. It was almost taken for granted that regional or global integration was one of the inevitabilities of history.
But after Brexit, things have changed, and there seems to be huge momentum which is working against integration.
According to the Economist, it says “Although the drawbridge-uppers have all the momentum, time is not on their side. Young voters, who tend to be better educated than their elders, have more open attitudes. A poll in Britain found that 73% of voters aged 18-24 wanted to remain in the EU; only 40% of those over 65 did.” Still, the present situation does not appear to me that positive.
Be that as it may, I am one of those who believe in the future of Northeast Asia Economic Community. I am sure people here, however pessimistic these days, share the same feeling deep in heart. Let us discuss and find ways to make it happen some day. Let us transform the impossible to the possible.
Northeast Asia has great potential to become a powerful engine of the world economy. The region contains world number 2 and 3 economy, China and Japan. South Korea ranks 11th and Russia 12th. The economies in Northeast Asia have been showing a steady growth.
Northeast Asia Economic Community is yet to come. Politicians have not gathered together to hold official talks for Northeast Asia Economic Community. In that sense, Northeast Asia has been a missing link among the network of regional integrations. But once established, it may possibly become the richest economic community in the world.
When we say the Northeast Asia Economic Community, which countries are we talking about?
Russia, China, South Korea, Mongolia and Japan should be no doubt included.
What about the United States? Geographically, the United States may not be regarded as a part of Northeast Asia. But I would send an invitation to the United States as a charter member of the Community, although Mr. Trump may decline it and Madame Clinton may also do the same. I hope they would modify their stance on regional integration once the presidential election is over.
What about North Korea? Geographically, North Korea is a part of Northeast Asia. But I find it difficult for North Korea to be invited as a charter member. North Korea must change its behavior if it wants to join the club.
With those in mind, my vision is to establish this Northeast Asia Economic Community and combine it with other regional integrations like TPP, Japan-China- Korea trilateral FTA, and ASEAN Economic Community. It will fairly cover the Asia Pacific region, and could almost be called Asia Pacific Economic Community.
Once established, it will not only provide the mechanism for the prosperity of the region through free trade and investment, but also lay the ground work for the peace of the region, for example providing the momentum to discuss various Confidence Building Measures, like notification of maneuvers and exercises, exchanges of information on military budgets and new equipments, exchanges of personnel, establishing direct (“hot line”) communications system, etc.
But, the recent events starting from Brexit have complicated my picture.
Until Brexit, we almost took it for granted that regional or global integration is one of the inevitabilities of history. TPP was agreed upon this year. The Japanese Parliament will ratify TPP this fall. The ASEAN Economic Community (AEC) was established last year. It was another major milestone in the regional economic integration agenda.
The Tripartite Free Trade Agreement negotiations/ among Japan, China, Korea have been resumed.
Progress is anticipated in the negotiations of the Regional Comprehensive Economic Partnership (RCEP) comprising the ASEAN 10 + six countries (Japan, China, Korea, Australia, New Zealand, and India).
But the question has suddenly arised when Britain decided to leave the EU, Mr. Trump said “America will be next,” and Madame Clinton also made clear her negative stance on TPP. The atmosphere has hugely changed.
Whether Mr. Trump gets elected next President, or Madame Clinton wins, both of them denounce TPP. It suggests that the United States’ foreign policy posture may be turning inwards and changing. It may be a big turning point in history.
The United States played an enormous role in the post-War world for the peace and prosperity. Pax Americana was real. But after the wars in Afghanistan and Iraq, things may have changed. Although the US economy is still number 1, its relative position has weakened. The United States shifted its focus to the Asia Pacific region to reinvigorate its economy by increasing trade and investment there. TPP is supposed to be the main instrument for that purpose. It makes a big sense to me. But if the next President of the United States denies TPP, it could undermine the United States’ credibility or reliability as a partner in the Asia Pacific region, and lead to the real end of Pax Americana.
Arnold Toynbee, a British historian, predicted that the center of gravity of the world would shift from the Atlantic to the Pacific, from the West to the East.
If Britain is leaving the EU, and Mr. Trump is saying “America will be next,” and Madame Clinton also denies TPP, they may undermine the influence of both Britain and the United States. Personally I would not like it, but it looks like it may happen. Toynbee’s prophecy may be proving true.
With Toynbee’s prophecy in mind, promoting the idea of Northeast Asia Economic Community would make sense, and after Brexit, it has become all the more important. We must recapture the momentum of regional integration.
We must recognize the geostrategic importance of Northeast Asia in the years to come. As I have mentioned at the beginning, Northeast Asia contains world number 2 and 3 economy, China and Japan, and 11th South Korea and 12th Russia.
Although it remains to be seen whether the United States ratifies TPP or not, if the United States, which is number 1 economy, joins the club of Northeast Asia Economic Community, the Community will definitely turn out to be the richest economic community in the world, and will be a powerful engine of the world economy.
I must invite all of us here to think harder about the ways to lead our discussions to official government-to-government talks for the Northeast Asia Economic Community.
I talked about my vision of establishing Northeast Asia Economic Community and combining it with TPP, the tripartite Japan-China-Korea FTA, RCEP and ASEAN Economic Community.
That may eventually lead to the FTAAP (Free Trade Area Asia Pacific). It will be a dynamic mechanism to revitalize the world economy.
I think it is a huge historic mission for the leaders of Northeast Asia to make it happen. I must encourage other politicians to join me.
The concept of FTAAP has been agreed upon by APEC countries in 2010 Yokohama APEC meeting; which means Russia and China have also agreed on the concept of FTAAP. This, I think, is an important point to share, because without Russia or China FTAAP would not be complete, and so it highlights the importance of promoting the idea of Northeast Asia Economic Community to complete FTAAP.
The scenario I described, however, much depends upon whether the United States will ratify TPP. Before Brexit, and before Mr. Trump and Madame Clinton denounce TPP, we all thought that it was the United States who most promoted and wanted TPP. But now, Mr. Trump is saying “America will be next” and Madame Clinton is also making clear her negative stance on TPP. We understand they are campaigning in the election. And some people say that the candidates will sound differently after the election. But what if they do not?
I am concerned that in that case, as I alredy mentioned, the credibility or reliability of the United States as a partner would be gravely damaged. And my scenario would also be hurt, because countries like China, Korea, Indonesia and other countries who have been studying TPP seriously/ and examining whether they should join TPP or not/ will suspend their examination process. Then, the idea of putting together TPP and other regional integration frameworks to realize FTAAP would turn very difficult.
I hope I am wrong. I hope I am worrying too much.
On the other hand, if the United States ratifies TPP, it would give a big impetus to China, Korea, Indonesia and other countries who have been studying TPP and they may accelerate their examination process. And they may even enter the negotiation process.
Be that as it may, there are already some progress. FTA between the United States and Korea, FTA between China and Korea, and EPA between Japan and Mongolia are already in effect. The negotiation of the tripartite FTA among Japan, China and Korea has been resumed. RCEP has been making progress.
With Russia, however, I hear very little. As for an FTA with Russia, although Japan’s Prime Minister, Mr. Abe is very keen on going a step further in the relations with Russia, the Japanese Government has no plan yet to discuss an FTA with Russia.
At the moment, Northeast Asia Economic Community may be a long way to go.
Initially, before going to FTA, we may have to settle for joint projects, in energy, finance, environment, tourism, and transportation, etc. I even hear an idea of digging a tunnel between Japan and Korea. I am not sure about the tunnel, but these joint projects among countries would help create a favorable environment for future FTA talks, hopefully leading to the Northeast Asia Economic Community.
Regarding Russia, since Mr. Putin has been focusing on the Russian Far East, I hope that joint projects involving Russia in the area of energy, for example, will help create a favorable environment.
In September, Japan’s Prime Minister, Mr. Abe and Mr. Putin are going to meet during the Eastern Economic Forum in Vladivostok. Mr. Putin’s visit to Japan may follow. They talk about a new approach. We should not be too optimistic, but we do not have to be too pessimistic.
In 2012, the Japanese Government proposed a conference in Tokyo to discuss ideas to promote Northeast Asia economic cooperation/ focusing on energy and finance, and invited scholars from six countries, Russia, China, Korea, Mongolia, the United States and Japan. Actually, I did this as the vice-minister for foreign affairs. Dr. Lee Jay Cho, who is chairing today kindly accepted our invitation and I remember we had fruitful discussions. My proposal was to establish “the Northeast Asia Development Bank”, and I remember Russia was very keen on this idea, probably because Russia has not joined ADB and so cannot get financing from ADB. At that time, several Japanese bankers came to my office in the Foreign Ministry, and said that they were very anxious for participating in the Bank. So it seemed that things were going all right. But after I left the Government, this conference has not been followed up and the idea of the Bank aborted. It is a great pity.
In the meantime, China proposed AIIB, and it has been established. Still, I think my idea of the Northeast Asia Development Bank remains valid. AIIB may be busy taking care of projects in Central Asia or silk road area. Northeast Asia Development Bank can focus on Northeast Asia, including the Far Eastern part of Russia. There can be a division of labor.
Beyond FTA, what about regional currency in Northeast Asia? It may be a tempting idea for those who promote regional integration, but to make regional currency possible, governments have to agree on unified financial policies and unified monetary policies. It is a long, long way to go, probably too far, too ambitious. It is especially so when we see what happened in Britain. Strong ill feeling among British people toward EU’s bureaucracy is said to be one of big reasons for the British leave vote.
At least for the foreseeable future, in Northeast Asia, unified financial or monetary policies, something like EU’s, may be unrealistic.
Be that as it may, especially among Japan, China and Korea, there is already substantial integration in progress. In terms of trade, for Japan, number 1 partner is China. The United States comes 2nd. 3rd is Korea. For China, number 1 partner is the United States, Japan 2nd, Korea 3rd. For Korea, number 1 trade partner is China. 2nd is the United States. Japan comes 3rd.
Thus, among Japan, China and Korea, in terms of trade, we see substantial integration already there. If we include the United States, the case becomes even clearer. The four countries are already closely intertwined in terms of trade.
I am one of those who initiated the negotiation process of the Tripartite FTA among Japan, China and Korea, and I do wish that the process will move forward and the negotiation be concluded. That will be a big milestone in promoting the idea of the Northeast Asia Economic Community.
In terms of tourism also, we find a similar situation. We see larger and larger flow of tourists flowing among Japan, China and Korea.
Against this background, we find that Japan, China and Korea are three center pillars in promoting Northeast Asia Economic Community. Leaders of the three countries must realize that they have great roles to play, even historic roles, as the boosters for that purpose.
The biggest obstacle could be nationalism; territory issues, history issues, etc. We have to take good care of them so that they would not hinder progress towards the Northeast Asia Economic Community.
As for territory, I would propose that governments concerned discuss them, for example, for two hundred years without resorting to physical forces. Thus, it must remain diplomats’ job, not soldiers’.
Mr. Abe, Japanese Prime Minister, is very keen on improving Japan’s relations with China. The relations have been sour since the Senkaku Islands incident/ in 2012. One viable solution could be to agree to carry on a dialogue on whatever the two countries disagree. There have been several meetings between Mr. Abe and Mr. Xi Jinping, but they were held for 30 minutes or so as sideline meetings/ during APEC or some international conferences. A real summit meeting is yet to be held either in Beijing or in Tokyo. We have not seen a clear sign of it yet though.
It is when someday Mr. Abe and Mr. Xi Jinping hold a full-fledged summit meeting, that the trialateral negotiation on FTA among Japan, China and Korea will gain real momentum.
Interdependence rather than narrow-minded nationalism would make the world peaceful and prosperous.
History has proved that economic integration would eradicate war/ and create peace. Germany and France used to engage in wars for hundreds of years. Now nobody even talks about a war between Germany and France. Likewise, Japan and the United States fought a severe war 70 years ago, but now nobody talks about a war between the two countries. The two countries’ economies are highly intertwined now. In Northeast Asia slso, economic integration, together with more understanding among countries, will be a vital instrument to create peace and prosperity. The idea of Northeast Asia Economic Community has become important more than ever.
We have to fight back against the adverse momentum for integration. We must defend the consensus that trade makes the world richer and cherish the ideal that people of different hues and faiths can get along together.
During this forum, I am sure we will derive lots of inspiration from the discussions to be held/ and find clues to promote and realize the idea of the Northeast Asia Economic Community.
Let us transform the impossible to the possible.
Thank you very much.