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Tuesday, April 20, 2010

East Asian Regional Architecture: New Economic and Security Arrangements and U.S. Policy

Dick K. Nanto
Specialist in Industry and Trade

The global financial crisis, the end of the Cold War, the rise of China, globalization, free trade agreements, the war on terror, and an institutional approach to keeping the peace are causing dramatic shifts in relationships among countries in East Asia. A new regional architecture in the form of trade, financial, and political arrangements among countries of East Asia is developing that has significant implications for U.S. interests and policy. This report examines this regional architecture with a focus on China, South Korea, Japan, and Southeast Asia. The types of arrangements include bilateral free trade agreements (FTAs), regional trade pacts, currency and monetary arrangements, and political and security arrangements. 

The East Asian regional architecture is supported by two distinct legs. The economic leg is strong and growing more intense. A web of bilateral and regional FTAs is developing. An East Asian Economic Community (with 13 nations), an East Asian FTA (with 16 nations), and an Asia Pacific FTA (with 21 nations) are being discussed. In contrast, the political and security leg remains relatively underdeveloped. The most progress has been made with the Association of South East Asian Nations playing the role of convener and has taken the form of the ASEAN Security Community (10 Southeast Asian nations) and ASEAN Regional Forum (25 nations, including the United States). In Northeast Asia, the six-party talks aimed at resolving the North Korean nuclear program are ongoing. 

As U.S. policy toward economic and security arrangements in East Asia evolves, it is turning on matters of intensity, inclusiveness, and final structure. Should the United States intensify its efforts to either hinder or support the architecture? Who should be included in the arrangements? Should the groupings be exclusively Asian? On the economic side, current U.S. policy appears to be to hedge by not trying to block attempts to create exclusive Asian FTAs but doing deals to keep from being cut out from their benefits. On the security side, U.S. interest in stability, counter-terrorism, and nonproliferation in East Asia is so great that the United States has sought a seat at the table when Asians meet to address security issues. Some also have called for the United States to join the East Asia Summit or to create a Northeast Asia Regional Forum that would include the United States, China, Russia, Japan, and South Korea. 

At the core of U.S. concern over the developing regional architecture in East Asia is the growing influence of China. A danger exists that if China comes to dominate regional institutions in East Asia, it could steer them down a path inimical to U.S. interests. Some Asian nations, however, are wary of excessive Chinese influence and are hedging and maneuvering against possible Chinese dominance. 

On March 15, 2010, the United States began negotiating to join a regional, Asia-Pacific trade agreement, known as the Trans-Pacific Partnership (TPP) Agreement. The United States, Australia, Peru, and Vietnam are seeking to join with the four existing members of the pact: Singapore, Chile, Brunei, and New Zealand. The TPP could become the basis for a Free Trade Area of the Asia-Pacific over the long term. 

The final question for the policy deliberations on trade and security arrangements in East Asia is what form the architecture will take. The industrialized world seems to be evolving into three distinct blocs, North America, Europe, and East Asia, but a trans-Pacific trade and security arrangement that includes countries both of Asia and the Americas also is possible.

Date of Report: April 15, 2010
Number of Pages: 45
Order Number: RL33653
Price: $29.95

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