Volz, Ulrich

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Yale Journal of International Affairs 176East Asian Economic RegionalismBy Edward J. LincolnBrookings Institution Press (2004). 160 pp. $22.95R E V I E W E D  B Y  U L R I C H  VO L ZUlrich Volz is a Fox International Fellow at the Yale Center for International and Area Studies. He is a graduate student in Economics at the Free University of Berlin, Germany.R E V I E W  E S S A YThe worldwide trend toward economic regionalism, most distinctly embodied in the North American Free Trade Agreement (NAFTA), the European Union’s Single Market, and the European Monetary Union, now seems to have arrived in East Asia, a region traditionally characterized by a lack of regional cooperation. The Asian fi nancial crisis of 1997-98 marked a turning point in East Asian countries’ aĴ itudes toward regionalism, sparking greater political interest in economic cooperation and integration. The crisis revealed the fragility of the region’s prevailing monetary and exchange rate arrangements, and led to the realization that a strengthening of the regional fi nancial architecture was urgently needed. Particularly remarkable is the involvement of China, which is increasingly demonstrating its willingness to work in tandem with its neighbors and to accept responsibility for the region as a whole. Japan and South Korea have also shown a strong interest in fostering regional cooperation. Integration eﬀ orts, however, remain strained by tensions between countries, most notably between China and Japan, both of which claim a leadership role. In his book East Asian Economic Regionalism, Edward J. Lincoln, a senior fel-low in Asian and economic studies at the Council on Foreign Relations, asks why it is that the region has shiĞ ed from a global to a regional outlook and assesses how quickly and to what extent this new regionalism will progress. Ultimately, he aims his analysis at the probable impact of East Asian region-alism on U.S. economic and strategic interests and weighs whether the U.S. government should encourage or discourage East Asian economic integra-tion. He expresses concerns that the United States will lose its economic and political infl uence in the region and that East Asia may driĞ  away from its strong transpacifi c economic ties toward a regional economic identity that excludes the United States.From the start, Lincoln is straightforward about his skeptical view of regional Winter | Spring 2006 177REVIEW ESSAYgroupings in general and East Asian cooperation in particular. He argues that East Asian economic integration, frequently referred to as “narrow economic regionalism,” is not in the interest of East Asia, and threatens to aĴ enuate the region’s trade and investment ties with the United States and Europe. In his view, “East Asian cooperation is undermined from the start by the region’s characteristics. Along almost any dimension, the disparity or diversity of the region is very large relative to that of other areas where economic regionalism has had some success.” He asserts that “the region exhibits none of the historical, cultural, or religious commonalities that characterize Europe or North America….Contrary to the claims of some political leaders in the region, there is no ‘Asian way’ that draws these nations together, no common point of view that is intrinsically diﬀ erent from that of the West.” While it is fair to ask whether the cultural ties between the United States and Mexico are much stronger than those be-tween Malaysia and Indonesia, Lincoln does not oﬀ er a convincing answer for why this should distress the West. On the contrary, if cooperation helps to overcome historical disputes and animosities in East Asia, the United States should welcome it. AĞ er all, European integration did not start as a reaction to centuries of amity within Europe. Lincoln has a stronger point in worrying that East Asia’s drive for greater regional cooperation has its roots in the anti-Western—and particularly anti-American—aĴ itudes that have blossomed in the past decade. Indeed, one of the most prominent advocates of East Asian regionalism has been the former Malaysian Prime Minister Mahathir Mohamad, who is known for his outspoken anti-Western rhetoric and who proposed the creation of an East Asian Economic Caucus as early as 1990. Lincoln is surely correct that the “common sense of irritation, frustration, and disagreement” with the U.S. government and the International Monetary Fund (IMF) aĞ er these institu-tions’ dismal handling of the Asian fi nancial crisis must be taken seriously. Nevertheless, the East Asian nations’ economic interests in maintaining and improving trade and investment relations with the United States and Europe are far too important to let these countries form a closed economic bloc that is hostile to the West. Lincoln’s fears that regional integration would leave U.S. fi rms at a dis-advantage relative to regional competitors, or even exclude them entirely, seem a bit exaggerated given the recent successful aĴ empts by East Asian governments to aĴ ract U.S. direct investment. Concerns that the creation of an Asian monetary fund—a Japanese proposal following the Asian crisis that was vetoed by the United States—could become “a vehicle for Asian Yale Journal of International Affairs 178ULRICH VOLZcountries to avoid or minimize the economic reforms demanded by the IMF” and create a “region that grew more slowly, aĴ racted less foreign capital, and was more prone to economic crises” likewise seems far-fetched.In addition to economic concerns, Lincoln worries about U.S. security inter-ests and reasons that “a narrow form of economic regionalism could have a corrosive eﬀ ect on the American security role in the region.…It is only a small step from the anti-Western rhetoric promoting Asian economic re-gionalism to calls for geĴ ing the United States out of the region altogether.” Unlike Lincoln’s other worries, this scenario might not be unrealistic in the long run. East Asia’s continuing economic rise, combined with decreasing economic dependency on the West, could bring about demands for greater political emancipation, as was the case in Western Europe aĞ er the end of the Cold War in the 1990s.  AĞ er spelling out the potentially detrimental eﬀ ects of East Asian region-alism on U.S. interests, Lincoln soothes the reader by asserting that so far “the negative rhetoric” of East Asian policymakers has not led to institu-tions or policies that have advanced a regional approach at the expense of international organizations such as the IMF, or of the West in general. He also asserts that within the next decade it is unlikely that the East Asian states will take strong policy steps toward regional integration akin to the European Union. Lincoln nevertheless argues that the U.S. government should be vigilant and, to prevent his worst-case scenario, should actively seek to preempt a tighter regional grouping of East Asian countries. Lin-coln recommends that “any U.S. strategy therefore needs to consider how to discourage the region from sliding into a tighter form of regionalism.” But he also asserts that pursuing a strategy of overtly rejecting eﬀ orts to advance East Asian regionalism could embolden anti-American rhetoric in the region. The United States would have to confront allegations of hy-pocrisy since, aĞ er all, it is itself engaged in NAFTA and actively pursuing a Free Trade Area of the Americas.  In light of these concerns, Lincoln proposes a “positive agenda” that both diminishes the drive toward a narrow form of regionalism in East Asia and encourages adoption of a broader form that does not exclude the United States. Such a policy, according to Lincoln, should consist of two elements: strengthening the World Trade Organization (WTO) and the IMF while rein-vigorating the Asia-Pacifi c Economic Cooperation (APEC) forum, a grouping that not only includes East Asian countries and the United States, but also Australia, Canada, Chile, Mexico, New Zealand, Papua New Guinea, Peru, and Russia.Winter | Spring 2006 179REVIEW ESSAY Lincoln certainly has a point in suggesting that reform of the BreĴ on Woods institutions and the WTO could strengthen their role and improve their tar-nished reputation in East Asia. But his proposal for making APEC the main forum for discussing cooperation in East Asia is not very convincing, and even Lincoln admits that APEC is a “somewhat unwieldy organization that will not yield dramatic progress on lowering trade and investment barriers.” Moreover, APEC is a forum that has never been embraced by East Asian countries, and despite recommendations in the book on how to reanimate the organization, it remains unclear how APEC could become the hub for East Asian discussion.Lincoln concludes his book by noting that “[u]nfortunately, neither the WTO nor APEC has much sex appeal in Washington, where regional and bilateral trade deals have captured the most aĴ ention. Nevertheless, the road to suc-cessful East Asian regional development lies in supporting global institutions and the broad, limited, regional approach of APEC.” Unfortunately Lincoln’s proposal will not have much sex appeal in East Asian capitals either, though for a diﬀ erent reason: a strategy for regional cooperation in East Asia that takes U.S. interests as its starting point will only reinforce resentment of the U.S. role. The United States will only be able to strengthen its position in East Asia if it acts as an honest broker. While Lincoln’s policy conclusions can be debated, East Asian Economic Region-alism is a skillfully wriĴ en book that presents a thorough analysis of current developments in East Asia and oﬀ ers a stimulating and controversial per-spective. Lincoln accomplishes his goal of helping the reader to understand what is going on in East Asia, and simultaneously provides an (unintended) introduction to the diﬀ use fears of the United States about losing supremacy in East Asia. East Asian Economic Regionalism is also a worthwhile read for East Asian policymakers who will probably have to live with U.S. skepticism of their regional endeavors for a long time to come. Y

East Asian Economic Regionalism. By Edward J. Lincoln

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