October 2000

1. EXECUTIVE SUMMARY

BACKGROUND

With a view to enhancing cooperation with ASEAN in achieving the Vision 2020 starting with the Hanoi Plan of Action (HPA), then Prime Minister Keizo Obuchi of Japan, in December 1998, proposed to establish an Eminent Persons Group from all the ASEAN Member States and Japan. The Group was mandated to formulate a set of concrete recommendations to enhance ASEAN-Japan cooperation and to present it to the Heads of States and Governments of ASEAN Member States and Japan at the ASEAN-Japan Summit Meeting in Singapore in November 2000.

THE PRINCIPLES OF COOPERATION FOR THE NEW ASEAN-JAPAN PARTNERSHIP

The ASEAN Member States and Japan have forged cooperative and constructive relations since the 1970s. Based on natural economic complementarities and geostrategic realities, economic cooperation between them developed further in trade, investment, and development assistance, leading to a higher degree of interdependence in the 1980s.

Recently, both ASEAN and Japan have been affected by the transformation of traditional modes and institutions of governance at various levels and sectors brought about by the globalization phenomenon, fueled by the Information and Communications Technology (IT) revolution and the recent Asian financial crisis. What have surfaced are our common vulnerabilities as well as our inevitable interdependence. ASEAN and Japan have thus been provided a unique opportunity to create a ‘common economic space’ to manage the common vulnerabilities and reap the benefits of globalization.

At the same time, the enlargement of ASEAN unfortunately coincided with the Asian financial crisis highlighted the emergence of a two-tier ASEAN. This was aggravated by the difficulties the old ASEAN members have in contributing to the economic goals sought by the new members. While ASEAN tackles the task of closing the ASEAN divide, it needs the cooperation of external partners to help surmount this challenge. In this context, Japan has demonstrated both its willingness and capacity to cooperate with ASEAN as a reliable partner.

These two challenges require a new partnership in which both sides should claim shared ownership. This new partnership should be based, inter alia, on the following principles:

1. Equal partnership, shared ownership, and mutual respect.

2. Importance of domestic reform by ASEAN Member States to improve governance in furtherance of the goals of the ASEAN Vision 2020 and the HPA, which will promote the new ASEAN-Japan partnership.

3. Importance of the ‘third opening of Japan’, which will promote the new ASEAN-Japan partnership.

4. Closing the ‘ASEAN divide’ as a common objective.

5. A ‘coalition of the willing’, open to the participation of all.

RECOMMENDATIONS

The Group makes 45 concrete recommendations. The implementation of these recommendations will facilitate the realization of the HPA and the Vision 2020, as well as Japan’s contribution to this process, through a more dynamic and deeper ASEAN-Japan cooperation. Such cooperation is in their mutual interest in meeting the challenges of globalization and in securing the future of ASEAN. Of these equally important recommendations, the Group presents the following fifteen as being the most suitable for immediate attention and timely implementation, i.e. the Group recommends that:

1. ASEAN Member States and Japan build on the Chiang Mai Initiative for currency stability.

The Chiang Mai Initiative was an important step for further enhancing regional cooperation among ASEAN Member States, Japan, China and the Republic of Korea (ASEAN+3). Based upon this initiative, other appropriate mechanisms that could strengthen our ability to provide sufficient and timely financial support to ensure financial stability in East Asia should be pursued. In pursuit of this goal, assistance should be provided, as necessary, for the capacity building of some individual ASEAN Member States.

2. Japan and those ASEAN Member States that are able to do so serve as catalysts to help rebuild confidence in other ASEAN Member States through co-investments with the private sector and relevant International Financial Institutions (IFIs) such as the International Financial Corporation (IFC).

Japan and some ASEAN Member States could help other ASEAN Member States by persuading IFIs such as the IFC to facilitate more private investments for industries that are key to sustainable development. The IFC is instrumental in lobbying the private sector to co-invest in the manufacturing sector and in long-term infrastructural and utilities concession projects. Such efforts would be instrumental for promoting investments into the ASEAN Growth Areas.

3. ASEAN and Japan work together for greater East Asian representation in IFIs such as the International Monetary Fund (IMF), the International Bank for Reconstruction and Development (IBRD) and the Asian Development Bank (ADB), so as to reflect the new realities in global and regional economies.

The rapid growth of the East Asian economies is not fully reflected in the decision making structure of the IFIs, such as in their share of voting rights in relation to the size of their economies. Measures to reform the international financial architecture would need to include a review of the roles of IFIs, especially for the enhanced participation of the emerging East Asian economies.

4. ASEAN and Japan vigorously pursue a comprehensive agenda for the new round of the World Trade Organization (WTO), in order to realize the objectives of the ASEAN Vision 2020.

ASEAN and Japan share great interest in promoting further trade liberalization. They could intensify their cooperation to strongly urge other trading partners to move forward towards the early launching of the next round of WTO negotiations. A comprehensive agenda for the new round of negotiations will be in the interest of ASEAN and Japan although it will pose many new challenges. ASEAN and Japan should consult each other as much as possible on all the major issues in the WTO.

5. ASEAN Member States and Japan seriously consider initiatives to promote free trade that are WTO-consistent at the regional, sub-regional and bilateral levels, while at the same time recognizing the primary importance of the WTO negotiations, and the implications for ASEAN integration.

ASEAN Member States are pursuing the ASEAN Free Trade Area (AFTA), and Japan and Singapore have begun negotiations for a bilateral free trade agreement seeking economic partnership for a new era. Other initiatives are possible, but they must be WTO-consistent.

6. ASEAN and Japan give impetus to take Asia Pacific Economic Cooperation (APEC) to the next stage, i.e., towards the creation of an ‘Asia-Pacific OECD’.

The Organization for Economic Co-operation and Development (OECD) is a forum for socio-economic policy coordination as well as a socio-economic information/data gathering and processing think tank with a strong secretariat for its member governments. Today, this function is partly carried out by PECC in the Asia-Pacific region, albeit on the second track. Governments in the Asia-Pacific region could coordinate their socio-economic policies, and ASEAN Member States and Japan can accelerate this process by beginning this exchange amongst themselves.

ASEAN and Japan should cooperate to realize the inclusion of Cambodia, Laos and Myanmar into APEC.

7. ASEAN improve their investment and business environment in order to promote foreign investment and revitalize economic activities, in particular through more vigorous pursuance of AFTA, the ASEAN Investment Area (AIA) and the ASEAN Industrial Cooperation Scheme (AICO).

A deeper economic integration of ASEAN will promote horizontal and vertical division of labor within ASEAN and result in market expansion, which will attract more foreign direct investments from Japan and other countries. Recognizing the importance of foreign direct investment (FDI) for promoting economic growth, ASEAN Member States and Japan could consider pursuing bilateral investment agreements.

8. ASEAN intensify its work to establish common cyber laws, secure-messaging infrastructure and payment gateways in its effort to realize an ‘e-ASEAN’. In doing so, ASEAN should make good use of Japan’s announced programs to bridge the ‘e-divide’.

Prime Minister Mori of Japan has committed $15 billion over 5 years in a comprehensive cooperation package, aimed at bridging the international ‘digital divide’.

9. ASEAN Member States and Japan cooperate and play a leading role, together with other interested countries, in the development of the Greater Mekong Sub-region, recognizing its importance for the development of the CLMV.

In the CLMV, basic infrastructure for transportation, energy, and communications are urgently needed in order to achieve sustainable economic development. In this regard, pilot projects for infrastructure, human resource development and a framework for cross-border cooperation in the East-West corridor should be emphasized. Such cooperation should include efforts to facilitate the participation of the private sector and relevant institutions, such as the ADB, IFC, and JBIC.

10. ASEAN Member States and Japan consult and coordinate more closely on the reform of the UN to reflect the new realities that have emerged in the past 50 years, including the reform of the UN Security Council, to serve as the central actor in global governance.

To these ends, ASEAN Member States should support the permanent membership of Japan in the UN Security Council within the context of comprehensive reform of the UN. ASEAN Member States and Japan should start to formulate and coordinate their policies on this issue.

11. ASEAN Member States and Japan cooperate closely to make the ASEAN Regional Forum (ARF) a more effective institution for security in the region.

ASEAN and Japan should exert all efforts to implement confidence-building measures proposed in the ARF, including the publication of defense white papers with an acceptable level of transparency. Further, the ARF should move more expeditiously to the next stage of preventive diplomacy.

As confidence-building progresses, ASEAN and Japan should cooperate to make the ARF leadership better reflect the wider community and regional footprint, including an increased role for non-ASEAN members. In future, the concept of a non-ASEAN ARF co-chair may be considered as a means of ensuring the ARF’s continuing effectiveness, relevance, and success.

Continuity and institutional memory can enhance the ARF’s capacity as a political-security dialogue mechanism. This can be achieved through the establishment of a permanent facility, with sufficient capacity, under the ASEAN Secretary-General, open to the expertise and participation of all the ARF members.

12. ASEAN establish an ASEAN University System that links the different centers of excellence in ASEAN, and connects to appropriate institutions in Japan, so as to promote social development.

This proposed ASEAN University System should provide courses in the medium of the English language that meet both national and regional needs in human development as well as utilize the Internet and other tools of distance learning. A part of East Asia’s strength has been to invest in the education of its peoples, and this must be re-emphasized within the context of heightened competition that comes with globalization.

13. ASEAN Member States and Japan cooperate in consolidating the rule of law as the basis for judicial systems and for social and human development, through programs for training of judges, attorneys and the police.

Part of the reforms that are required for ASEAN Member States relates to the rule of law. This is not only for commercial activities. It is a vital element to anchor human security through the equal protection and fair treatment of individuals. Japan and some countries have more experience in legal reform and in developing judicial systems with a strong tradition of the rule of law. These experiences should be shared with others, through cooperation programs.

14. ASEAN Member States and Japan expand cooperation on regional and global environmental issues of common concern, to address environmental degradation and work towards sustainable development.

Many environmental issues are transnational in nature. With increased trade and investment between ASEAN and Japan, and among ASEAN Member States, regional cooperation on environmental issues has become of great importance for sustainable development and human security. This is important for global issues such as climate change, and regional issues such as major floods and the haze problem caused by fires.

15. ASEAN and Japan strengthen the existing exchange programs for journalists and editors in both directions, and enhance the educational and youth exchange programs also in both directions.

Currently, the number of exchange programs for journalists and editors is decreasing. This trend must be reversed, with emphasis on increasing the flow from Japan to ASEAN Member States.

At the university level, ASEAN-Japan university networks should be strengthened through the expansion of mutual recognition of academic credits, more student and faculty exchanges, and more collaborative research. Scholarships should be expanded and be made available to those with real needs.

Youth exchange should be also enhanced both in quantity and in quality through better coordination between implementing organizations and associations. Japan Exchange and Teaching (JET) programs to invite English-speaking teachers to Japan have recently been partially extended to ASEAN, and these should be further expanded. Similar programs could be introduced in ASEAN to invite Japanese teachers to ASEAN Member States. Programs for youth student exchange should be further enhanced in both directions.