Friday, September 4, 2015
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India and Pakistan continued trading barbs Saturday as hopes of starting a dialogue to reduce tensions between the two nuclear-armed neighbors faltered.
 
The national security advisers of India and Pakistan were to meet on Sunday and Monday in New Delhi. It appears that meeting is off but neither side is willing to say it out loud.
 
Instead, both are sticking to their own conditions for the meeting.
 
Pakistan’s national security adviser, Sartaj Aziz, said the meeting…

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India, Pakistan Trade Blame as Proposed Talks Falter

Authors: Trevor Kennedy, University of British Columbia, and Maël ‘Alan’ van Beek, Seoul National University

In June, Japanese Prime Minister Abe Shinzo and South Korean President Park Geun-hye put their differences aside just long enough to celebrate the 50th anniversary of normalisation of relations, albeit without meeting in separate ceremonies in Seoul and Tokyo. In doing so the two leaders played nice emphasizing the common interests of their two countries while mollifying historical disputes. Yet as the 70th anniversary of the end of Japan’s colonial occupation of the Korean peninsula approaches on 15 August, can we really expect relations to keep improving? Probably not.

Japanese Prime Minister Shinzo Abe, second from left, is led by a Shinto priest, right, after paying respect for the war dead at Yasukuni Shrine in Tokyo (Photo: AAP)

Abe has been under little domestic pressure to improve bilateral relations. Before his re-election in December 2012, many Japanese were infuriated by a visit by then president Lee Myung-bak to the disputed Dokdo/Takeshima islets. This event closely followed an Olympic soccer game during which a South Korean player displayed a slogan referencing the territorial dispute.

Opinion polls over the past three years show considerable animosity: 52.4 per cent of Japanese respondents had ‘unfavourable’ opinions of South Korea, largely due to the perception that South Koreans berate Japan over history. And 63 per cent of Japanese (and 73 per cent of young Japanese) feel the past is behind them.

Abe’s actions since taking office have exacerbated this situation. While Abe has visited numerous countries to bolster Japan’s standing as part of his global public relations bid, he has decided to forgo South Korea. This is despite the fact that he is even maintaining amicable relations with Russian President Vladimir Putin despite joining G7 efforts to sanction Russia.

Abe’s decision to visit the controversial Yasukuni Shrine in Decmber 2013 was unpopular among Japanese, condemned by China, South Korea and the United States, and even cost a bilateral summit with South Korea. But Abe willingly made these sacrifices since he was elected to end Japan’s economic malaise, not its historical disputes. As long as Japanese voters continued to believe Abe was the best option to reinvigorate the economy, there was little risk he would suffer from the visit.

Abenomics and the Trans-Pacific Partnership (TPP) are perceived to have further diminished the importance of South Korea to Japan. Abenomics policies have led to the precipitous decline of the value of the Japanese yen against the won, improving Japanese industrial competitiveness, to the detriment of South Korean firms. As a result of near parity, South Korea and Japan have become more rivalrous than integrated, competing in the same sectors for the same price point overseas. While South Korea is Japan’s third largest trading partner at 7.8 per cent, following the United States and China, this may change as Japan’s relations improve with TPP members. TPP members will become preferred trading partners, decreasing the number of Japanese supply chains through South Korea. The Abe government tends to follow this line of thinking discussing South Korean relations predominately as a way to enhance to the US–Japan alliance rather than economic potential.

Park too is unlikely to focus on bilateral relations with Japan. Halfway through her term, Park’s public support rate is suffering: differences between electoral promises and actual governance; the tragedy of the Sewol Ferry disaster; allegations of intimidating news media; a bribery scandal causing her prime minister to resign; and criticisms of her handling of the MERS crisis have all combined to hit Park hard.

Park’s decreased popularity has also seen rival factions from within her own Saenuri, South Korea’s ruling party, challenge her publicly. In 2014 Kim Moo-sung was elected chairman of the party defeating Suh Chung-won, a close aide of Park. And in July Park forced the resignation of parliamentary floor leader Yoo Seong-min with whom she was known to have had a public feud. To avoid being a lame duck president, Park must bolster her popularity domestically.

While an improvement of Japan–South Korea disputes might improve her standing, only 5.1 per cent of South Koreans consider this a priority. More important to most South Koreans is improving relations with North Korea, the United States and China. Park has little impetus to take a proactive stance, especially since too soft a posture could draw parallels with her father’s affinity for Japan. To complicate the situation, for South Koreans, relations with Japan cannot be improved unless historical issues are resolved.

While the Japanese government has made a number of official apologies for its wartime actions, statements by officials that seem to contradict such apologies have undermined their credibility. In 2014 changes to Japanese textbooks to present ‘correct views’ of history and territory (that is, the position of the government) stirred controversy, as South Koreans felt Japan was attempting to ‘distort, minimise and omit historical facts’. This reinforced the perception among many South Koreans that Japan is militaristic. Abe’s desire to make education patriotic has only compounded this.

Much of the heat has been directed towards Abe. In the past he has called for revisions of the Kono statement, which apologised to ‘comfort women’ for abuse at the hands of the Japanese imperial military. More recently the Abe government conducted a review of the process by which the Kono Statement was issued, and Abe labelled comfort women victims of ‘human trafficking’ — thereby exonerating the wartime government from responsibility. Abe also has come under criticism for not explicitly apologising for Japan’s wartime actions during the first address of a Japanese leader to a joint session of the US Congress. As a result, 80.5 per cent of South Koreans dislike Abe — only marginally less than than those who dislike Kim Jong-un. Thus, much relies on whether or not Abe apologises for Japan’s past actions on the 70th anniversary.

What, then, should we expect on 15 August? South Koreans will be attentive to how Abe addresses the colonial era. Yet, as the political backlash to Abe’s new security bills — which aim to legalise the limited exercise of collective self-defence — has devastated his ratings, he is unlikely to further antagonise his constituency. With the loss of much of the agricultural vote — due to agricultural reforms and his support of the TPP, and his waning support among moderates, Abe more than ever needs the support of his base. His base happens to be more nationalistic than mainstream society and they would resent any concessions towards South Korea. At the same time, if Abe resorts to ‘personal’ apologies — or worse, disregards historical disputes altogether — this would further deteriorate relations. In light of the various political challenges, serious moves to repair Japan-ROK relations may not be in the offing until there is a change in leadership in both countries.

Trevor Kennedy is a MA Candidate in Asia Pacific Policy Studies at the University of British Columbia. Trevor writes on various policy related issues in Northeast Asia on his blog, Asia Pacific Policy and on Twitter.

Maël ‘Alan’ van Beek is a MA Candidate in International Studies at Seoul National University. Alan co-founded Korea and the World, a podcast that interviews experts on Korean political, economic and societal issues.

 

 

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New leadership needed to fix Japan–ROK relations

Author: Trevor Wilson, ANU

The second general election since Myanmar began its political transition in 2011 will be held on Sunday 8 November 2015. Around 30 million Myanmar voters — at home and abroad — may be eligible to vote in one of the larger worldwide, single-stage voting events. But what the election means for Myanmar’s continued democratic transition remains unknown.

The 2010 election was characterised by widespread vote rigging, and was deemed not to be free and fair. The 2015 election will be held under more transparent and rigorous procedures in the presence of international observers, but it will not necessarily be seen as legitimate as the military continues to exercise effective control over politics.

Like in 2010, in both houses of parliament, 25 per cent of the seats are reserved for military representatives. This is in accordance with the former military regime’s constitution adopted in a flawed referendum in May 2008.

President U Thein Sein, a retired general who led the governing Union Solidarity and Development Party (USDP), has not yet confirmed his intentions in regard to the election. After taking the presidency, Thein Sein had to resign as formal head of the USDP. So it has been generally assumed that he would not seek a second presidential term.

Thein Sein adopted a reformist agenda as president, promoting reconciliation and peace negotiations with all ethnic groups. But his proposed nationwide ceasefire agreement has still not been formally agreed to by all parties.

The opposition National League for Democracy (NLD), led by Daw Aung San Suu Kyi, did not contest the 2010 election. A small faction of the party, styling itself the National Democratic Force, only won a small number of seats. But the NLD did contest by-elections held in April 2012, winning 43 of the 45 contested seats. Aung San Suu Kyi was elected to parliament for the first time, and subsequently accepted an appointment as head of the Parliamentary Committee on Rule of Law and Tranquillity, a position she still holds.

The NLD and Suu Kyi have finally confirmed that they will contest in 2015. But Suu Kyi is not permitted under the 2008 constitution to stand for the presidency because her two sons hold British citizenship.

The NLD had won a clear majority in the 1990 elections, Myanmar’s first under the former military regime. But the regime refused to transfer power. The ensuing military coup led to a campaign of repression against the party. More than one million Burmese NLD supporters fled the country.

A number of other parties representing different ethnic groups, who won a small number of seats in the two previous elections, will also contest some seats. While there are no opinion polls in Myanmar on voting intentions, it is widely speculated that the NLD could form the government after the elections, either on its own or in a coalition.

National politics in Myanmar are in some ways currently characterised by parties and individuals adopting set-piece ideological positions and focusing on their party’s political objectives, without necessarily responding thoughtfully to widespread popular concerns.

This can certainly be said of the more overtly ‘political’ actions in Myanmar, including local-level communal violence and regional insurgencies. Attempts to assert an independent position with or without grassroots support can have wide-ranging impacts. National politics is also marked by the failure of the major parties to respond to common concerns, including land disputes.

Myanmar’s people care very much about this 2015 election. In November 2010, they saw how an election process can be corrupted by ballot stuffing and other abuses. Of course, many people still remember how the 1990 elections were ‘stolen’ and the NLD punished by the military. Some now realise the NLD does not always meet their expectations politically. They are either disenfranchised or plan their own political response, independent of the NLD.

Myanmar has received international best practice election expertise and the quasi-independent Union Election Commission seems to be making more intensive preparations leading up to the 2015 elections, engaging in its most extensive electorate consultations ever.

Party and voter registration has been carried out more thoroughly than in previous elections, including the 2010 elections. Electoral staff, party officials and independent civil society representatives are now better trained. Much greater domestic and international observation of the voting process will ensure better transparency. These factors will contribute to an improved election process.

In the end, the elections’ success will be judged by the legitimacy they engender, which depends on the general acceptability of the outcomes. The elections would enjoy greater legitimacy if they were not held under the unchanged 2008 constitution, which was not the product of a genuine democratic process.

The 2008 constitution would be improved if a compromise could be reached on some of the amendments that have been discussed in the past two years. Military representatives in the parliament recently voted against constitutional amendments that would have reduced the majority vote required for constitutional change and allowed Suu Kyi to contest the presidency.

The election outcomes will likely be confused. It may be some time before new policies are determined, even if the election process itself is peaceful and fair. Hopefully, Myanmar’s overall reform trajectory towards democracy will continue after 2015, whoever holds power.

Myanmar’s post-2015 leaders will inherit considerable challenges. Most important of all is achieving effective rule of law: until significant progress is achieved in embedding this into all aspects of society, sound socioeconomic policies will be hard to accomplish, and it will be impossible to protect individual rights and freedoms. These are the very goals that Myanmar now needs and that its people now aspire to more than ever. It behoves all Myanmar’s friends and neighbours to stand ready to help.

Trevor Wilson is a visiting fellow, Department of Political & Social Change, at the Australian National University.

An earlier version of this article was originally published here by Asia Currents.

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Myanmar’s political destination still unknown

Authors: Gary Clyde Hufbauer and Cathleen Cimino-Isaacs, PIIE

There’s a potential mega-battle brewing over trade rules and the provision of market economy status for China that could reach the World Trade Organization (WTO) in 2016.

Whether particular countries grant China market economy status has important implications for the adjudication of anti-dumping cases. In international trade, dumping occurs when a country exports a product at a price below the normal cost of production or price paid in the exporting country.

China anti-dumping case

When China joined the WTO in 2001, Article 15 of China’s Protocol of Accession to the WTO generally allowed other WTO members to disregard Chinese prices and costs in anti-dumping cases and instead base the calculation of dumping margins using external benchmarks. An exception was made if Chinese producers could ‘clearly show’ that market economy conditions prevailed in the industry. Article 15 essentially authorised ‘nonmarket economy’ methodologies long used by the United States and the European Union in anti-dumping cases against communist countries.

Taking advantage of this provision, authorities in the United States, the European Union, Japan and Canada, among others, almost always use surrogate prices and costs to calculate Chinese dumping margins. Rarely are the authorities satisfied that market economy conditions prevail in Chinese industries.

This comparison with surrogate prices and costs typically leads to much higher dumping margins and thus much higher penalty duties imposed to bring the delivered price in the importing country closer to ‘normal value’. Since China is a leading target of dumping cases worldwide, the non-market economy methodology is a sore point with Chinese officials. A decade ago, China mounted a vigorous diplomatic campaign asking trade partners to accord it market economy status. The campaign succeeded with New Zealand, Singapore and Malaysia in 2004 and Australia in 2005, among others, but it did not persuade the United States, the European Union, Japan, Canada and several others.

All this brings us to the prospect of controversy come December 2016. Article 15(a)(ii) of China’s Protocol states:

The importing WTO Member may use a methodology that is not based on a strict comparison with domestic prices or costs in China if the producers under investigation cannot clearly show that market economy conditions prevail.

But buried in Article 15(d) is the critical sentence: ‘In any event, the provisions of subparagraph (a)(ii) shall expire 15 years after the date of accession’.

Chinese officials strongly argue that this sentence requires all countries to accord China market economy status on 11 December 2016, 15 years after China’s accession, and that WTO members can no longer use surrogate costs and prices in anti-dumping cases.

Some US and EU lawyers read the text differently. While they agree that Article 15(a)(ii) will effectively disappear, they do not agree that the Protocol confines WTO members to a binary choice between market economy (with its strict comparison of export prices with Chinese prices or costs) and non-market economy status (which allows comparison with surrogate prices or costs). They point to the opening language in Article 15(a), which states:

[T]he importing WTO member shall use either Chinese prices or costs for the industry under investigation or a methodology that is not based on a strict comparison with domestic prices or costs in China.

To be sure, under Article 15(d), the whole of Article 15(a) potentially disappears, but only ‘once China has established, under the national law of the importing WTO Member, that it is a market economy, the provisions of subparagraph (a) shall be terminated’.

Come December 2016, the United States and European Union might well argue that China has not established that it is a market economy. They could modify their current surrogate practices and instead use ‘mix-and-match’ approaches — claiming that some Chinese firms or industries operate under market conditions and others do not. For those that do not, they could use surrogate prices or costs.

Whether the United States takes a hard-line mix-and-match approach, rather than grant China market economy status across the board, could well turn on policy considerations rather than legal parsing. Among these considerations will be the general atmosphere of commercial relations with China in 2015 and 2016, including the evolution of the renminbi exchange rate (devaluation would inspire a hard-line approach) and the outcome of the US–China Bilateral Investment Treaty negotiations (success would have the opposite effect).

With that observation from the economic text of realpolitik, we recommend that the United States should adopt a rebuttable presumption of market economy status in post-2016 anti-dumping cases. If a US petitioner can show that the Chinese firm accused of dumping is state-owned or state-controlled, does not publish financial accounts in accordance with international standards, or in other ways ignores commercial considerations in its business dealings, then the US Commerce Department could revert to surrogate prices or costs.

This approach would have two benefits: it would encourage Chinese state-owned and state-controlled firms to publish financial accounts and operate according to market principles, and it would answer fears by some US firms that they are being forced to compete with the Chinese Ministry of Finance.

If something like this mix-and-match approach is adopted, China might well initiate WTO litigation in response to an affirmative anti-dumping decision. But 2018 seems the earliest date for a final decision by the WTO Appellate Body. And even if China prevails in the WTO, the targeted Chinese firms would not receive retroactive refunds for anti-dumping duties collected prior to the ruling. Again, this hard commercial reality would encourage Chinese firms to publish accounts and operate according to market principles.

Answering these questions is of grave importance. The market economy battle, along with another potential battle over currency manipulation, has been spurred by the politically charged belief in the United States that China does not play fair — a legacy of many years of US trade deficits. These disputes could shape future trade rules, disputes and remedies for years to come.

Gary Clyde Hufbauer is a senior fellow and Cathleen Cimino-Isaacs is a research associate at the Peterson Institute for International Economics (PIIE).

This article is based on a previous post published here by the Trade and Investment Policy Watch blog of PIIE.

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Is China a market economy?

New mining laws in Myanmar are expected to come into place after November’s national elections, enticing more foreign investment, but rights groups fear local communities could be imperiled without more solid legal protections.

Analysts say Myanmar’s mining industry is still at the “frontier” stage of development with prospects in precious metals as well as copper, tin and tungsten.

John Hancock, an Australian lawyer and consultant in Yangon, said there is plenty of enthusiasm with…

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Caution Urged as Myanmar Poised to Embrace More Mining

Author: Peter Drysdale, East Asia Forum

The visit, the week before last, of the general secretary of the Vietnamese Communist Party, Nguyen Phu Trong to Washington at the invitation of President Obama marked another important step on the long journey towards rapprochement between Vietnam and the United States. The visit marked the twentieth anniversary of the ‘normalisation’ of diplomatic relations and the removal of some of the embargoes after the end of the Indo-Chinese war nearly twenty years earlier. In all, it’s taken a generation to heal officially the wounds of war and the scars of US defeat at the hands of Ho Chi Minh’s North Vietnamese forces and their triumph over the South.

US President Barack Obama and Vietnamese General Secretary Nguyen Phu Trong shake hands during a meeting in the Oval Office of the White House in Washington, DC, 7 July 2015. (Photo: AAP)

Nguyen’s reception at the White House, wrote Hoang Binh Quan, a member of the central committee of the Communist Party of Vietnam and chairman of the its commission for external relations, in the Washington Post in the lead-up to the visit, symbolised respect for Vietnam’s choice of political regime. By inviting the party general secretary, a position that has no equivalent in the American system of government, Washington at last extended proper respect to Vietnam’s political choices. Vietnam’s political system may not reflect that of the United States in many ways, but Vietnam now sought to move in the same direction as the United States — as a market economy, with protections for foreign investors and the same ambitions for peace and stability in international affairs, Hoang wrote. ‘Strong partners — and good friends — are not necessarily those who are most alike but those who can accept each other as they are and have a frank dialogue about their differences’.

The celebrations in Washington and Hanoi naturally focused on how far the relationship has come and where it might go, not on how long it took to get there.

Moving beyond what President Obama called the two countries’ ‘difficult history’ has taken a long time, contrary to the hype about how remarkable and rapid their reconciliation had been during the visit. Within a decade, the United States was in deep alliance with the former Axis powers, Germany and Japan, after their defeat in the Second World War. Vietnam was different. It tore at America’s heart and profoundly divided its people. Vietnam was bound to remain in the sin bin (or the penalty box), so long as there was no overwhelming strategic imperative for seeking rapprochement. Contrast Australian and US post war relations with Vietnam. Australia too was mired in the Vietnam War, and deeply complicit in its origins. Its conduct and its failure divided the nation. Yet Australia opened diplomatic relations with Hanoi in 1975; quickly lifted embargoes on trade; embraced Vietnam’s joining ASEAN in 1995 and entered into defence cooperation from 1998 — despite becoming proportionally one of the developed world’s largest hosts to Vietnamese refugees from the anti-Hanoi South.

As Murray Hiebert points out this week US-Vietnam economic relations have blossomed since normalisation, with two-way trade topping US$36 billion last year, up 12-fold since 2001 when the two countries signed a bilateral free trade agreementPolitical and security ties between Vietnam and the United States have also come a long way since the two countries normalised relations, Hiebert says. ‘Since then, they have stepped up high-level visits and launched regular political, security, and defence dialogues to tackle outstanding issues. During a visit to Washington in July 2013, Vietnam’s president and his US counterpart laid the groundwork for a comprehensive partnership between the two countries. They agreed on nine areas of cooperation including political and economic relations, security ties, human rights, and cooperation on tackling environmental issues’.

Two main things have thus driven the eventual concession of respect for Vietnam as it is, rather than how it might be refashioned, by the United States.

First, Vietnam came to prosper and thrive despite its effective economic and political isolation from the largest power in the West (until the United States lifted embargoes in 1994, normalised diplomatic relations in 1995, signed the United States–Vietnam trade agreement in December 2001 and Vietnam acceded to the WTO in November 2006). Vietnam, though a one-party state, was more successful in the reformation of the economic, social and political conditions of its citizens from the 1980s than many in America might have presumed, given the nature of its political system. In the early years it was favoured by earnings from oil and gas exports. Over the past three decades a centrally planned economy has largely been supplanted by a market economy — in large part the result of bottom-up pressure for change to which the country’s Communist Party leadership has acquiesced. This prospect would have been remote had Vietnam not diplomatically re-positioned into ASEAN and. consistent with its outward-looking development model, embraced and been embraced by its neighbours in East Asia, including China, Japan, Australia, as well as countries elsewhere  in the world, like Europe. Vietnam became a relatively prosperous lower middle income economy — increasingly integrated into the world economy — that demanded attention in ASEAN and globally, despite its earlier isolation.

Second, there has been steady growth of the political imperative to build a surrogate alliance relationship around both countries’ anxieties over the rise of China, inspired more recently by the US pivot towards Asia.

Now both countries are engaged in the negotiation of the twelve-nation Trans Pacific Partnership (TPP) Agreement that would give Vietnam preferred access over other Asian partners, for example, in US textile markets (not ‘displacing US workers’, as Hoang tellingly noted in his Washington Post piece, but displacing other Asian suppliers, some of which are poorer in per capita GDP terms than Vietnam). In the language of international economics, the dominant element in the deal that appears to be on the table between the United States and Vietnam in the TPP diverts trade; it does not create it. It’s a horse trade of economic for political favours, although relaxation of embargoes on weapons sales awaits tangible progress on human rights in Vietnam.

As David Brown observes in this week’s lead essay, human rights — chiefly political and religious freedoms — have been on the American agenda since Washington and Hanoi resumed direct dialogue about a quarter of a century ago. ‘Though bilateral ties have grown vastly broader, US prodding on civil liberties still piques Vietnam’s one-party regime’.

Brown argues that Americans are unlikely to put aside their criticism of Vietnam on human rights no matter how close US–Vietnam ties may become in other respects. Hanoi can complain with some justification that Washington holds it, among America’s friends, to a uniquely high standard. ‘There’s a subjective element at work here: Vietnam’s intolerance of domestic dissent is a significant impediment to the resolution of America’s Vietnam War trauma. Americans want their former foes and others to be more like America. If, like Germany and Japan, the Vietnamese become exemplary world citizens, the sting of defeat is eased, the spilt blood and treasure somehow justified’.

Yet, Brown concludes, the political model in Vietnam is not the United States or other pluralist democracies, nor China: it’s Singapore, the city state that has effected ‘authoritarian legalism’. Whether that’s a stage along the way in political development, or an end-point, there’s a way to go before Vietnam gets there.

Peter Drysdale is Editor of the East Asia Forum.

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Vietnam and rapprochement with the United States

Author: Seungjoo Lee, Chung-Ang University

Economic integration has steadily increased in East Asia. But the region still suffers from what South Korean President Park Geun-hye calls ‘Asia’s paradox’, the disconnect between economic interdependence and backward political and security cooperation. Any further economic integration will likely reflect political power shifts in the region.

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Between 1990 and 2012, intra-regional trade among the ASEAN+3 nations increased from US$562 billion to US$4,436 billion. This represented 38 per cent of the region’s total trade in 2010, up from 28.6 per cent in 1990. In 2011, the share of trade in intermediate goods in East Asia was 56.9 per cent, while only 28.2 per cent of trade was in final goods.

Economic integration in East Asia is also gradually expanding to include India, Australia and New Zealand. In 1990, intra-regional trade in ASEAN+6 accounted for only 31.3 per cent of East Asian trade. By 2012, it had increased to 41.2 per cent. East Asian countries are more robust than in the past.

Economic integration among East Asian countries goes beyond trade to include investment and production. They are deepening economic integration by creating a virtuous circle of investment, production and trade.

At the same time, it is said that intra-regional trade does not properly reflect trade integration in East Asia. The intra-regional trade index tends to increase as the number of participating countries increases or when a large trading nation without a regional bias in trade is included. But it may be more precise to use alternative indices such as the intra-regional trade intensity or the regional trade introversion index. Intra-regional trade intensity in East Asia has been largely constant — not increasing — for the last three decades. It is still lower than that of the North American Free Trade Agreement and of the European Union.

So how much further can the scope of economic integration expand? The United States is in the middle of negotiating the Trans-Pacific Partnership and China is floating ideas for the Free Trade Area of the Asia-Pacific. This shows that economic integration and regionalism are not just purely economic phenomena. They are also political constructs.

Economic integration in East Asia is not just regional — it has a global context. Intra-regional trade intensity has not increased because the region maintains a triangular trade structure: production occurs within the region but final goods are then exported out of the region. Even after the East Asian economies supposedly decoupled from the Western countries following the global finance crisis, the triangular trade structure has not changed.

What is changing is that East Asian countries are beginning to depend more on China for trade. China has been South Korea’s top trading partner since 2004. South Korean trade with China increased from 22.1 per cent in 2007 to 24.2 per cent in 2011. In the same period, its trade with the US and Japan declined. South Korea’s dependence on China for trade continued to increase even during the global financial crisis.

Asymmetric interdependence — the situation where the less dependent country can use its power to influence outcomes — with China is a reality for many East Asian countries. While the rise of China is obviously an economic opportunity, these countries may encounter significant risks in coming years. In particular, China’s stance toward neighbouring countries has changed from a charm offensive to more aggressive foreign policy.

East Asia has so far been unable to turn its ever-increasing economic interdependence into institutionalised cooperation, giving East Asian regionalism the nickname ‘soft regionalism’. But the rise of China may give more context to East Asia’s current wave of economic integration. The next question is how and why East Asian countries will engage with or hedge against China in economic terms.

Seungjoo Lee is a professor of Political Science and International Relations at Chung-Ang University, Seoul.

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The politics of Asian integration

Author: Raul (Pete) Pedrozo, United States Department of Defense

In a recent East Asia Forum article, Sam Bateman criticised a decision by the US Secretary of Defense Ashton Carter to develop military plans for more assertive freedom of navigation (FON) operations in the South China Sea (SCS). Specifically, Bateman asserts that ‘there are significant legal, operational and political risks involved with these operations’. While there may be risks associated with conducting FON operations in proximity of China’s man-made islands in the SCS, much of what Bateman states in support of his position is misplaced.

US warship SNS Safegurad is anchored at a port on the island of Palawan, western Philippines, 23 June 2015. The Philippines are holding separate naval drills with two of the country's top military allies, the United States and Japan, near the disputed South China Sea. (Photo: AAP)

First, Bateman alleges that the US is only concerned with China’s reclamation work in the SCS, which could give the impression that the US has abandoned its position of neutrality in the sovereignty disputes themselves. But, despite China’s assertive behaviour in the SCS over the past 40 years, starting with the 1974 invasion of the Paracels and culminating with its current reclamation activities encompassing more than 2000 acres (800 hectares), the US has maintained its neutrality regarding the sovereignty disputes. At both the US Pacific Command change of command ceremony and the Shangri-La Dialogue in late May, Carter stressed that ‘there should be an immediate and lasting halt to land reclamation by all claimants’.

Second, Bateman questions the legality of FON operations in the territorial sea, stating that ‘diverting from the normal passage route between points A and B just to demonstrate a right of passage’ does not constitute innocent passage. Bateman cites the provisions from the UN Convention on the Law of the Sea (UNCLOS) that innocent passage should be ‘continuous and expeditious’ and should not involve ‘any threat or use of force against the sovereignty, territorial integrity or political independence of the coastal State’.

There are a number of problems with Bateman’s analysis. To begin, nothing in UNCLOS suggests that a ship engaged in innocent passage must transit in a straight line between point A and B. All ships, including warships, enjoy a right of innocent passage through the territorial sea. Passage is innocent so long as it is not prejudicial to the peace, good order or security of the coastal state. Legally, it shall be considered prejudicial only if a foreign ship engages in any of the 12 prohibited activities listed in Article 19. Merely transiting the territorial sea is not one of these legally enumerated activities, a fact confirmed by the International Court of Justice in the Nicaragua v United States case.

Additionally, UNCLOS allows a coastal state to designate sea lanes and traffic separation schemes (TSS) in its territorial sea for safety of navigation purposes, which foreign ships exercising the right of innocent passage must use. But no such sea lanes or TSSs have been established in the SCS.

Moreover, as Bateman correctly points out, man-made islands constructed on submerged features are not entitled to a 12-nautical mile (nm) territorial sea. Therefore, US ships and aircraft can legally conduct operations within 12 nm of the feature. Furthermore, because the US maintains a position of neutrality over the sovereignty disputes, it does not recognise Chinese sovereignty over any of the SCS features.

Third, Bateman asserts that ‘FON operations are inherently dangerous’. Due to the risks involved, the FON program is administered with great caution. Since its inception in 1979, hundreds of FON assertions have been conducted by US ships and aircraft around the world. Each operation is deliberately planned, legally reviewed and approved at the highest levels of government. With a handful of exceptions, these operations have been conducted peacefully and professionally without interference from the coastal state.

Fourth, Bateman rebukes the US for criticising Chinese vessels for lacking professionalism and failing to follow the international rules for preventing collisions, indicating that that the ‘US Navy has experienced several accidents in recent years as a consequence of its own navigational errors and poor seamanship’. While US naval vessels have been involved in mishaps as a result of poor seamanship, the big difference is that poor seamanship by US officers is generally inadvertent, while poor seamanship and lack of professionalism on the part of Chinese officers has tended to appear deliberate.

Fifth, Bateman indicates that regional nations may not support increased US presence in the SCS, citing a statement by the Vietnamese foreign ministry. But this is at odds with the success of ongoing US engagement in the region. Singapore invited the US to forward deploy four frigates to the small country. Then, the US and Australia signed an agreement that will more than double the number of US troops training in northern Australia.

Similarly, the US and the Philippines signed the Enhanced Defense Cooperation Agreement that will enable US forces to access Philippine bases and facilities, as well as pre-position materiel in the Philippines for military and humanitarian missions. Of greater significance is the recent signing of the US–Vietnam Joint Vision Statement on Defense Relations, which opens new opportunities for enhanced US–Vietnamese defence cooperation.

Finally, Bateman claims that ‘by provoking China in such an aggressive and unnecessary manner, it can only make the current situation worse’. Politics aside, FON operations are a lawful exercise of navigation and overflight rights and freedoms, and other lawful uses of the sea and airspace, available to all nations under international law.

The US will not acquiesce in unilateral acts of other states designed to restrict the rights and freedoms of the international community in navigation and overflight and other related high seas uses.

Captain Pedrozo is former professor of international law at the Naval War College and is now a Deputy General Counsel for the US Department of Defense. He previously served as Staff Judge Advocate, US Pacific Command, and Special Assistant to the Under Secretary of Defense for Policy. The views expressed do not necessarily represent the position of the US Government or the US Department of Defense.

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Don’t go wobbly on freedom of navigation in the South China Sea