Washington's Concern For the Asian Union

Washington is wary of an initiative for East Asia's economic integration. Increasing economic integration in the East Asia region seems to be the next engine of world economic growth. Losing the initiative would lessen the influence of the U.S. on this region.

See the relevant excerpt:

Taku Iwaki / Yomiuri Shimbun Staff Writer
Yomiuri Shimbun, Nov. 9, 2006

..... The United States reportedly wants to give a boost to the idea by having the APEC members agree to enter into a joint study on an FTAAP, looking into hurdles that will have to be surmounted for the realization of an all-inclusive free trade agreement as well as the merits of such an accord for about one year.

.....In East Asia, China has been strengthening its economic influence by concluding free trade agreements with ASEAN.

Japan, for its part, also has proposed its own initiatives for concluding an East Asian Economic Partnership Agreement and setting up an East Asian version of the Organization for Economic Cooperation and Development. Multilateral talks on the initiatives have begun, involving 16 countries--the 10 ASEAN member states, Japan, China and South Korea as well as Australia, India and New Zealand. The APEC region and East Asia have the world's leading high-growth emerging economies such as China, India and Russia.

From the U.S. perspective, it is the most realistic to make the best use of APEC to keep itself part of Asian economic integration. A Japanese government source said Washington is apparently trying to use APEC as leverage to open up the Asian market. .....However, China, which has been increasing its economic sway over ASEAN, has been reacting strongly against U.S. involvement. In 2004, China proposed an East Asia Free Trade Area plan, including ASEAN, Japan, China and South Korea. Against this backdrop, Beijing been insisting that trade liberalization in the ASEAN plus Three zone--which includes Japan, China and South Korea--should precede the conclusion of an APEC-wide free trade accord.


According to the above article, the APEC region and East Asia have the world's leading emerging economies such as China, India and Russia.

To sum up, the aims of the U.S. are thought to be:

(1) The U.S. wants to make the best use of APEC to keep itself part of Asian economic integration.

(2) The U.S. wants to try to use APEC as leverage to open up the Asian high-growth emerging market.

The U.S. economy will go into stagnation in the long run because of the increase in the aging people in the U.S., as well as in many other developed countries like Japan. Although the number of incoming foreign people is now ingreasing in the U.S., it is uncertain for them to be the main engine of this country's economic growth. In theory, increasing population would lead to high economic growth. However it is only in the short run. In the long run, as the Solow-Swan model says, an increase in people does not lead to persistent high growth but technological progress does. It is uncertain whether they contribute to the advance of production technology and the accumulation of high-tech knowledge in the U.S.

If most immigrants are from low-income countries like Mexico and other South American countries, they would be less educated and less skilled, and thus it would cost very much for the U.S. local or federal government to provide them with fundamental educations, medical care, unemployment insurance and any other social services. They are generally thought to earn so less that they can't pay taxes. Therefore the presence of them may be the big fiscal burden to the U.S. economy.

From this perspective, the Washington's aim is obvious: the U.S. joins the growing Asia market to enhance its export to it. It sells more goods and services to the region and increases the demand for the products by the U.S. and internal employment. By doing so, the U.S. can keep its economic growth so sustainable as to finance the "civil minimum" of the social security for low-income immigrans and elder people.

So far the U.S. economy has been so large that it has been less related to the rest of the world. However Washington begins to feel seriously the necessity of joining the booming market in the world, facing its expected economic stagnation. Washington's concern for the international integration in the East Asia region stands for the awareness that "we can't live alone in a globalized world any longer" . In this regard, the U.S. is not the super-largest country any more in the world. This case shows that Washington comes to realize it.