助成

Institute forInternational Policy Studies
・Tokyo・

IIPS International Conference“Enlargement and Future of Europe 2002”
Tokyo, 12-14 November“IMPLICATIONS OF EUROPEAN ENLARGEMENT
ON ASIA ANDTHE UNITED STATES”
by
DR ERIC TEO CHU CHEOW,COUNCIL SECRETARY OF SINGAPORE
INSTITUTE OF INTERNATIONAL AFFAIRS (SIIA) &MANAGING
DIRECTOR OF SAVOIR FAIRE CORPORATECONSULTANTS, SINGAPORE.

INSTITUTE FOR INTERNATIONAL POLICY STUDIES (IIPS) CONFERENCE :“ENLARGEMENT AND FUTURE OF EUROPE 2002”, 12-14 NOVEMBER 2002

“IMPLICATIONS OF EUROPEAN ENLARGEMENT ON ASIA AND
THE UNITED STATES”
by

DR ERIC TEO CHU CHEOW, COUNCIL SECRETARY OF SINGAPORE
INSTITUTE OF INTERNATIONAL AFFAIRS (SIIA) & MANAGINGDIRECTOR OF SAVOIR FAIRE CORPORATE CONSULTANTS, SINGAPORE.

European regionalism, integration and enlargement are now consolidating in an
impressive way. This would certainly have profound effects on world affairs andeconomics, especially for the United States and East Asia (Japan, China, Korea and
ASEAN), the two other pillars in the so-called “world triumvirate” today. But before
discussing the implications of European enlargement on America and Asia, it would be
more appropriate to first look at the context of regionalism under present “globalized”
circumstances. Firstly, this European regionalism, integration and enlargement must be“set” in the context of two parallel global trends, viz neo-liberalism, liberalization andglobalization on one hand, and the rise of regionalism on the other. Secondly, European
regionalism and enlargement could therefore serve as an impetus to the rising East Asian
regionalism, thanks to the “threat” or challenge of globalization, and thus become amodel for East Asian regionalism as well. Lastly, it would be appropriate to see how theEuropean enlargement process would actually affect and change East Asia and theUnited States. The implications of Europe’s consolidating regionalism should have thus
a profound impact on Asia and the United States in the short, mid and long terms.

Globalization as the Driving Force in the World today
The post-Cold War era since the last twelve years has been characterized by thetwin trends of neo-liberalism and liberalization, which began sweeping the world in
the Reagan and Thatcher years and triumphed with the collapse of the Soviet Empire in
the late 1980s and early 1990s. The Reaganite and Thatcherite revolutions brought
sweeping changes to the mentality of the post-World War order, and with the liberationof the Eastern European satellite states and the collapse of the Berlin Wall, this neoliberalism was on the way to an ideological triumph. When the Soviet Empire ultimately
collapsed under the weight of inefficient communism, and when China became
progressively engaged in a new “socialism à la chinoise” experiment, the days ofliberalism’s final triumph were finally hailed and those of communism’s demise weresealed! A recent award-winning television series, “Commanding Heights”, and based ona book of the same name by Daniel Yergin, emphasized that the most importantphenomenon and transition of our post-War modern times was undoubtedly the freemarket revolution, which gripped the world in the 1990s.

Neo-liberalism and liberalization then engaged the world in a frantic race towards
globalization, as four key elements became progressively globalized; but on the other
hand, sadly to say, half the world remains de facto “marginalized” in this same
globalization process. The key elements, which have been progressively globalized forhalf the world that is already actively engaged in this process would include the massive
and rapid circulation of goods and services, capital, ideas and human resources. The IT
revolution has been instrumental (by partnering liberalization) in enhancing globalization.
The United States, Europe (including Russia, Eastern and Central Europe), Japan, East
Asia (including China), Australia-New Zealand and the urban agglomerations of thedeveloping world have been plugged into this globalization process and network, whereas
the rural worlds of Asia, Latin America and Africa remain in the dark shadows ofglobalization.
The massive and rapid circulation of these four elements of globalization is aworld phenomenon by itself. Never has there been such a rapid exchange of theseelements and on such a scale before in the history of humanity. The monumental
exchange of goods and services on such an international scale (for at least half ofhumanity) has been realized with the development of world-wide transport, logistics andIT, as well as the deregulation of commercial changes, thanks to the previous GATT
arrangements and the present WTO. Further liberalization is expected, although key
developing nations are now clamouring for a fairer and more level playing field. The
rapid transfer of capital (in terms of investments and speculative short-term capital) has
clearly its roots in the development of financial liberalism on a world scale, and thanks to
IT, there is now no need for any physical movement of capital across the world. Theinterdependence of stock markets and capital markets also make capital flows more rapid,
fluid and uncontrollable, perhaps to the detriment of developing nations.
On the other hand, the circulation of ideas and information has reached a frantic
extent that we are all now plugged into a world information web or pool; no information
can now be deliberately hidden or denied for long, as media giants feed information by
the seconds across the globe. The rapid flow of information now ensures betteraccountability and transparency, and has the effect of aiding the flow of goods, services
and capital around the world. Lastly, the flow of human resources is probably the last of
the four elements to face a truly globalized perspective, as countries still put up
formidable barriers to the free flow of human capital across the globe. Talents andprofessionals may now crisscross the world without too many problems, especially in thedeveloped world, in search of better value creation, but lower levels of labour and themigration of population masses (and suspected terrorists!) are still strictly monitored,
especially from developing to developed nations. The free flow of human capital will notcome about in a globalized world as long as the globe remains “divided” between the“globalized” and the “marginalized”, especially when the more powerful developed
world would have its final say on eventually opening up its borders to a globalized andunfettered free flow of human capital across the globe.
Regionalism as an “Answer” to Globalization : An Impetus for East Asian Regionalism?

But, as a reaction to globalization and as a result of greater interdependence ofregions across the globe, a new thinking and impetus has been given to the developmentof regionalism in all its forms. Regional interdependence and sovereignty became more
important to rival national dependence and sovereignty, as nation states sought comfort
and “protection” (against globalization and increasing economic and politicaluncertainties) in bigger numbers and by sheer size. Regionalism has developed as a
guiding concept in our modern times in the last years of the 20th and now in the beginningof the 21st century, just as the dismantling of colonial empires and the assertion of nationstatehood dominated the era beginning with the period between the two Wars all the way
till the 1980s. Europe had led the way in regionalism, starting in 1957 with the Steel andCoal Agreements and thus began a novel experience in regional-building, all the way till
the introduction of the euro in January this year, which thus “cemented” in a certain way
the integrated process of European construction. Although the European Union isperhaps the world’s best and most successful integrated regionalism model, other parts of
the world, like in Southeast Asia, South Asia, Africa, Central and Latin America, havealso begun their respective regional push as well.
The European construction experience could thus serve as a model and an
impetus to other regional aspirations, from Southeast Asia to East Asia, and from Latin
America to Africa. But what are the underlying reasons for this impetus towards
regionalism world-wide? There are at least five reasons possible.
Firstly, as it is stated above, the rise of regionalism in the world could probably be
attributed to two trends at present, viz as a reaction to globalization itself and to thegrowing political and economic uncertainties, as countries (especially medium-sized
and smaller ones) seek greater security and manoeuvre space in the comfort of larger
regional entities. The fear of being swept away by globalization (especially for smaller
countries), as they cannot cope with the progressive opening of borders to the four
elements of a globalized world, has become more acute as crises have swept through thedeveloping world in greater frequencies. There is also the feeling that by staying together
as larger entities, they would be able to resist pressure from bigger powers or developed
economies, and may be even able to “cushion” the adverse effects when forced to open
up by the richer and more powerful Western countries. It in fact appears to be a sort ofsurvival instinct for weaker nations!
Developing countries are also becoming more aware that the world would begoing into more political uncertainties and a slower economic growth in the coming years.
There would undoubtedly be more political upheavals, inter-state conflicts, religious
tensions, and ethnic and terrorist violence. The bearish mood has set in, in terms ofinvestments, equity and future domestic growth. The tech and dot.com bubbles burst
have probably spelt the end to unfettered growth, as productivity in the IT revolution
appear to be leveling of, especially in the United States and developed economies.
Agricultural commodity prices remain depressed for most developing country producers,
whereas oil prices may be on the upswing with tensions increasing in the Middle East,
thus affecting future world economic recovery. But key in the hoped-for economic
recovery would now be centred on the continuous stabilization and growth in at threeconfidence levels, viz consumer, corporate and stock market, which are all decreasing.
Unemployment and social woes would increase, especially in the developing economies,
with dire consequences for the already-severe social and digital divides. The world’s
poor would definitely get poorer, as it becomes more urgent to level this divide in thepresent anti-globalization context. Regionalism and regional entities provide a sort of“security blanket” to small and lesser developed economies who would find refuge innumbers and regional affinities against extra-regional bigger powers.
Secondly, in a global economy, regionalism could provide a larger internalmarket and hinterland, although it is also a fallacy to believe that an internal market of
populations having a similarly low level of living across an entire regional entity could betruly an economic force or a common uplift in prosperity; indeed, purchasing power anda wide cross-section of income levels would play the crucial role in determining theusefulness of a larger market and hinterland. In the East Asian context, the total
population is almost 2 billion, or one third of the world’s total population. But more
importantly, the region’s middle class is growing increasingly, not only in South Korea,
Singapore, Malaysia, Thailand and Taiwan, but notably in China, which would provide aboost to consumer spending; in fact China’s middle class, which consumes vast amountsof durable and non-durable goods, can now be estimated at some 150 million, or about
12% of its total population. Hence, the future key to East Asia’s vast market would be
the rise of this consuming class and generation, which would have more discerning
consumer power and a taste for brand names and state-of-the-art products or “gizmos”, arevolution that had been led by the Japanese consumer over the past twenty or more years.
East Asia’s consumer market is therefore of an importance which no one can underestimate, especially the growing Chinese consumer world. In fact, with the rise of China(and together with the more “matured” markets of Japan, South Korea and the NIEs), theEast Asian market would be an ideal testing ground and launching pad for new
innovative products, services and ideas, before conquering the world market. If trade
could be liberalized within the “ASEAN+3” framework, there would be enormous
potential for consumer growth in the coming years.
Thirdly, regionalism also provides the basis for a wider area of application for
across-the-region investment opportunities, especially in seeking integrated
production chain networks across the region, based on economies of scale andindustrial specialization. In order to fructify investments, there is a need today forbetter returns; if cross-border advantages could be found in setting up integrated
industrial and manufacturing chains across the region, through facilitating investments
via joint or common fiscal (and less regulatory) policies, then there is an added advantage
of committing investments on a regional basis. In the East Asian context, FDIs could bepoured into an auto industry, using cheaper labour in the lesser developed Southeast Asia
(for manufacturing of parts), then assembled in the more developed NIEs, tapping into
the logistics and banking facilities of the more developed economies like Singapore orHong Kong, and then powered by high-level research and design in Japan or South Korea.
It is also precisely this “integrated chain of production” opportunity, which China could
offer as a single country, from the cheaper and less developed Western provinces to the
hi-tech industrial bases of Wuhan or Shanghai, that poses as a real threat to its smallerneighbours. On a regional scale, industrial specialization has in fact already taken rootwhen Japanese firms moved certain industrial and manufacturing operations and bases
into Southeast Asia, concurrent with the rise of the yen in the 1970s and 1980s. If thisindustrial exercise could be repeated on a wider regional scale and with regional
blessings of an effective implementation, via the “ASEAN+3” framework, thenregionalism in East Asia would have a real meaning and could even become an impetus
to investments and a more integrated industry as a whole. Furthermore, in the services
sector, much synergy could be found in investing in tourism activities, health care,education facilities and the “creative economy” in order to serve a larger East Asianmarket, especially when the purchasing power of East Asian middle class consumers
would rise further and as restrictions to travel and to consume other “Asian services” arereduced, in the name of “people-to-people” exchanges.
Fourthly, regionalism also appears as a means to preserve culture and cultural
identities in the face of “uniformization” in the world, which has come about thanks toglobalization. Regional entities, whether be it in Europe or in Africa, speak of preserving
indigeneous cultures against the MTV generation or Hollywood propagation or even“wanton consumerism à l’americaine”, although there are doubts if regionalism could
effectively stop this “uniformization”. The newer and younger generations are imbibedwith things associated with Western fads and symbols of consumerism, which regional
entities would find hard to tone down. But perhaps more importantly is the sense ofcultural affinities within regional groups. The feeling of “Africanism”, “Asian-ness”,
European-ness”, or being “Latino” or “Arab”, does muster a sense of security in thepsyche of regionalism, and this psychological sense of pride or “of belonging” could be areal impetus to regionalism. In East Asia, it has been difficult, unlike Europe, to establish
an East Asian identity, as many countries in Southeast Asia do not necessarily have thesame civilizational background and roots as the countries of Northeast Asia. East Asia is
not only more disparate than Europe politically and economically, but also culturally andsocially as well. However, one must also guard against “exclusive-ness” in regional
entities, as it is just too demagogically easy to build regional entities based purely on raceor ethnic belongings. Furthermore, one should also guard against achieving theunfortunate ends of a “clash of civilizations”, by holding on to and privileging
regionalism, purely based on race, ethnicity or religions.
Lastly, there is perhaps also a need for common security and strength inregional entities. A collective voice in foreign and defence policies could enhance a
regional entity’s foreign and security identity in the world. Peer group pressure could
also be useful as a confidence booster to increase the collective strength and bargaining
power of such regional groupings. A common policy on defence and foreign affairs, orin trade negotiations would deeply enhance the entity’s chances of success in interactingwith other major powers or entities. For example, Europe has seen the necessity of
speaking with one voice in trade and monetary negotiations through the European
Commission and European Central Bank respectively, just as Javier Solana represents theEuropean Union’s Common Foreign and Security Policy (CFSP). In East Asia, disparate
voices speak out separately on different issues, as different emphasis is levied on key
issues because of the different histories, backgrounds and social conditions present ineach of the thirteen “ASEAN+3” countries. There is still no “bain commun” (“common
bath”) in outlook for East Asia in terms of international economics, foreign policy anddefence, and collective security is still a remote concept to be properly accepted in East
Asian countries, not to mention the potential arms race in this region.

Would the European Integration Model be Suitable for East Asia?
East Asians have time and again wondered if the European model for integration
would be suitable for East Asia, given its own greater disparity and diversity across theregion. Furthermore, the region may not have totally overcome all its historical andpsychological barriers to really come together as one region. Besides, there are still wide
divergences in political, economic and social structures across East Asia. But thefundamental question remains if East Asia would have the common will to pull and cometogether to build the “East Asian house”, just as the Europeans had decided to build their“common European house” together, which could “stretch from the Atlantic to the Urals”,
to quote former French President General Charles de Gaulle.
Is the European model truly applicable to East Asia in the first place? Fourtheoretical factors should be considered and reflected upon in this regard.
Firstly, European construction and integration began as a process to rebuild acontinent, which had been devastated twice by savage wars in 1914-18 and 1939-45.
East Asia has not had such a devastating war as to warrant a re-building process and reconstruction; neither has East Asia been shaken by such a cataclysm as topsychologically force all its countries to pool all their resources together to avert such acatastrophe in the future. The urgency and impetus to bind together warring nations inEast Asia are still far less important today than for Europe in the aftermath of the Second
World War. This psychological factor is what would continue to distinguish East Asia
from Europe in their respective construction paths and their road to regionalism.
Secondly, European model has been built on a Continental Cartesian approach inits planning and execution. The step-by-step approach from a strong center has reflecteda systematic planning à la française, as French technocrats guided the integration process
in its earlier days; it developed this way from the Coal and Steel Community concept to
the Maastricht Treaty, then introduced the euro and defined the scope of the CFSP. It istherefore a long and never-ending debate if East Asia should follow this European modeof “heavy integration”, involving a centralized bureaucracy and enormous planning tobring the regional entity to fruition. Or should and could East Asia adopt a more flexible
or “looser” approach to integration through mutually over-lapping bilateral frameworks
of cooperation and coordination first, before going into main-stream integration? Insteadof the top-down approach, a more bottom-up mode could perhaps be more suitable for
East Asia, given its greater disparity and diversity. The modus operandi for East Asia
may thus be different from that of Europe in its eventual integration path.

Thirdly, the European Union has systematically centred on economic cooperationand the sectorial approach of integration (like agriculture, coal and steel etc), as its main
pillar of construction from the 1960s onwards. Would it be possible for East Asia tobuild on liberalizing trade instead, as its main pillar of cooperative action in this region,
as economic cooperation has already mushroomed and spread de facto across the region,
thanks to the present environment of outsourcing and pragmatic industrial diversification
across East Asia, beginning with the Japanese and South Koreans southwards and thenwestwards into China? But trade restrictions are still relatively important in East Asia,and further attempts to liberalize trade (especially in the sensitive agricultural sector)
could be the real impetus to spark off East Asian regionalism in a big way, especiallygiven the rising middle class and consumer demand in the region. Hence tradeliberalization could provide the basis and spark of East Asian regionalism, as opposed tothe more economic cooperation and sectorial-based approach undertaken by theEuropeans. Here again, the approach of East Asia may differ from that of Europe!
Lastly, the Europeans have put as the corner-stone of its integration policy a clear
political agenda, as is the condition of entry for all future aspirants to the European Union,
viz democracy and human rights respect. The Western Europeans, who have beenchampioning this cause, have made this democratic enshrinement their premier cause to
defend in constructing the Europe of tomorrow. The latest Commission report on
excluding Turkey from promises of being included in the next waves of enlargement until
it embraces effective political and social reforms proves once again the importance of thispolitical agenda. The political difficulties posed to some countries of far-right coalitions
in government in Austria and then in the Netherlands (which has since collapsed) also
show the sensitivities and delicate questions linked to this political agenda and“condition”. The question we have to ask is whether East Asia needs and would want a
political agenda to build the common “East Asian house” of tomorrow. Or should East
Asians concentrate more on the trade and the purely economic agenda to propel East
Asian regionalism, as it is doubtful if there would be any unanimity, which could befound in using the democratic and human rights issues as the primary condition to bring
East Asians together. The focus of East Asia may therefore diverge from that of Western
Europe, which is today extending the Union eastwards into Eastern and Central Europe aswell in 2004 (ten countries) and 2007 (two more countries), after the end of the Cold War.

Implications of a Successful European Enlargement on East Asia and the United States
Beyond just the theoretical merits and politico-economic impetus of European
regionalism on other regions, like East Asia, the enlargement process in Europe would
definitely have profound implications for both America and Asia.
European enlargement would firstly have some profound effects and impact on
the United States, as the world’s sole superpower or “hyper-power”, in the words of theformer French Foreign Minister Hubert Vedrine. There are at least four possible impact
on the United States.

Firstly, an enlarged Europe of twenty-five would put more Western, but separate
sovereign, voices under its banner. In terms of political clout and influence, Europe
would have a greater commanding voice in the United Nations (but only when theEuropean countries effectively speak in one voice!) in political, security and foreign
policy. As European Union expansion continues eastwards (in two waves of ten and thentwo more “new” countries joining in, in 2004 and 2007 respectively), NATO’s expansion
would also proceed eastwards, now that the contentious issues with Russia have been
resolved at the last NATO Summit in Rome. At least seven new members, comprising
the three Baltic states, Romania, Bulgaria, Slovakia and Slovenia, would be slated to join
NATO following the upcoming Prague Summit this autumn. This should “cement” thevoices of democracy and the advocates of human rights in the world and in the Western
sphere. But a challenge to the United States could come in the form of a European
collectivity versus the USA, as in the recent International Criminal Court (ICC) issue,
when aspiring European Union members were initially asked to strictly toe the European
position in opposing the American pull-out from the ICC. Thanks to the UK and Italy,
this “rule” has been relaxed in favour of Washington. However, profound differences
over the ABM Treaty and the future of nuclear disarmament, as well as over thePalestinian issue, have also surfaced between Europe and America since George Bushbecame President of the United States. Europeans have also stood firm in unanimity
against the Bush Administration over the latter’s decision to withdraw from the Kyoto
Treaty. A bigger enlarged Europe would thus stand as a more formidable counterweight to the United States; the latter may face tougher times ahead in dealing with
Europe. But Washington also has the necessary clout and power to stand up against theunited European front, or even to divide the Europeans up according to its own wishes.
Secondly, in the economic arena, trade disputes and negotiations would also be
tougher in the years ahead as Europe increases its clout and world standing. As it stands,
WTO negotiations and arbitration have already proven arduous between Brussels andWashington, as witnessed by the steel and farm disputes lately. Issues of government
procurement, trademarks and mutual trade sanctions have also plagued US-European
relations lately, and probably even further, as the EU increases to twenty-five in the next
few years, European economic and trade interests would inevitably increase, withpotential clashes with the Americans increasing too. An enlarged European Union would
therefore stand as an economic counterweight as well against Washington, and it would
become a more formidable challenger to the Americans in the WTO and international
financial institutions. The euro, much touted, has not been able to challenge the dollar in
the financial markets, as European growth had not taken off in a big way owing toexisting structural problems on the Old Continent. It is however not so much because of
the euro’s weakness but the dollar’s overpowering strength; however, the euro’s futurewould appear good in the coming years, especially if an “overstretched” United States
could inevitably undermine its dollar.
Thirdly, an enlarged Europe could also challenge the “hard and soft powers” ofthe Americans, although the latter would have a superior head start, given that Europe isstill consolidating, after speaking in different voices and tones for years. The American
military “hard” power is far superior to that of European countries put together and hasthe ability of power projection worldwide (fighting two wars at any one time) andtechnological superiority greater than the Europeans’ own hard. The Gulf War and themilitary campaign in Afghanistan have amply shown the prowess of the American
military and its might cannot thus be under-estimated, as a combined European militaryforce is still in its nascent form, in terms of a Rapid Deployment Force and a Common
Army, drawn from the different European military. This Force has clearly manytechnical flaws and incompatibility to iron out first! It remains to be seen with theimminent strikes on Iraq if Europe could come together militarily in an effective way.
Lastly, in terms of soft power, Europe has probably a better chance to challenge
American soft power “hegemony”, although the smaller countries to be added to theEuropean Union would not really make a profound or fundamental difference to Europe’s
soft power projection! The recent diplomatic spectacle of France holding out against theUnited States in the UN still focuses on an individual European country, but not on theUnion as a whole. The force of European soft power will instead still come fromconsolidating a European cultural soft power of its own, although the future of its successmay be doubtful, as the younger generations of Europe are already imbibed with
American culture and fads today, though there is also a trend in Europe today of goingback to its roots in order to find its common strength. A common European soft power
will thus depend more on how European culture themselves evolves in the coming years,
from the depth and wealth of Europe’s multiple inherent cultures.
It is hence questionable how European enlargement would truly affect the UnitedStates in a big way, except for perhaps more American accommodation and tact inhandling the Europeans when they reach a greater critical mass after enlargement andexpansion towards Eastern and Central Europe. (The recent Irish referendum of 19 Oct
has again shown how difficult it has always been to balance all the national interests ofindividual countries in the Union; ultimately, some of these interests would have to besacrificed during each enlargement, especially for the poorer countries in the Union, who
may loser certain benefits when even poorer countries join in.) The United States isalready a world power, and the sole power today, having strategic interests worldwide,that both its hard and soft power could be mustered easily in order to exact influence andclout everywhere on the international scene. An enlarged Europe could pose not really arising threat but more an economic competitor on the world stage, but only provided that
the Europeans could consolidate their own integration process, which seems to be still
dividing them today; meanwhile the United States is already one big country, which
wields the appropriate means and influence of the day!
Turning to East Asia, an enlarged Europe could also have some impact on theformer’s future and the chances of East Asian regionalism successfully taking off, given
the immense disparity and diversity of Asia. This impact on East Asia’s success could
be felt in at least in four ways. It is however clear that the impact we are assessing
cannot be compared directly with that on the USA, as the latter is one country, whereas
East Asia is still an amorphous region in the making!

Firstly, an enlarged Europe could provide a disparate East Asia with a muchneeded impetus to come together, at least from an economic point of view, as the threatof a “fortress Europe” always exists in the minds of East Asians. An enlarged Europe oftwenty-five or more countries, stretching from the Atlantic to the Urals, would mean that
this Union could be a privileged area for trade amongst themselves. Countries like theNetherlands or Belgium already have a high level of intra-European trade (to the level ofat least 75%), and if the Eastern and Central European countries could reach this levelwithin the next years, there could be sizeable trade diversion possible, though not totally,as there would definitely be also trade creation, as the enlarged Union prospers. As East
Asian trade with these “new” countries are already slowly developing, East Asians would
probably have a choice of either developing better trade exchanges with the EU as awhole or organizing themselves into a larger trade entity in order to foster or better
negotiate enhanced trade relations with the EU. The end result of this enlarged EU could
therefore be an impetus for East Asians to rally around its own regional entity, so as to be
on a better footing vis-à-vis the enlarged Europe.
Secondly, the European Monetary Union and the introduction of the euro havealso had an impact on East Asia, especially when it went through the trauma of the Asian
Crisis in 1997-98. East Asians under the “ASEAN+3” framework have already launched
the Chieng-Mai Initiative, as a first timid step towards monetary regionalism. A web ofcurrency swap agreements and peer group surveillance have marked this landmark
initiative, and the yen-yuan swap agreement, which was signed earlier this year should bea monumental step forward towards some concrete form of East Asian monetary
cooperation and regionalism, which East Asian could definitely learn from the successful
European experience in constituting their euro. Furthermore, at the latest Copenhagen
Asia-Europe Meeting, Asian governments have pledged to bolster their reserves of euros,
issue more euro-dominated debt and use the euro more in trade settlement. Withmonetary stabilization, East Asians should now expect increasing FDIs and capital flows
across East Asia, but financial exigencies and rigueur should be applied in East Asia, andshould be a far cry from the “wild days” of financial liberalization mismanagement in theearlier half of 1990s. More investments across Asia should funnel growth andemployment for not only the manufacturing industry and services, but also for
agricultural production, agro-based industries and tourism, which would then anchor East
Asian growth in a better balance between exports and domestic market growth. The
Europeans’ euro could perhaps one day inspire East Asia to consolidate an Asiancurrency around the yen and the yuan!
Thirdly, its is also imperative for us to ponder if East Asia could perhaps learn
from the European experience of mustering a common will to build a “common house”.
Europeans learnt from the lessons of war to build a more stable structure for tomorrow;
East Asians would therefore also have to overcome history and the past to build their“common Asian house” together. Just as France and Germany had buried the hatchet tobuild Europe, it is hoped on this 30th anniversary of the normalization of Sino-Japaneserelations this year that both Tokyo and Beijing could overcome their past and lead tobuild a new Asia together. Japanese and Chinese leadership would be vital to build Asia,
just as the rapprochement of de Gaulle and Adenauer, and through the inspirations ofJean Monnet and Maurice Schumann, really “stabilized” the Old Continent and built
Europe through peace and economic progress. For Japan, anchoring China within the
Asian fold would be vital at a time when China’s phenomenal rise is threatening Japan’s
economic, political and security position in Northeast and the whole of Asia. Turning
China into an intrinsic opportunity for Japan would therefore be its foremost challenge
and task, and the noblest way out could be to use “East Asian regionalism” to embrace
the Chinese dragon, like what the European experience had amply shown between Franceand Germany! A Sino-Japanese common leadership in East Asia is therefore crucial.
Lastly, European enlargement could really serve as an inspiration to East Asian
regionalism in terms of “meshing together” all the fundamental issues of sovereignty andnational differences when there is a larger goal and stake ahead for all. The path towards
European integration has been littered with a myriad of problems and obstacles since1957, and many still remain unresolved, especially linked to national sovereignty,
cultural differences (which nevertheless also exist in a more homogeneous European
entity, as compared to East Asia!) and nationalistic feelings. Economic coordination andcooperation would be dealt a blow, though severe, if and when the “stability abd growthpact” collapses and be replaced hopefully by another mechanism to ensure the stability ofthe euro in the coming months. European enlargement gets tougher each round and theEurope of Twenty-Five would be a real challenge to the Union, but as long as the will tostay together could overcome nationalistic feelings, the Union would pull through. It
depends largely on the political leaders and the mainstream of society, who must take thelead in seeing the ultimate goal clearly and pushing the process ahead despite hard andtrying times on the road to integration. East Asia, being so disparate and diverse in allareas, has still to set its ultimate goals clearly and must thereafter muster thedetermination and political will to work towards it.
Political leadership andpsychological resolve are still lacking in East Asia, although the economic, monetary andsocial imperatives for such a regionalism in East Asia appear much clearer.

Conclusion
An enlarged Europe will definitely have an impact on both the United States andEast Asia, although an enlarged Europe’s implications for East Asia would be far greaterthan for Washington, given the latter’s size and current clout. Regionalism is on the
upswing, probably as a reaction to globalization today, but it is still unclear if this trend
could effectively catch on in East Asia, as it assesses the success, obstacles, problems or
failure of European regionalism, integration and enlargement in the next crucial years.
But the heart of the matter still lies in the ability or not for East Asia to muster enoughpolitical will, leadership and common purpose to do the “unthinkable”, viz create a“common East Asian house” for tomorrow, which could eventually become a real
“hyper-power” on the world stage that can compete and rival both the United States ofAmerica (and its enlarged Free Trade Area of the Americas or FTAA) and an “enlarged
Europe towards its East” in the coming years!