Publisher’s Note

Some Thoughts in India — Asian Dynamism& the Region’s Responsibility
By Kazumasa Kusaka
In November 2018, the Japan Economic Foundation held ourannual Asia-Pacific Forum of 15 members from the region inNew Delhi. This year’s theme proposed by Research andInformation System for Developing Countries (RIS) of India was“Protecting the Global Trading System and the Role ofMultilateralism”.
India has promoted not only its software industry but also IT,
robotics, and “Make in India”, and under the initiatives of Prime
Minister Narendra Modi its World Bank ranking in “Ease ofDoing Business” improved from 142nd to 77th to attract FDIfrom the rest of the world. India is a fitting location to talk about
free trade and investment and the Fourth Industrial Revolution.
Among the United Nations’ 17 SDGs, “Industry, Innovationand Infrastructure” is the most immediate challenge for India tocreate “Decent Work and Economic Growth”. This will help
build the financial and human resources to aim for other goals
such as “No Poverty”, “Reduced Inequalities”, “Clean Water andSanitation”, “Affordable and Clean Energy” and “ClimateAction”.
During our stay, we observed the infamous PM2.5 air pollutionof New Delhi. One of the causes is the increase in road traffic,
with an annual growth rate of 16% both in passengers and cargo.
I had an opportunity to visit the construction sites of theDedicated Freight Corridor (DFC) between Delhi and Mumbai,
which will connect major cities as well as introduce electric
locomotives. It aims to meet the high rate of growth in freighttransportation to reduce the high dependency on trucks. It also
aims to create India’s largest industrial belt in order to promote
exports and FDI. At the same time, high-speed railway projects
are progressing to tackle the increasing need for traffic, as well as
environmental concerns.
This visit reminded me of the original and fundamental aim ofAPEC and other Asian groupings — to identify the barriers tosustainable growth. In the beginning, the major barriers wereenergy, infrastructure investment and human resource
development. Progressively we moved to trade liberalization andfacilitation. We then began our first Asia-Pacific Forum in 2003
to promote FTAs and the one in 2018 was the 17th.
In this region, the TPP, from which the United States decided towithdraw, will become effective as the TPP11 on Dec. 30, 2018.
Negotiations for an agreement on the RCEP are also at a stage
requiring the most effective political leadership, like being one
step away from the peak of Mount Everest, the most challenging
part of the climb.
In some Western nations, as the expression “everything ishttps://www.jef.or.jp/journal/

globalized except our consent” represents, globalization iscausing a refusal to “consent” from some of its constituents,
prompting a focus on a more nation-based politics.
To deal with these new developments, there is a need forinternational institutions such as the Bretton Woods system toevolve. Consensus-based decision making and rule-making insuch institutions do not function well. We need to restore trustand confidence in these institutions. Some argue for a “consensus
minus X formula” which allows a decision to be taken without
full consensus. When applied to regional FTAs, like the TPP11,
those who agree would proceed to implement the deal and wait
for the remaining negotiating partner(s) to join later. Consensusbased decision making had been effective on the assumption thatpublic consumers are friends of free trade. Should one lastcountry be isolated, the government in question could not afford
to block the consensus. The reasoning behind this is that indemocratic countries opposition parties and the media would
criticize any attempt to do so as an act of anti-international
cooperation in order to defend special interests. International“peer pressure” had thus effectively been used to promote
domestically unpopular policy measures, until recently.
However, one old exception in some countries has been “freetrade”, which has had connotations of imperialist power interestsand sometimes resulted in the negotiator blocking the consensus
being designated a hero. A new exception is in cases where thepublic support their “own country first” even if neither businessnor specific interests favor protectionist measures. How can wecope with this new reality?
Whether one likes it or not, globalization will continue toprogress, and with Industry 4.0 each country will face increasing
income disparities. Inclusive growth, in other words a “betterglobalization”, will be a major goal in pursuing regionalintegration.
Meanwhile, for the growth strategy of this region to succeed, itis essential that we cooperate in promoting mega FTAs, one in
expanding membership of the TPP11, and two in agreeing to theRCEP. Since US leadership is now “hospitalized” for a while, I
think it is our region that must take on the role of the promoter offree trade, and take action for economic integration.

Kazumasa Kusaka is chairman and CEO of the Japan Economic Foundation(JEF), as well as being a professor of public policy at the University of Tokyo. Hepreviously served as special advisor to the prime minister on global warming
after having been vice minister for international affairs at the Ministry ofEconomy, Trade and Industry.
Japan SPOTLIGHT • January / February 20191