COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(94) 314 final 
Brussels, 13.07.1994 
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
TOWARDS A NEW 
ASIA STRATEGY 
INDEX 
Executive Summary , 1 
I Overall Objectives 3 
II Existing EU Policy Instruments in its Relations with Asia 4 
III The European Union's New Political Approach towards Asia 7 
IV The EU's New Trade & Co-operation Strategy towards Asia 1.13 
V Conclusions 22 
Annex I Asian Countries: Basic Economic Statistics 25 
Annex II Trade Flows in Asia 26 
Annex III The EU and Asia: Agreements, Trade and Aid 30 
Executive Summary 
The rise of Asia is dramatically changing the world balance of econo­
mic power. By the year 2000, the World Bank estimates that half the 
growth in the global economy will come from East and Southeast 
Asia alone. This growth will ensure that by the year 2000 one billion 
Asians will have significant consumer spending power and of these, 400 
million will have average disposable incomes as high, if not higher, than 
their European or US contemporaries. 
The European Union needs therefore to accord Asia a higher priority 
than is at present the case. 
The Union needs as a matter of urgency to strengthen its economic 
presence in Asia in order to maintain its leading role in the world economy. 
The establishment of a strong, co-ordinated presence in the different 
regions of Asia will allow Europe at the beginning of the XXIst century to 
ensure that its interests are taken fully into account there. 
Asia's growing economic weight is inevitably generating increasing 
pressures for a greater role in world affairs. At the same time the ending of 
the cold war has created a regional environment of unparalleled political 
fluidity. Consequently the European Union should seek to develop its 
political dialogue with Asia and should look for ways to associate Asia 
more and more in the management of international affairs, working towards 
a partnership of equals capable of playing a constructive and stabilising role 
in the world. 
In order to seize these new opportunities the Union should seek to make 
a positive contribution to regional security dialogues and to follow closely 
developments in particular in the area of arms control and non-proliferation, 
regional disputes (Korea, Spratly, Kashmir) and the security of sea lanes. 
Matters relating to good governance, including human rights, should also 
play an important role in the Union's relations with Asian countries. 
The success of Europe in taking advantage of the business opportunities 
in Asia largely depends upon decisions taken or not taken by the private 
sector. The Union's role is to pursue market-opening for both goods and 
services and to overcome obstacles to European trade and investment by 
encouraging a favourable regulatory environment for business in Asia. 
Active participation by European companies on Asian markets it should be 
noted can contribute to providing qualified jobs for European workers. 
To achieve its aims, the Union needs to adopt more pro-active strategies: 
emphasising fuller, and increasingly targeted use of economic co-operation 
to promote European trade and investment. This can largely be achieved 
within present financial resources. 
Reforms of previously centrally managed economies, such as China, 
India or Vietnam, are an extremely important aspect of the momentous 
changes sweeping across Asia. European participation in these changes 
both at the institutional and at the private sector level, will contribute to 
reinforce mutual understanding and economic links. 
The Union needs to conduct a co-ordinated programme of public 
relations in order to raise its profile in Asia. 
By the year 2000, South Asia will still contain the single largest concen­
tration of the world's poorest people, so development cooperation will 
remain as an instrument to contribute to the Asian governments' own 
efforts at poverty alleviation. Enhanced co-ordination between the Union 
and its Member States is required in order to achieve critical mass and the 
desired impact. 
Ï. Overall Objectives 
Asia defined. The term "Asia" is an over-simplification : Asia is not a single 
region. The 26 countries of Asia discussed in the present Communication have 
different cultural traditions and different social, economic and political profiles, 
even if industrialisation is making some of these differences less marked than in the 
past.1 
The main thrust of the present and future policy in Asia is related to economic matters. 
However, this major component of the Union policy has to be presented in the 
framework of the political and security balance of power in the region. 
Overall Objectives 
• To strengthen the Union's economic presence in Asia in order to maintain the 
Union's leading role in the world economy. The establishment of an important presence 
in Asia will allow Europe at the beginning of the XXIst century to ensure that its 
interests are taken fully into account in this key region. Given the pace of growth in 
Asia, active participation by European companies can also contribute to providing 
qualified jobs for European workers. 
• To contribute to stability in Asia by promoting international co-operation and 
understanding; the Union must to this end widen and deepen its political and economic 
relations with the countries in Asia. 
• To promote the economic development of the less prosperous countries and regions 
in Asia. Given that Asia for the foreseeable future will continue to contain the world's 
largest concentration of poor people, the Union and its Member States will need to 
continue to contribute to poverty alleviation and sustainable growth. 
• To contribute to the development and consolidatione of democracy and the rule of 
law, and respect for human rights and fundamental freedoms in Asia. 
Priorities 
If the EU is to achieve these objectives, this will require a considerable effort to re­
orient existing policies and to move into new domains. The magnitude of this effort calls 
for a more efficient use of all available resources. Not least, this implies more co­
ordination within the Union. 
^he 26 countries covered in this Communication are grouped according to 3 
geographic regions: The 8 countries and economies of East Asia (China, Japan, North 
and South Korea, Mongolia, Taiwan, Hong Kong, Macao); the 10 countries of South­
east Asia (Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Cambo­
dia, Laos, Vietnam and Burma); and the 8 countries of South Asia (India, Pakistan, 
Bangladesh, Sri Lanka, Nepal, Bhutan, Maldives and Afghanistan). Relations with the 5 
Central Asian republics are currently dealt with in the context of the CIS and are 
therefore not included here. 
This also calls for a set of clear policy priorities across Asia which can be followed up 
in a manner best suited to the individual circumstances of each country and region: 
• To continue to strengthen the Union's bilateral relations with individual countries and 
regions in Asia. 
• To raise the profile of Europe in Asia. 
• To support efforts by Asian countries to cooperate at the regional and subregional 
level such as the ASEAN Regional Forum with a view to enhancing peace and security 
in the region and generally to strengthen the Union's relations with regional groups such 
as ASEAN or SAARC. 
• To associate Asian countries in the management of international affairs and in 
particular to encourage them to play a more active role in multilateral actions with a 
view to maintaining international peace and security. To strengthen links with Asian 
countries in multilateral fora, and further encourage Asian participation in multilateral 
organisations. 
• To pursue all actions necessary to ensure open markets and a non-discriminatory 
business environment conducive to an expansion of Euro-Asian trade and investments. 
• To integrate into the open, market-based world trading system those Asian countries 
which are moving from state controls to market-oriented economies. 
• To contribute to sustainable development and to poverty alleviation in the least 
prosperous countries of Asia. 
II. The EU's Existing Policy Instruments in its Relations with Asia 
In proposing new strategies for Asia, the European Union does not start from a 
tabula rasa: the Union has already gained considerable experience in Asia: 
Bilateral Relations 
Traditionally the EU conducts its bilateral co-operation with many countries and 
regions in Asia, as elsewhere, in the framework of Trade and Co-operation 
Agreements (see Annex III, Table 1). 
The EU also has a structured political dialogue with most partners of the Asia 
region. 
On a bilateral level, it is the case with Japan (on the basis of an EU-Japan 
Joint Declaration), China (recent exchange of letters between this country and 
the EU), India (on the basis of the joint political declaration of last December), 
Pakistan. With Sri Lanka, there has been an agreement of principle to initiate the 
dialogue, although it has not yet taken place. South Korea has requested a 
formalised arrangement. 
At the regional level, the political dialogue takes place with ASEAN (there is 
no bilateral dialogue with individual members of ASEAN). There is provision 
for an annual EU-ASEAN meeting at the ministerial or senior officials level, and 
there is another ministerial level meeting every year in the framework of the 
ASEAN Post Ministerial Conference (PMC) where the EU is one of the dialogue 
partners, the others being the US, Canada, Australia, New Zealand, South Korea 
and Japan. 
At an even broader level, the EU is taking part in the only collective regional 
security dialogue, the ASEAN Regional Forum (see page 9), which includes 
most Asian countries and will meet annually starting this year. 
The political dialogue has mainly taken place at the ministerial or political 
director level, either in a Troika format or with the Presidency and the 
Commission. 
Fifteen years ago the European Commission's only Delegation in Asia was in 
Tokyo. Today there are 10 delegations in Asia (see Annex III, Table 1 for list). 
Multilateral Co-operation 
The Union is engaged in a wide-ranging dialogue with Asia within the UN-
system on subjects of common interest relating to international peace and 
security. The Union has in recent years greatly expanded its economic co­
operation with Asian countries. This has not only happened in the context of the 
GATT where the role of Asian countries has increased considerably 
commensurate with their growing importance in world trade, but also in UN fora 
such as UNCED or CSD and in the OECD with Japan (and shortly Korea). 
Commercial policy 
The mainstay of the Union's Commercial policy, both in general and towards the 
countries of Asia, has always been an active commitment to trade liberalisation 
within the multilateral system with respect for all of the rules and commitments 
that this entails. Increased market access for the Union's exporters has been 
successfully pursued via the Uruguay Round and other actions at the multilateral 
level. The Union has also sought to improve market access for European 
business through its bilateral relations. 
Trade promotion on a European level from Europe to Asian markets is 
undertaken, to various degrees, across the region. However, the main trade (and 
investment) promotion activities from Europe to Asia are made by the EU 
Member States acting individually. 
The Union has at its disposal a number of trade policy instruments: anti­
dumping measures and safeguard measures. These are in conformity with the 
Union's multilateral obligations and commitments which limit their use accord­
ingly. With respect to textiles all existing restrictions under the MFA will be 
phased out over ten years as agreed in the Uruguay Round. 
Development aid 
Between 1976 and 1991, the European Union disbursed aid worth more than 32 
billion ECU to Asia. This makes the Union the second largest donor to Asia, 
after Japan but with three times more than the USA. Of the total amount 
disbursed by the Union, about 11% came from the budget line for Asia and Latin 
American countries administered by the Commission (see Annex III, Table 3). 
Only a small portion of this was allocated to economic co-operation, the 
remainder going mainly to rural development projects and food aid. However 
effective this assistance may have been in the past, the need was felt to re-assess 
its effectiveness with a view to adapting the approach to the changed conditions 
in much of Asia. 
An important start was made in the Developing Countries of Asia and latin-
America Regulation of 1992. The Regulation foresees two main lines of co­
operation: (i) development aid for the poorest countries and population groups 
and (ii) economic co-operation with countries or regions with high growth 
potential. Environmental issues have to be taken into account in both forms of 
co-operation. Economic co-operation, and this was the innovation in the 
regulation, is aimed at improving the business and regulatory environment in 
partner countries in order to stimulate two way trade and investments with the 
direct participation of the private sector to the benefit both of the Union and the 
partner country. 
In 1991, the EC Council and its Member States adopted a resolution on 
human rights, democracy and development. On this basis, the EU gives high 
priority to specific agreed actions aimed at consolidating democracy and 
promoting human rights in some Asian countries. This kind of activity is 
increasingly diversified covering fields such as the support of elections, NGOs, 
free media, vulnerable groups, information on, and sensitivity to, human rights. 
In 1993, despite the feet that for many years Asia has had many high growth developing 
countries, only 12% of the EU aid for Asia was committed to economic co-operation. The 
remainder was used for activities broadly intended to alleviate poverty (the main commitments 
went to South Asia. In both China and India the EU's largest activity undertaken in the 1980s 
was a dairy development project financed mainly out of the food aid budget. 
Co-operation in specific sectors. Various forms of technical assistance and co­
operation are financed from special budget lines for example for energy, the 
environment, tropical forests, science and technology, AIDS prevention and 
narcotics control. 
NGOs. Widespread support for Non-Governmental Organisations is available, 
including certain country-specific NGO funds (for example for Cambodia or 
Vietnam). 
Humanitarian aid, refugee and emergency assistance are important contri­
butions to the alleviation of suffering in Asia. 
GSP. The Union is well aware of the importance to developing countries of 
access to its market. To this end, preferential market access has been unilaterally 
offered to Asian developing countries for many years under the EU's 
Generalised System of Preferences scheme. Indeed, the Asian countries are the 
main beneficiaries of the scheme, accounting for as much as 72% of imports by 
the Union under the scheme in 1992. On the 1 June 1994, the Commission 
adopted its Communication to the Council and the European Parliament relating 
to the revision and the updating of the principles to be followed in the 
elaboration of the new scheme to be applied for the period 1995 to 2004. The 
Commission will shortly table its proposals for the detailed operational scheme, 
more founded than in the past on the concept of development, which will be 
implemented on 1 January 1995. 
Stabex was extended to Bangladesh and Nepal in 1987 under a five year scheme 
and to Burma in 1988. These are the only countries in Asia to have benefited 
from Stabex. 
Investment and financial facilities 
EIB. In addition to its contributions to balanced development within the Union, 
the European Investment Bank also finances investment projects in non-member 
countries. Since 1992, the EIB has extended its lending operations to the Asia 
and Latin America regions on an experimental basis. The scheme is open to 
countries there which have a co-operation agreement with the Union. An 
allocation of 250 million ECUs per year over three years is available for these 
countries. During the first year of operation, loans worth 100 million ECU were 
made to projects in Asia. 
ECIP. The European Community Investment Partners facility promotes joint 
ventures in Asian, Latin American and Mediterranean countries between local 
and European operators. Between 1988 and end 1993, 292 projects for a total 
ECIP financing of+/- 30 million ECU have been approved for Asia. 
III. The European Union's New Political Approach towards Asia 
1. The Justification for Closer Political Relations 
Introduction 
The European Union is entrusted with the task of developing a common foreign 
and security policy to enable it to protect its interests and values as well as 
playing a constructive role in world politics. 
The increase of the relative weight of Asia in the world economy will 
considerably reinforce the political weight of this region on the international 
political scene. 
To keep Europe in its major role on the world stage it is imperative to take 
account of the emergence of these new Asian powers. 
The maintenance of peace and stability in Asia is an important factor not only 
for the protection of the Union's interests in this region, including economic 
ones, but also for the respect of international obligations and agreements on 
which the Union itself depends for its security, e.g. regarding non-proliferation. 
It is therefore essential that the Union develops the capacity to play its proper 
role in the region. 
1.1 Security Arrangements in Asia 
Political and security relations between Asia and the major powers are 
undergoing a gradual but profound shift under the combined influence of rapidly 
spreading economic growth and the end of the Cold War. 
From a security viewpoint, the US remains the key player in the region and 
the current situation is characterised by a web of bilateral security arrangements 
between the United States and a number of Asian countries. At the present 
moment, no single Asian country or outside power appears to be in a position to 
take over the role of the US. 
The US is in the process of developing a more pragmatic relationship with 
Asia. Whereas in the Cold War the US was prepared to subordinate its economic 
interests to the goal of containment, it is now focusing more and more on the 
economics of the relationship. 
A further sign of such a shift in US policy towards Asia is the recent decision 
to extend (with a few exceptions) the MFN-treatment of Chinese exports into the 
US. The US thus delinked trade and human rights. This shift may also be 
regarded as a move towards a more long-term strategy aimed at influencing 
developments in China by further integrating China into world trade and 
economic relations. 
Japan enjoys a privileged security relationship with the USA. The Japanese 
constitution renounces Japan's right to declare war and proscribes the use of 
Japanese forces outside Japan. Participation in certain international 
peacekeeping operations has, however, been possible. 
In the wake of die Soviet collapse, Russia has tended to turn inwards and 
refrain from an active role, but remains a country to be reckoned with, notably 
with regard to developments in North Korea. 
Pakistan, through its involvement in Afghanistan, and also China and India, 
are playing a significant role in former Soviet Central Asia, a key area for the 
stability and future development of Russia. 
In the aftermath of World War II, Europe's former Asian colonies gained their 
independence leading to the almost complete withdrawal of European forces 
from the region. Hong Kong and Macau will revert to China in 1997 and 1999, 
respectively. As a result, the European influence on developments in Asia has for 
many years been exerted mainly through the medium of trade and investment, as 
well as development co-operation and cultural exchanges. It is to be noted, 
however, that some Member States still have wider interests in the region and 
maintain relationships that include a security component (e.g. the Five Power 
Defence Arrangement which links the UK with Malaysia and Singapore). 
1.2 Political and Security Co-operation between Asian Countries 
The reduction of tensions in the world has allowed the Asian countries to take 
the first modest step in the direction of developing an Asian identity and 
cultivating Asian approaches to Asian problems starting at the subregional level. 
The change in the "rapport de force" with non-Asian powers is translating into 
political confidence, notably and vocally among the countries of South East 
Asia, which no longer hesitate to question our moral values and our social 
systems. 
Economie growth and imitation effects are having a dampening effect on 
intra-regional tensions: there is a shared perception in Asia that growth leads to 
prosperity, which in turn generates stability and security. But economic growth 
also makes it possible to expand military budgets: a number of countries, notably 
in South East Asia, have been active in developing their capabilities, especially 
in the naval field, and in spite of the soothing effects of economic growth, there 
remain a number of potentially serious regional flashpoints (Spratlys, Kashmir). 
The first steps towards a regional security forum are taking place under the 
auspices of ASEAN, but at the same time there are signs that Asia is moving 
towards a classical balance of powers diplomacy. 
The Union has a long-standing relationship with ASEAN. There is a formal 
EU-ASEAN agreement (1980). The EU participates in the annual ASEAN Post 
Ministerial Conference, which will now extend to the newly created regional 
security forum, the ARF (ASEAN Regional Forum). The ARF will be meeting 
for the first time this year. It encompasses most of the countries of Asia except 
North Korea and includes North America, the EU and Russia. In conformity with 
the principle of ASEAN itself, the discussions are to be consensus oriented and 
the participants clearly wish to avoid conflictual debate. 
Although ARF may over time develop into the overall security forum for the 
Asian region, it is likely that subregional groupings may emerge to deal with 
specific problems, such as those of North East Asia. These subregional 
groupings may or may not operate in the framework of the ARF. The European 
experience gained from establishing and operating the CSCE may be of a certain 
relevance in this connection. 
1.3 Asia in Search of a Role in World Politics 
With the increasing strength of Asia and individual Asian countries it is however 
inevitable that this region will wish to play a more prominent role on the world 
stage. Economic importance rather than military force will serve as a platform 
for its influence. 
In connection with the debate on the restructuring of the United Nations 
Security Council it is already evident that Asia wants a stronger and also a 
permanent representation. It is well known that certain of the more important 
Asian countries feel entitled to a permanent seat in the Council. Considering the 
special responsibilities associated with being a permanent member of the 
Council this is a clear sign that these countries have the ambition to involve 
themselves in political questions relating not only to the Asian region but also 
beyond. 
Another indication pointing in the same direction is the participation of 
certain Asian countries in international peacekeeping operations outside the 
Asian region. It is very much in the interest of the Union that the responsibilities 
of carrying out such operations be shared between as many countries as possible. 
10 
2. Characteristics of the new Political Approach towards Asia 
2.1 Strengthening the Political Dialogue with Asia 
The political dialogue between the Union and Asia should develop within the 
following parameters. 
The political dialogue must gain its legitimacy from the Council and from the 
European Parliament with the Commission playing the special role conferred 
upon it. The approach by the Council towards Asia is partly a reflection of the 
different historic relations between the individual Member States and the region, 
partly their present interest in strengthening such relations, often dictated by 
economic considerations. The Union's obligations entered into under global 
arrangements also play an important role. The European Parliament has adjusted 
its structures and working methods to accommodate its increased responsibility 
post-Maastricht. Its interparliamentary Delegations and sectoral committees, as 
well as ad hoc missions, have established contacts with all the major countries of 
the region. 
Asia has on its side consistently advocated an outward looking European 
Union which represents for the Asian countries a major source of income and 
investments. Asia has repeatedly encouraged Europe to show a greater interest in 
the region. The Asian countries have however refrained from being too specific 
in identifying the precise subjects which they would wish to elaborate further in 
a political dialogue with the Union. This may be explained by some uncertainty 
about how the Union works (representation), partly by a perception of the 
European Union as being a difficult partner to negotiate with (Uruguay Round). 
The basic objective of the policies towards Asia in the coming years must 
therefore be to increase Asian interest in and knowledge of the Union and to 
demonstrate to the Asian countries the ability and commitment of Europe to 
make a positive contribution to the peaceful development and stability of the 
region. The EU should, in particular, develop its political dialogue with those 
countries in the region which are prepared and able to make a significant 
contribution to the maintenance of the region's peace and stability. 
2.1.1 The European Union has already initiated a political dialogue with several 
Asian countries and group of countries and is in the process of developing 
dialogues with a number of others. The existing dialogues have typically 
consisted of a presentation of the general situation of the respective parties and 
discussions on regional and global problems. It might, however, be desirable to 
focus on specific subjects with appropriate preparation and follow-up. One way 
of achieving this would be to dedicate Troika meetings to agreed themes on 
which the parties would have sufficient time to elaborate. 
In the future more effort should be spent on developing the political dialogue 
at expert level with a view to deepening the dialogue and if possible making it 
more operational. 
11 
2.1.2 The Union participates in the ASEAN Regional Forum which provides for 
a wide-ranging dialogue on security concerns encompassing the greater part of 
Pacific Asia. The Union must follow the evolution of the ARF and develop ways 
for making its own particular contribution to the discussion of such matters. 
2.2 Subjects for Political Discussion 
1. Arms control and non-proliferation 
Rapid economic growth, territorial disputes, increasingly ambitious armament 
programmes, the potential for distrust in such a large region and the weakness of 
the multilateral organisations for political consultation are all factors which 
could lead to regional conflicts in Asia capable of disrupting world equilibrium 
and thereby impinging on CFSP objectives. 
Whereas global military expenditure fell by 20 % in 1993, such expenditure 
grew in East Asia alone. 
The European Union considers policies on arms control and the non-
proliferation of weapons of mass destruction (nuclear, chemical, biological, 
ballistic missiles) as important elements of the Common Foreign and Security 
Policy. These are probable areas for future joint action. The EU should explore 
the possibility of continuing or initiating dialogue on some of these points with 
the Asian countries. 
The EU could focus these discussions on the following: 
• Conventional Arms. The UN Conventional Arms Register was the result of a joint EC-Japan 
initiative and came properly into effect at the beginning of 1993. The gathering and 
publication of data are an essential measure of confidence where conventional arms transfer is 
concerned. The EU has already initiated a dialogue, which should be pursued, with many of 
the region's countries on the need to improve the register's coverage and efficiency. 
At the 48 UN General Assembly, the international community began its reflection on the 
"Convention on prohibitions or restrictions on the use of certain conventional weapons which 
may be deemed to be excessively injurious or to have indiscriminate effect" in order to 
examine, in particular, an amendment to its Protocol II on anti-personnel mines. These 
negotiations will run to 1996. A successful outcome would be in the joint interest of the EU 
and the Asian countries given the use of such mines in conflicts in the region. 
• The indefinite and unconditional extension of the NPT in 1995 is one of the CFSP's most 
important short term objectives. The EU will continue its efforts to improve the Treaty's 
coverage. At the same time, the Union will make great diplomatic efforts with the countries 
of the region party to the Treaty to reach the objective of such an extension. 
• Strengthening the IAEA's Safeguards System. The international tension brought about by 
North Korea's attitude on nuclear inspections underlines the need to reinforce the efficiency 
and maintain the credibility of the IAEA's safeguards system. This challenge for the 
international community also provides an opportunity for the EU and the Asian countries to 
cooperate. 
• Export Policies on the Export of Sensitive Goods and Technologies. Given the industrial 
and commercial dynamism of the Asian countries and the deepening of their already well-
developed technological abilities as suppliers, they are already major suppliers of goods and 
12 
technologies which could be sensitive for the proliferation of weapons of mass destruction, 
whether in the chemical, ballistic, biological or nuclear sectors. (According to the IAEA, Asia 
is the only region in the world where there is an increase in the use of nuclear generators for 
domestic electricity supply with the number of nuclear power stations set to double from 70 
in 1992 to 140 by 2010). A dialogue between the EU and Asia on the basis of objectives of 
non—proliferation and legitimate industrial, technological and trade development is of prime 
importance. 
• Conventions Prohibiting Chemical and Biological Weapons. The rapid and concrete 
implementation of the obligations of the 1993 Convention Prohibiting Chemical Weapons and 
the strengthening of the terms of the 1972 Convention Prohibiting Biological Weapons are 
important short-term objectives for the EU with a view to consolidating the international 
non-proliferation and disarmament system. These topics could be appropriately pursued by 
the Union in its dialogue with Asian partners. 
• Comprehensive Nuclear Test Ban Treaty. The EU actively supports the efforts of the 
Disarmament Conference in Geneva to conclude a universal and verifiable treaty and should 
encourage its Asian partners to join in that support. 
2. Human Rights 
The development and consolidation of democracy and the rule of law and 
respect for human rights and fundamental freedoms together form a major 
objective of the external policy of the European Union. Regarding human rights, 
the general approach of the EU is endorsement of existing international stan­
dards, as set down in the relevant international instruments, to which most or all 
Asian countries are signatories. In this respect, the Union should encourage all 
countries to become signatories of and to fully implement all relevant inter­
national instruments. The European Union pursues this objective, inter alia, 
through dialogue guided by the Vienna Declaration and Programme of Action of 
the 1993 UN World Conference on Human Rights, to the success of which both 
the Union and the Asian countries have actively contributed. 
In the first place the dialogue on human rights will predominantly be dealt 
with in its its context and in appropriate fora both bilateral and multilateral, such 
as the UN Commission on Human Rights where the governments of the 
countries concerned are most likely to be under scrutiny. 
The concept of the interrelationship between human rights, democracy and 
development, should be inspired by the assumption that economic development 
could bring about the progressive construction of civil society and thus improve 
the exercise of human rights, which in their turn could also be an important 
factor for development. 
Emphasis should also be given to facilitating legislative and institutional reform, 
and, in this respect, technical training and granting of scholarships as well as 
visits and seminars could be envisaged. 
3. Drugs 
The drug phenomenon constitutes a global problem and is today considered a 
major threat to the stability and democracy of societies confronted with it. Drug 
13 
trafficking, drug production and drug consumption also presents a problem to 
Asian regions and has significant repercussions on the European economies and 
EU security and stability. The globality of the problem is widely recognised and 
the need for co-operation at international level is clearly voiced. The European 
Union therefore already initialised a dialogue on drug and drug related matters 
with some Asian countries such as India and China. This approach has to be 
pursued in order to enhance awareness of the drug problem at the highest 
political level. In fact the necessity for the systematic inclusion of the drugs 
question in the political dialogue has been stated and elaborated in the recent 
communication from the Commission to the Council and the European 
Parliament on a European Union Action Plan to Combat Drugs. The 
implementation of this drug plan has already been identified by the Corfu 
Council as a priority. The immediate objective of a political dialogue on drugs 
with Asian countries should be the improvement of the capacity and willingness 
of the countries concerned to commit themselves fully in the fight against drugs. 
A further aim will be the ratification by third countries of the three United 
Nation Conventions on narcotic drugs and psycho tropic substances. 
IV. The European Union's New Trade & Co-operation Strategy 
Towards Asia 
1. Justification for a New Trade & Co-operation Strategy 
1.1 Economic growth in Asia 
Europe's interests in Asia are (i) to benefit from the economic 
opportunities and to respond to the economic challenges in the region 
which contains the world's fastest growing countries, and which could 
represent between a quarter and a third of the world economy by the 
year 2000; (ii) to integrate into the open, market-based world trading system 
those Asian countries such as China, India or Vietnam which are moving from 
state controls to market-oriented economies; and (iii) to assist in the enormous 
problem of poverty alleviation. 
To secure these objectives, and to prepare for the growing role of the Asian 
powers in world affairs, the European Union needs to accord Asia a higher 
priority than it has done in the past. The Union also needs to re-assess its 
policies towards the countries and regions of Asia, moving from the defensive to 
the pro-active. This can only be achieved by the Union and its Member States in 
co-ordination and with the direct participation of the European private sector. 
14 
Characteristics of économie growth in Asia. Economic growth in the three 
regions of Asia has been extensively analysed and described (see Annex IV for 
economic profiles of the countries and regions of Asia). The main characteristics 
having direct implications for the European Union's new strategies are as 
follows: 
• Variations in growth: Average GNP growth per capita in East Asia between 
1965 and 1990 was 5.5%. Southeast Asia was not far behind, but the average 
conceals important variations. East and Southeast Asia contain some of the 
world's richest countries to be sure, but they also contain some of its poorest 
(e.g. Mongolia, Burma, Cambodia, Laos or Vietnam). South Asia has on average 
had less rapid growth (1.8% over the same period), but there have also been 
important increases in wealth. 
• Rapid spread of growth: Economic growth in Asia has spread very rapidly 
from one country, and from one region, to the next. 
Given the above two points, European Union strategies will have to be flexible 
and modular in order to anticipate changes in all three regions of Asia, and they 
will have to be geared to the particular circumstances of the different countries 
and regions there. 
Continued high growth in large parts of developing Asia. Despite the slow­
down in Japan and in most of Europe (and in the US until 1993), the IMF 
reckons that Asian GNP will have grown on average by 44% between 1990 and 
1995, (compared to 16% and 11% respectively for Latin America and Africa, 
and minus 32% for Eastern Europe and the former Soviet Union). 
Growth of this order shows every sign of continuing and expanding, 
transforming as it does those countries and areas as yet untouched. There are 
signs that South Asia too could also enjoy higher growth in the next ten years, 
especially if the momentum of the restructuring process is maintained. However, 
South Asia will only succeed in substantially reducing poverty if economic 
growth there is matched by a significant reduction in birth rates. 
Trade within Asia is growing rapidly, but growth trends within the three 
regions are very different (see graphs in Annex II). Here as elsewhere, East Asia 
has led the way: the increase in trade between East and Southeast Asia is 
striking. The proportion of trade between these two regions in 1991 (as 
compared to their trade with the rest of the world) was about the same as in 
NAFTA (42%) and this share was arrived at in a much shorter space of time. The 
jump in intra-trade is a "natural" development, i.e. it was achieved without 
formal trade arrangements and it is for the moment unlikely to lead to such 
arrangements. The growth of intra-Asian trade has led to a decline in dependence 
upon developed country markets in North America and Europe to a degree never 
before seen. South Asia for the moment remains outside the growth in intra-
regional Asian trade. 
15 
External trade plays a key role in both high speed and developing Asia's 
economic growth, although in varying degrees. The World Bank reckons that 
half the growth in world trade up to the year 2000 will be generated in East and 
Southeast Asia alone. This holds out enormous opportunities for the Union and 
can help create many new jobs. 
Total East Asian trade doubled over the last decade. In 1992 it stood at one trillion ECU (of 
which Japan accounted for half). Trade in Southeast Asia has also grown, but not as rapidly: in 
1991 it was 350 billion ECU. South Asia's total external trade ($50 billion) has only grown 25% 
over the same decade (the Union's two-way trade with all the countries of South Asia is only 
marginally larger than with Singapore). 
Some countries in the region have a well established record as free trading 
nations, others have only recently started to liberalise their trading regimes, 
while there are also countries which do not yet participate in international trade. 
Trade policy with an emphasis on de facto market access for both trade in goods 
and services will therefore be a key component in the Union's strategies towards 
not only developed Asia but also Asia's newly emerging markets. 
In the area of trade the Union is, after the US, the most important market for the 
developing Asian countries, absorbing in 1993 as much as 128 billion ECU of exports or 
27% of their total exports (see Annex III, Table 2). Without doubt, the Union has 
benefited as Union exports to these countries increased from 15 billion ECUs in 1980 to 
93 billion ECUs in 1993. Concomitantly, the share of developing Asia in Union 
exports jumped from 7% to nearly 20%, thereby overtaking the 18% share of the US in 
total Union exports. 
The inclusion of the EFTA countries in the Union will not greatly alter EU trade results with 
Asia countries since EFTA's trade with them is only about 10 to 15% of that of the Union 
(although individual EFTA countries hold important shares of specific Asian markets). 
Foreign direct investment (FDI) plays quantitatively and qualitatively an 
important role, in particular in East and Southeast Asia. The EU's relative share 
has declined steeply (between 1986 and 1992 only 10% of the region's FDI 
came from the Union), therefore the Union's new strategy will emphasize 
investment promotion and the creation of favourable conditions for European 
investment in Asia. 
Total FDI flows to these regions increased steadily during the eighties, with Japan being the long 
established leader of the three, followed by the US. Although Japan has the highest stock of 
cumulative FDI in Asia, since 1991, annual investments from Taiwan, Korea and Hong Kong 
have been at a higher level. 
Sustainability of growth in developing Asia. The impressive economic growth, 
especially in developing East Asia, should not prevent a critical assessment of its 
sustainability: high growth calls for adjustment (just as does low growth and 
stagnation, albeit adjustment of a different type). In the context of much of Asia 
this concerns in particular political liberalisation, as better paid, better fed people 
demand more individual freedom. The ability to address this issue in a 
16 
satisfactory way will no doubt be of critical importance in sustaining economic 
growth in many Asian countries. 
Sustaining high growth will also be determined by the ability to improve infrastructures, the 
lack of which can easily become a bottleneck to future growth. 
Some countries need to invest heavily in mass education and the reform of their educational 
systems. This was one of the most important strategies for high growth and equitable income 
distribution in East Asia. All large countries in the region (China, India, the Philippines, 
Thailand, Indonesia and Vietnam) face severe regional imbalances as economic development 
has been in these countries first and foremost either concentrated in urban centres, or closely 
associated with one particular part of the country. 
The environmental sustainability of unchecked rapid growth in the region is a source of 
growing concern with increasingly global dimensions. This applies not only to tropical forests, 
but also to the relatively low levels of energy efficiency in many countries of the region. Coupled 
with the relatively abundant supply of carbon rich fossil fuels (India, China) this is a problem 
which poses a particularly urgent challenge. 
Market transition. Many countries of Asia are in the process of reforming their 
economies to make the transition from centrally planned to market based 
systems. Many are still hampered by large and inefficient state enterprises. The 
new strategies of the Union will be aimed to assist the ongoing reform process. It 
is after all in the enlightened self-interest of the Union to encourage die growth 
of new markets which are open and compete within the internationally agreed 
framework of the GATT. 
Poverty also has its imperatives. Asia's future is not a homogenous picture of 
dynamic growth. A characteristic of high speed growth in East and Southeast 
Asia was that it brought with it a dramatic increase in human welfare and huge 
reductions in poverty. The same is not so easily obtained in South Asia which in 
the year 2000 will still contain the single largest concentration of the world's 
poorest people. This represents more than just a brake on the South Asian 
countries' economic development and their potential as future markets for 
European business. People below the poverty line have higher fertility rates, 
greater vulnerability to disease and little option but to pursue short-term, 
environmentally degrading practices. These are challenges of global signif­
icance: poverty alleviation will therefore remain an important strand of the 
Union's Asia strategy. 
1.2 Asia policies of Japan and the US 
A re-evaluation of the EU's policies towards Asia cannot take place in a vacuum. 
All of the major international actors have an interest in the region, more so even 
than the EU whose interest is in the first instance primarily economic. The Union 
must therefore be aware of the ideas and actions of others if it is to safeguard its 
interests and maximise the potential of its own policies. 
Japan's presence in East Asia and the role that it has played in the region's development is 
massive and on-going. Aid, trade and investment links are very strong and have proved to be 
mutually beneficial. Recently there have been signs that Japan's relations with South Korea in 
particular are improving. In the case of China, after a slow start, economic links are becoming 
17 
ever stronger. Southeast Asia is a major supplier of raw materials to Japan, and since 1985, 
Japan has relocated manufacturing capacity there on a scale unmatched by either Europe or the 
US. Japan is also intent on increasing its presence in South Asia; India is now a major recipient 
of Japanese ODA. In addition, Japanese direct investment in India has increased in recent years, 
albeit from a very low base. Japan is gradually assuming a higher profile throughout Asia, 
although it is careful to disassociate itself from the more assertive tone of some US or European 
pronouncements on human rights. 
The United States has started to place increasing emphasis on its Asian Policy. The most 
obvious sign of this has been its active promotion of, and participation in, APEC (Asia Pacific 
Economic Co-operation, see ). At this stage it is far from clear that this initiative has been 
successful. The recent trade dispute with Japan, a series of small disputes with Southeast Asian 
countries and the question of China's MFN status all suggest that whilst the US wishes to 
increase its economic presence in the region, it has not yet found the optimum balance between 
the different policy strands. However, it is likely that away from "high politics", links between 
the respective business communities will be strengthened. The US is India's largest trading 
partner with total bilateral trade of about half EU-India trade. India has been selected as one of 
the US Commerce department's "big ten emerging markets" (and a Section 301 target). 
1.3 The need for new EU strategies 
Large parts of Asia are booming and market access is improving, but business 
there must be earned. The presumed dependence in all three main regions of 
Asia on Europe whether for their capital and know-how, or as a counter-balance 
to Japan and the USA, is less valid today than even five years ago. The reason 
for this is that Asia now has its own resources of capital, management and 
technological capacity. 
It follows therefore that the European Union needs new pro-active strategies 
towards Asia. Above all it needs to strengthen its economic presence in Asia in 
order to maintain its leading role in the world economy. In doing so it is able to 
build upon the steps taken by individual EU members states to develop new 
strategies towards Asia. 
The costs of failing to develop pro-active strategies towards Asia 
The Union stands to lose out on the economic miracle taking place there because of the strong 
competition: from Japan and the United States, and also increasingly from companies within the 
region's newly industrialised and capital rich countries such as Korea or Taiwan. To take but the 
example of Japan. Already Japanese companies are competing with each other to consolidate 
their position in Asian markets. They have invested heavily and are establishing the type of sales 
and distribution systems which European companies have found so hard to penetrate in Japan 
itself. If European companies are unable to take a full share of the world's main centre of growth 
in the next decade this will affect their profits and competitiveness, not only in Asian markets, 
but also world-wide. 
If the Union loses out on the economic miracle taking place in Asia, this will have political 
costs, and at the very least it will exacerbate the calls for more defensive policies from those who 
view Asia as a threat rather than as a valuable partner, which in turn will further reduce the 
benefits to be gained from Asia, and so on, in a spiral of decline. 
18 
Basis of new strategies. Not the least significant aspect of the ongoing Asian 
transformation is that it represents the first achievement of sustained economic 
growth by a major area of the world outside of Europe or regions of European 
settlement. This means that the Union will not be able to take for granted 
automatic acceptance of European values and ways of doing things. Universal 
human rights are recognised in Asia as in Europe, but the manner in which these 
are advocated and defended is crucial. For its part, the Union favours a frank and 
open dialogue on these issues which should be developed as a necessary strand 
in the policy mix. 
Economic growth in Asia has been market driven, taking place for the most 
part without formal regional structures. Therefore the Union's new strategies 
will be based upon an appreciation of the cultural, economic, social and political 
characteristics of each of the EU's individual partners in Asia. 
The EU's strategies will also cover relations with regional groupings in Asia 
such as the ASEAN (Association of Southeast Asian Nations); SAARC (South Asia 
Association for Regional Co-operation); sub-regional arrangements such as the 
numerous cross-border "growth triangles" now emerging; and supra regional 
groups such as APEC (Asia Pacific Economic Co-operation), which link East 
Asia across the Pacific to the Americas and Australasia. 
2. Characteristics of the New EU Economic Strategy Towards Asia 
2.1 Economic policy implications 
This section elaborates the specific policies and instruments required to achieve 
the policy objectives and the main policy implications within each of the 
domains. The individual design of policies will of course be country specific and 
must be elaborated in the light of their individual circumstances. The Union has 
a great deal of policy experience in Asia and must build upon its previous 
successes. 
More and more countries within Asia are growing into economic and political 
powers and are becoming increasingly integrated into the world system. The 
EU's existing relations with them must be adapted to reflect the fact that we are 
all now partners in a global economy. It is therefore essential that the EU 
reinforces, or where it does not yet exist, establishes a non-confrontational 
dialogue of equals, to address questions of bilateral concern and also to consider 
jointly the growing number of global concerns: most notably the maintenance of 
an open rule-based world trade system; preservation of public goods such as the 
environment; and particular issues such as trade in narcotics or the prevention 
and cure of AIDS. 
Closer consultation and dialogue can generate a greater understanding of each 
other's viewpoints and problems and facilitate the search for consensus 
solutions. This can in turn help to avert disputes and provide an environment 
which is of benefit to business both in Europe and in Asia. The importance of 
such dialogue goes beyond the purely bilateral. If the Union can assist in the 
19 
development of a consensus approach, this will feed into inter-regional 
initiatives (e.g. APEC) and smooth the path for work undertaken at the 
multilateral level, for example concerning the post Uruguay Round agenda. 
Regionalism and multilateralism. The EU has a long-standing relation with 
ASEAN which remains a cornerstone of its dialogue with the region. The Union 
has welcomed the ASEAN Free Trade Agreement and indeed welcomes all such 
initiatives for regional co-operation provided they are consistent with the GATT-
based multilateral trade system. 
2.1.1 Raising the profile of Europe in Asia 
The impact of certain actions can be greatly enhanced if individual Union actors 
join their forces. This applies as much to the business sector where the Union's 
image can act as an important selling point as to international fora. It also applies 
to co-operation programmes and activities, especially economic co-operation, 
which take place within a highly competitive environment. 
A greater knowledge of the Union and its activities would increase the 
regard in which it is held in Asia. The EU should therefore provide much more 
information about Europe and make a much greater effort to explain the nature 
and objectives of EU policies in Asia. Greater efforts should also be made to 
provide information on European financed activities in Asia, especially 
economic co-operation (and also development projects). A wide range of dif­
ferent policies could fall within this domain: 
2.1.2 Public information policy: in order to draw up a more efficient public 
information policy, a baseline all-media study of the European image in Asia is an 
essential prerequisite. 
2.1.3 An enhanced visitors programme to invite distinguished Asian politicians, 
journalists, academics and other leaders to Europe should be considered. 
2.1.4 Strengthening Higher Education and training links with Asia, including 
University Co—operation schemes targeted into specific technological, policy and 
management studies and emphasising the implementation of joint or mutually recognised 
post-graduate programmes, joint-research projects and university-industry co-operation 
activities. These will include, inter-alia, support to European and Asian Studies Centres 
and joint Management and Technical training programmes, implemented whenever 
possible with the active participation of European and Asian companies. 
2.1.5 Encouraging decentralised co-operation between the institutions which are 
the basis of a pluralistic civil society. Such co-operation has in the context of the Union 
been a powerful force in the shaping of the European identity. With regard to the EU's 
relations with Asian countries, activities such as town twinning or cultural exchanges will be 
invaluable in an environment where there is a serious lack of knowledge and of mutual 
comprehension. 
2.1.6 Improving European expertise on Asia by supporting a network of European 
centres specialising in Asia (to share perspectives and expertise on Asia and to provide counsel 
and advice to European policy makers); and funding in countries such as Korea or China 
initiatives based on the EU's young executives programme in Japan. 
20 
2.2 Strengthening the European Economic Presence in Asia 
Economic co-operation is based upon the concept of mutual benefit, and as 
such is qualitatively different from development co-operation. This characteristic 
makes economic co-operation an important instrument in the EU's relations with 
many of the Asian countries, where the level of development is rapidly rising. It 
should be extended towards countries such as Korea for which at the moment it 
is not used. 
There is also obviously scope to strengthen links in the fields of scientific co­
operation and research and development, narcotics control, AIDS prevention and 
environmental co-operation. The Union is of course already active in these areas, 
but their potential needs to be exploited to the full. 
Co-ordination with Member States and the private sector. The Union's co­
operation in Asia will be complementary to that of the Member States. In order 
to achieve this and in order to increase the effectiveness of Union and Member 
State co-operation activities, greater co-ordination will have to take place 
between them in terms of: policy co-ordination; operational co-ordination, 
including in the field; and co-ordination in multilateral fora. With regard to 
economic co-operation, the direct participation of the private sector is also a sine 
qua non. 
The following activities (all of which contribute to economic cooperation in 
the broadest sense) are intended to ensure that European private sector is faced 
with a trading and investment environment which is conducive to economic 
growth and international trade. These activities will therefore promote European 
trade and investment in Asia: 
2. 2.1 Representations (lobbying): it is necessary to undertake all the appropriate steps 
to obtain from Asian partners modifications of their legislation and administrative 
regulations which hamper the development of European trade and direct investments. 
Basic concerns include Standards and Quality Control; Intellectual Property Rights 
and the negotiation of Mutual Recognition Agreements on standards, testing and 
certification. 
2. 2.2 Providing expertise and policy advice to the ex-state trading countries of Asia 
which have embarked on structural economic reform, such as China, Mongolia, Vietnam 
or Laos, to assist them to set up the institutions, policies and laws to make a smooth 
transition to market-based economies (an example would be the EU market transition 
programme in Vietnam, the first major programme of this kind in Asia). Those countries who 
have not so embarked (Burma, North Korea), should be encouraged to do so as soon as 
political conditions permit. 
Countries such as India and Pakistan which have already set about deregulating their 
economies should be assisted in these policies. 
2. 2.3 Promoting business co-operation between European companies and their Asian 
counterparts This should be done by increasing information and by creating a favourable 
framework for industrial co-operation and notably for SME's; through existing 
instrument. 
21 
Regarding the first point, information on trade and investments in both Europe and Asia, 
and improved information with regard to Asian markets and contracts, are required. 
The opening of European Business Councils; Joint Investment Committees and 
especially European Business Information Centres (EBICs), are steps in the right 
direction, but more need to be opened (there are none as yet in China, ex-Indochina or Pakistan). 
The European Business Community in Tokyo and Seoul need to be supported. The^role of the 
EBICs is to provide information on European and local market conditions, including trade and 
investment opportunities. They are established in close co-ordination with bilateral Chambers of 
Commerce and EU Member States' private sector representatives. To be successful, the 
EBICs also require backward linkages to European business associations and Chambers of 
Commerce and EU Industrial federations. 
Second, a favourable framework for industrial co-operation which aims at creating a positive 
climate for EU investment and co-operation, should be initiated by launching concrete activities 
such as sectoral round tables, sufficiently horizontal industry-oriented training initiatives and 
pilot actions in the field of technological co-operation." 
2. 2.4 Establishing better links with European business associations and Chambers 
of Commerce. This could either be done by the formation of a business association at the 
European level as foreseen in the White Paper on Employment (e.g. "the Europe Asia Business 
Association"), or by setting up a network with existing national associations. The objectives of 
such an association or network would be to promote economic co-operation between the 
European Union and the countries of Asia and to share perspectives and expertise on Asia and to 
provide counsel and advice to European policy makers. 
2.2.5 Enhancing co-operation in the fields of science and technology and 
research and development. There is no doubt that such co-operation can have a 
positive effect upon the Union's economic presence within the region. To date the 
majority of the Union's efforts in this domain has either been co-operation with Japan, for 
example the new Forum on Science and Technology, or come under the Science and Technology 
for Development programmes. The recently approved Fourth Framework Programme (1994-98), 
Action 2, covers co-operation with third countries, especially developing countries and thus 
provides a means of enhancing scientific and technological co-operation with Asia. It would be 
important to reinforce these activities in so far as scientific co-operation in advanced fields such 
as information and communication technologies, industrial, and materials technologies and 
biotechnology's are concerned. A separate approach which merits a broader coverage is the 
establishment of European technology centres: 
• The funding available for international RTD co-operation under the 2nd Activity of the 4th 
Framework programme is relatively limited. Co-operative projects with Asia must, 
moreover, concentrate on areas where the co-operation will be beneficial to Community 
interests. 
• This being so, there may be scope for looking to other sources of funding, including under 
other policies of the Union, and other types of RTD co-operation. For example, it is 
particularly important to foster contact between young researchers of Asia and the Union as 
future leaders in the economic fields in their respective regions and therefore potential 
multipliers in terms of improving understanding and enhancing mutual interests. 
2. 2.6 Establishing European technology centres especially in key sectors where 
Europe has a comparative advantage, e.g. the EC-Skigapore Regional Institute for 
Environmental Technology which acts as a window for European research and development and 
22 
services (in a sector which has equal salience both in dynamic and in developing Asia). Such 
windows for European R&D should be co-financed by the Union and the host country and may 
be based on institutional twinning. They should maintain close contact with other business 
facilitation activities such as the EBICs. 
2. 2.7 Supporting investment. The Union is lagging seriously behind other 
investors in the Asian boom (providing only 10% of inward FDI to East and 
Southeast Asia between 1986 and 1992). Many of the activities and instruments 
falling under economic co-operation (listed under points IV.3.1 to 2.2.6 above) 
are therefore designed to support and promote European direct investment in 
Asia (one of the main tasks of the European Business Information Centres for 
example is to provide information on market and investment conditions in the 
Asian countries and regions in which they are established). In addition, the 
Union needs to promote direct investments by 
• Providing financial incentives for joint ventures and other forms of business tie-
up (e.g. by using the European Community International Investment Partners scheme, 
ECIP, or the European Investment Bank or by sponsoring market research). 
• Supporting trade promotion. There is no need to duplicate Member State 
export efforts, but better co-ordination is needed to maintain an active presence on 
Asian markets as called for by the White Paper on Employment. 
2.2.8 Co-operating to alleviate poverty 
Development Aid has traditionally been an important tool of the EU's policy, 
politically as well as economically and, at least for some countries, it will 
continue to be so. 
East Asia has had an extraordinary success in reducing poverty by adopting 
outward oriented trade strategies, by importing foreign technologies and 
welcoming foreign investments. The Union supports this approach in its 
emphasis on economic co-operation. 
Success can be claimed in alleviating poverty by South Asian governments and donors, 
including those of the European Union. But the problems are complex and, given the magnitude 
of the challenge and the limited resources available, aid needs to be constantly fine-tuned to 
ensure effective poverty alleviation. This will include emphasising support for policies which 
enable the poor to participate in growth by addressing barriers denying them access to 
opportunities, assets, credit or basic inputs, or by investing in the poor, for example by 
supporting primary education, health care (especially reproductive health care), preservation of 
the environment, supply of services to reduce urban slums and potable water supplies in poor 
regions. 
Since the aid administered by the Commission only accounts for about 10% of 
the Union's total aid to Asia, in order to achieve maximum impact, the 
Commission and the Member States need to enhance their coordination. In 
addition, in evaluating the impact of its aid, the Union needs to ensure that the 
balance between poverty alleviation and economic co-operation fits the changing 
conditions in Asia. Account will also have to be taken of the overall political 
conditions under which the aid is delivered to die recipient country in order to 
ensure maximum efficacity. 
23 
2.2.9 Enhanced co-operation in the field of the Environment 
Given the growing importance of international and economic relations in the field of the 
environment, it is important for there to be effective co-operation with the countries of 
the Asian region. 
Within the resources available, the development of Community relations on the 
environment with countries in Asia need to be reinforced. Strong relations already exist 
with japan and those with China and Korea are expected to move to a more formal 
footing in the medium term. The global nature of many environmental problems and the 
severity of the problems in certain Asian countries, as well as the promises made by the 
Community at Rio necessitate an environmental dialogue with third countries. 
2.2.10 Development of market for agricultural produciton 
Despite increasing agricultural production, there will be an increasing demand for 
imports of agricultural products, partly due to a change in diet. In the medium term 
these countries therefore will demand more cereals and livestock products from the 
world market. Therefore, there is a risk that import protection, for which Japan and 
Korea are striking examples, could spread even more in the region, although the 
commitments taken in the Uruguay Round will help to contain this kind of development. 
The European Union has an interest to be present on these markets with its agricultural 
products too, particularly processed ones. 
V. Conclusions 
The range of policies and instruments as set out in Parts II to IV above will be 
applied in a modular form which means that a coherent range of activities can be 
applied to different countries and regions in order to meet the interests of the 
European Union and its Member States, as well as the interests of the partner 
and recipient countries. 
Individual components can be adjusted as countries evolve their economic 
structure (see Annex I, Table 2). In other words, the Union and its Member 
States should not seek to apply as many of the instruments as possible to as 
many countries in Asia as possible. This could only result in spreading of limited 
resources too thinly with a negative impact on both effectiveness and profile. It 
will be necessary therefore to prioritise both in terms of countries and in terms of 
sectors, and to apply different instruments to countries that are at different levels 
of development. The new strategy requires a comprehensive approach covering 
political, economic and cooperation aspects : 
24 
• The Union needs to accord Asia a higher priority and to deepen and extend its 
dialogue with Asian countries and regional groupings. This dialogue should be 
pursued both bilaterally and in the framework of multilateral organisations. 
• The Union should, in particular, develop its political dialogue with those 
Asian countries which are prepared and able to make a significant contribution 
to the maintenance of peace and stability both within the region and globally. 
Arms control and non proliferation are of particular importance. The human 
rights issue form an integral part of the political dialogue. 
• The Union should strengthen its relationship with regional and subregional 
security fora. The ASEAN Regional Forum is of particular note in that it allows 
for a wide-ranging dialogue on security concerns encompassing the greater part 
of Pacific Asia. 
• The Union needs to place greater emphasis on market opening, for trade in 
goods and in services.; 
• The Union needs to select priority sectors for economic co-operation which 
reflect its own comparative advantage, e.g. banking, energy, environmental 
technologies, transport equipment, telecommunications, etc. 
• The Union needs to help integrate into the open, market-based world trading 
system those Asian countries such as China, India, Vietnam or Pakistan which 
are moving from state controls to market-oriented economies. 
• Greater emphasis should be placed on pro-active economic cooperation. Top 
priority for this type of co-operation should go to the newly emerging Asian 
markets, largely, but not exclusively in East and Southeast Asia, namely South 
Korea, China, Macao, Taiwan, Hong Kong, Indonesia, Malaysia, Pakistan, Phili­
ppines, Singapore, Thailand and India. 
• The best experience of the Union and its Member States needs to be pooled in 
poverty alleviation strategies to focus on the population of those countries with 
major poverty problems, namely China, Mongolia, Cambodia, Laos, Vietnam, 
India, Bangladesh, Bhutan and Nepal (and Afghanistan and Burma when pol­
itical conditions permit). 
^ u<> 
Index to Annexes 
Annex I Asian Countries: Basic Economic Statistics 
Table 1 : GNP and Population 25 
Table 2: Trade Structures 26 
Annex II Trade Flows in Asia 
Table 1: Merchandise Imports of East, Southeast & South Asia 27 
Table 2: Merchandise Exports of East, Southeast & South Asia 28 
Table 3: Merchandise Balances of East, Southeast & South Asia 29 
Annex III The EU and Asia 
Table 1: The EU's Agreements with the Countries of Asia 30 
Table 2: The EU's Trade with the Countries of Asia 31 
Table 3: The EU, Japanese and US ODA to Asian Countries 32 
25 
Annex I 
Table 1: Economic Profiles of the Countries of Asia, 1992 
East Asia (minus Japan) Population 
(millions) 
1,263 GNP($bn) GNP per 
capi ta 
Korea 44 296 6,790 
China 1,166 442 380 
Taiwan 21 211 10,215 
Hong Kong 89 15,380 
Macau 0.5 t9,000 
Mongolia tlOO 
North Korea 23 23 tl,064 
ll:*-&&Ktftm&t Asia mm m 
ASEAN 325 382 1,175 
Brunei 0.3 t6 t21,150 
Indonesia 184 123 670 
Malaysia 19 52 2,790 
Philippines 64 50 770 
Singapore 44 15,750 
Thailand 58 107 1,840 
Cambodia t2 t200 
Laos 250 
Vietnam 68 tl5 t220 
Burma 44 
iiiv $c**ti* &#i& ; ,| *>i7& tl88 
India' 884 271 310 
Pakistan 119 50 410 
Sri Lanka 17 10 540 
Nepal 20 170 
Bangladesh 113 25 220 
Maldives 0.2 0.1 500 
Bhutan 1.5 0.3 180 
Afghanistan 22 t2.4 tl50 
Source: World Bank Atlas, J994, Washington, 1994. Note: Figures marked with f are for 
1991 (Source: Asian Development Outlook 1993; CRONOS estimates). 
26 
Table 2: Trade Structures of Asian Countries 
The changing pattern of merchandise exports is a useful indicator of the economic 
changes taking place in a country. The following table gives one view of how each 
Asian country's exports fitted, or can be expected in the future to fit, one of 4 profiles: 
I. Developing country (raw materials exports still predominant, but manufactured 
goods other than machinery rising in importance); 
II. Near Newly Industrialising Economy (Near NIE) (manufactured goods (typically 
textiles & garments and electronics)* other than machinery, have become more 
important than primary commodity exports, but machinery takes only a small share 
of exports); 
III. Newly Industrialising Economy (NIE) (machinery exports have overtaken primary 
commodity exports; other manufactured goods exports are already declining in 
importance); 
IV. Developed, industrialised Economy (machinery exports, or knowledge intensive 
exports, are predominant while exports of other manufactured goods or primary 
commodities have sunk to relative insignificance). 
Trade Structures of Asian Countries 
at Four Stages of Economic Development, 1965-2000 
Korea (ROK) 1965 1990 > 2000 
China 1965- 1990-2000 
Chinese Taiwan 1965- 1990-2000 
Hong Kong 1965-90-2000 
Macao 1965- 1990 >2000 
Mongolia 1965-90-2000 
North Korea 
ASEAN 1965-90- ->20(X) 
Brunei 1965- 1990 >2000 
Indonesia 1965-90-2000 
Malaysia 1%5—>199() ->2000 
Philippines 1965—> 1990-2000 
Singapore 1965- 1990-2000 
Thailand 1965—>1990 2000 
Cambodia 1965-90-2000 
Laos 1965-90-2000 
Vietnam 1965-90- >2000 
Burma 
India 1965-90-2000 
1965- ->1990 •2000 
Pakistan 1965- ->1990 >2000 
Sri Lanka 1965-90-2000 
Nepal 1965-90-2000 
Bangladesh 1965-90-2000 
Maldives 
Bhutan 1965-90-2000 
Afghanistan 1965-90-2000 
Source: Basedon Nomura Sôgô Kenkyûjo, Ajia no hatten to risku, Tokyo, 1993. 
II. 1 Merchandise imports of East, South-East and South Asia 
EAST ASIA (*) SOUTHEAST ASIA SOUTH ASIA 
Billion of ECU Billion of ECU Billion of *CU 
82 83 84 85 86 87 90 91 92 82 83 84 85 82 83 84 85 86 87 90 91 92 
EAST ASIA (*) SOUTHEAST ASIA SOUTH ASIA 
Billion of ECU Billion of ECU 
82 i •il t^hmMt:--
l*-'-f 
83 84 85 86 87 89 90 91 92 Billion of ECU 
82 83 84 85 82 83 84 85 86 87 89 90 91 92 
(*) Japan Excluded 
V*. 
II.2 Merchandise exports of East, South-East and South Asia 
EAST ASIA (*) SOUTHEAST ASIA SOUTH ASIA 
Billion of ECU BflftonofECU 
82 83 84 85 86 87 Billion of ECU 
82 83 84 85 86 87 90 81 92 82 83 84 85 86 87 90 91 92 
EAST ASIA (*) SOUTHEAST ASIA SOUTH ASIA 
Billion of ECU 
82 83 84 85 86 87 88 89 90 91 92 200 Binon of ECU 
150 H Billion of ECU 
82 83 84 85 86 87 89 90 91 92 8283848586 87 888990 9192 
(*) Japan Excluded 
IL3 Merchandise balance of East, South-East and South Asia 
East Asia (*) Southeast Asia South Asia 
Bien o! ECU BBonofECU BffionofECU 
1 i I 
89 90 91 92 _ . . . ( 1 . ! . . r 
KS384SS86t7n«90(ia2 8S 86 87 88 » 91 92 
;) Japan Excluded 
30 
Annex III 
Table 1: The European Union's Co-operation and Other Agreements with 
the Countries of Asia (and Date of Establishment of EU Delegations in Asian 
Countries) 
Korea (ROK) Framework Trade 
and/or Co-operation 
Agreements; 
Declarations etc. Sectoral Trade 
Agreements 
Textiles (87) Date of 
Establishment 
of Delegation 
1989 
China Trade (78); Trade and 
Co-operation (84) Textiles (89) 1988 
Taiwan 
Hong Kong Textiles (86) 1993' 
Macao 1993 Textiles (87) 
Mongolia 1993 
North Korea 
ASEAN 1980 
Brunei 
Indonesia Tapioca (82) 
Textiles (87) 1988 ** 
Malaysia Textiles (87) 
Philippines Textiles (87) 1990 
Singapore Textiles (87) 
Thailand Tapioca (82) 
Textiles (87) 1978 
Cambodia 
Laos 
Vietnam Textiles (93) 
Burma 
India 1973/82/94 Sugar Cane (75) 
Textiles (87) 1982 
Pakistan 1986 Textiles (87) 1988 
Sri Lanka 1975/1994 Textiles (87) 
Coconut (75) 
Nepal 1994-5 
Bangladesh 1976 Textiles (87) 1989 
Maldives 
Bhutan 
Afghanistan 
•Office; ••Representation 
31 
Table 2: The European Union's Trade with the Countries of Asia 
(1992) 
Unit Million HCU 
Total trade Exports Imports m 
m* Balance 
ffimimfâffr'tfftiiïï, 
East Asia (not incl. Japan) 69,766 28,295 41,471 -13,176 
Japan 72,018 20,507 51,511 -31,004 
Korea 13,662 6,232 7,430 - 1,198 
China 23,629 6,848 16,781 - 9,933 
Taiwan 16,962 6,249 10,713 4,464 
Hong Kong 14,692 8,784 5,908 2,876 
Macao 557 53 504 451 
Mongolia 42 21 21 
North Korea 222 108 114 6 
"'A"4im"'Vi'" *4» J **/*» 2&im& -"*&;%$$-?\ 
ASEAN 41,693 19,282 22,411 3,129 
Brunei 641 419 222 197 
Indonesia 8,399 4,053 4,346 293 
Malaysia 8,041 3,103 4,938 1,835 
Philippines 3,051 1,443 1,608 165 
Singapore 11,999 6,351 5,648 703 
Thailand 9,562 3,913 5,649 - 1,736 
Cambodia 45 27 
Laos 31 25 19 
Vietnam 620 301 319 18 
Burma 84 51 33 
WÊÊÊM ^^siifsamm 18 
IÉS 
India 10,123 5,245 4,878 367 
Pakistan 3,392 1,812 1,580 232 
Sri Lanka 1,068 451 617 166 
Nepal 203 47 156 109 
Bangladesh 1,075 328 747 419 
Maldives 34 15 19 
Bhutan 25 24 23 
I Afghanistan 80 44 36 
I&3&X I ?«&*&* ^ > 4 #»,***' m 
USA 
Latin America 160,693 73,917 86,776 12,859 
44,554 20,048 24,506 - 4,458 
[ East Europe 54,157 17,538 36,619 19,081 
Source: Eurostat 
32 
Table 3: The European Union, Japan and US ODA to the Developing 
Countries of Asia 
(1976-1991) 
t%miAëi\ 
China 
Korea 
H, Smithed Asia 
ASEAN 
Indonesia 
Malaysia 
Philippines 
Singapore 
Thailand 
Cambodia 
Laos 
Vietnam 
Burma 
... $&jMQt.&tàt.. ., 
India 
Pakistan 
Sri Lanka 
Nepal 
Bangladesh 
Afghanistan 
:.çmww*Âi& ... EU member 
states ODA 
to Asia 
«•. jrWWW-r 9 
2,493.0 
376.9 
8/080.3 
6,650.5 
4,281.5 
421.3 
806.5 
121.2 
1,02 0.0 
111.4 
97.2 
528.4 
692.8 
3fc8,$44.7 
7,168.8 
2,235.0 
1,491.3 
805.2 
3,821.5 
122.9 
£6,994»9 EU ODA 
(administered 
by the 
Commission) 
*•$* * K 4 ' 
190.7 
1.0 
%44*€ 
320.4 
100.1 
6.4 : 
71.0 
0.9 
14 2.0 
65.3 
14.5 
114.2 
30.2 
: 2,307*1 
1,217.3 
177.7 
149.1 
33.5 
7 07.7 
21. 8 
3,043.4 Total EU ODA 
to Asia 
(Commission 
plus member 
states) 
3/ Q63n Q 
2,683.7 
377.9 
„a,624*£ 
6,970.9 
4,381.6 
427.7 
877.5 
122.1 
1162.0 
17 6.7 
111.7 
642.6 
723.0 
:l?f98l,8 
8,38 6.1 
2,412.7 
1,640.4 
838.7 
4,529.2 
144.7 
29,638.3 Japan s ODA 
to Asia 
6t017.3 
5,3 94.6 
682.7 
19,50€.4 
17,271.7 
7,243.9 
1,845.6 
4,112.1 
135.8 
3,934.3 
4.2 
131.6 
131.5 
1,967.4 
$,€5U5„7 
2,396.4 
1,898.9 
1,547.4 
704.2 
3,124.4 
24.4 
! 35*.27S*4 US ODA 
to Asia 
0 
65 
3j87o 
3,774 
1,212 
10 
2,210 
9 
333 
22~~ 
0 
10 
70 
&t%%2 
1,084 
2,043 
840 
235 
2,228 
252 
T0,623~" 
Unit = $ million. Source: OECD 
Z3> 
ISSN 0254-1475 
COM(94)314final 
DOCUMENTS 
EN 11 
Catalogue number : CB-CO-94-340-EN-C 
ISBN 92-77-71823-4 
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