RIS/SACEPS Workshop on Monetary Cooperation in Asia

The RIS in collaboration with South Asia Centre for Policy Studies (SACEPS), Dhaka, Bangladesh organized a Workshop on Monetary Cooperation in South Asia: Potential and Prospects on December 23, 2003 in New Delhi.  The workshop began with remarks by Dr Nagesh Kumar, Director-General, RIS; Prof Rehman Sobhan, Executive Director, SACEPS, Dhaka; and Dr Arjun Sengupta, Chairman, SACEPS.

As is well known, monetary cooperation among the SAARC countries has attracted a lot of attention as one of the areas of potential cooperation.   The RIS had prepared a study on this subject. The workshop was organized to discuss the issues raised in this study, as well as to discuss the issue of macroeconomic coordination in Asia.  

Prof. Muchkund Dubey, President, CSD, New Delhi chaired the first session  on monetary cooperation in South Asia:  potential and prospects.  Dr Mirza Allim Baig, Research Associate, RIS made the thematic presentation.
Dr  Saman Kelegama, Executive Director, Institute for Policy Studies, Sri  Lanka;  Professor I N Mukherji, School of International Studies, JNU; Professor Sunanda Sen of Academy for Third World Studies and Dr Ramgopal Agarwala, Senior Advisor, RIS were the panelists.

The second session on macroeconomic coordination in South Asia was chaired by Dr Sudipto Mundle, Chief Economist, ADB, New Delhi. The panelists in this session were Dr Ramgopal Agarwala, Senior Advisor, RIS; Dr Arjun Sengupta and Prof Rehman Sobhan.

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The ASEAN Japan Commemorative Summit

Virtual Information Centre
December 16, 2004 

During the period of 11-12 December 2003, Japan hosted the Association of Southeast Asian Nations (ASEAN)-Japan Commemorative Summit in Tokyo. The summit marked the first ASEAN+1 meeting to be held out of the member region.

During the two-day conference, leaders pledged to create a common East Asian community with the signing of the Tokyo Declaration for a Dynamic and Enduring ASEAN-Japan Partnership in the New Millennium. In addition, leaders signed the ASEAN-Japan Plan of Action, which included approximately 120 items to implement encompassing the basic direction for future cooperation and Japan’s pledge of U.S. $3 billion of aid for Southeast Asia over the next three years. This included $1.5 billion of funds to promote human resources development programs and the other half to go to projects aimed at the Mekong River region, promoting a growth area that includes Brunei, Indonesia, Malaysia and the Philippines. Prime Minister Koizumi said the countries "must strengthen regional cooperation on terrorism, piracy, human trafficking and other cross-border issues to make peace and security in the region more certain." Japan also took steps to strengthen security by signing a document confirming its intent to accede to the Treaty of Amity and Cooperation in Southeast Asia (TAC).TAC is a regional code of conduct adopted in 1976 in which signatory states pledge respect for the independence, sovereignty and territorial integrity of all nations, non-interference in internal affairs of one another, the peaceful settlement of interregional disputes and the renunciation of the threat or use of force. ASEAN members reciprocated with a document of consent from all members. China and India previously signed the accord in October. Before the main session, Japan agreed to start bilateral free trade agreements (FTA) talks with Malaysia, the Philippines and Thailand early next year. The negotiations are beginning steps by Japan and ASEAN members to conclude a regional FTA in 2012. Singapore has already signed an FTA with Japan .

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Seminar on Monetary and Finacial Cooperation in Asia

The Research and Information for Non Aligned and Other Developing Countries (RIS), jointly with Asian Development Bank, New Delhi,  organized a Seminar on Monetary and Financial Cooperation in Asia in New Delhi on December 11, 2003. Shripad Naik, Hon’ble Minister of State for Finance, Government of India delivered the inaugural speech in which he said that the issues of regional importance in the global context merit serious thought and collective action.  The Asian community now needs to focus on the economic cooperation front which can tilt the balance of power in our favour.  

The first business session on Monetary and Financial Cooperation in Asia, chaired by Ambassador S T Devare, had three presentations:  Economic Integration and Re-emergence of Asia  (with focus on Monetary and Financial Cooperation) by Dr Pradumna B. Rana, Director, Regional Economic Monitoring Unit, ADB, Manila; Financial and Monetary Cooperation in Asia: Problems and Prospects by Dr Mihir Rakshit, Project Director, ICRA; and Towards an Asian Economic Community by Dr Nagesh Kumar.

Dr Ashok Lahiri, Chief Economic Advisor, Ministry of Finance, Government of India chaired the second session on Global and Regional Economic Outlook. This session had two presentations: Asian Economic Monitor by Dr Srinivasa Madhur, Principal Economist, ADB/REMU;  and India’s Long-run Growth Performance by Dr Sudipto Mundle, Chief Economist, ADB/INRM.  Dr Suman Berry, Director-General, NCEAR and Dr Shubhashis Gangopadhyay, Director, IDF were the main  Discusstants. The participants, among others, included representatives from business and industry circles, research institutes, academia, government departments, and media.

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An Asian Currency Bloc

The idea of not only an Asian Economic Community, but also of an Asian currency, on the lines of European Union and Euro respectively, is in vogue. After the floating of the concepts of Asian bonds and the Asian Monetary Fund, with in both academic and policy circles, the ideas for establishing an Asian currency bloc are beginning to take shape. A distant idea it might seem, but the active interest of regional leaders like Japan and China may indeed make it a reality, in the near future. 

As reported by the The Economic Times (December 9, 2003), Japan is keen on establishing an Asian currency bloc, including key regional economies, even China. The reason behind Japanese interests in establishing a regional currency bloc are principally backed by the fears emerging out of the trade imbalances created by the fluctuations of Chinese currency to the US Dollar.  The talks for formulating such a currency bloc are already underway between the ASEAN+3

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Asian Biotech Consortium for Fostering Cooperation

Press and Information Bureau, New Delhi
Press Release
October 8, 2003  

An Asian Biotechnology Consortium is proposed to be set up in New Delhi and the Department of Biotechnology (DBT) will be the Nodal Agency, under the aegis of the Ministry of External Affairs. Twenty-two Asian countries will come together for this under the Asia Cooperation Dialogue (ACD) launched in Cha-am Thailand in June last year. India agreed to take the lead in establishing the consortium to foster greater cooperation among the ACD countries in Biotechnology. 

A two-day meeting of the ACD countries just concluded in New Delhi after considering the concept paper prepared by India on the setting up of the Consortium as well as modalities of going about it. The meeting called by the MEA in association with DBT ended with a number of recommendations including those on setting up of a Core- Fund, Membership and Launching of an ACD Biotech website to network the countries of the region for exchange of information and collective action. The meeting agreed to collectively address issues related to the development of Biotech infrastructure and expertise, bio-safety, IPR issues as well as technology access, transfer and commercialisation, for the socio-economic progress of the region.

In his opening remarks, the Secretary in the MEA, Dr. R.M. Abhayankar, underscored the need for a consensus among ACD member countries, to work together for the socio-economic development of the region, exploiting the full potential in Biotechnology. The Secretary DBT, Dr. Manju Sharma in her message said, the dialogue should also address institutional framework, biodiversity utilisation, capacity building and regulatory guidelines.

The ACD member countries are; Bahrain, Bangladesh, Brunei Darussalam, Combodia, China, Indonesia, India, Japan, Kazakhstan, Kuwait, Laos (PDR), Malaysia, Myanmar, Oman, Pakistan, Philippines, Qatar, Singapore, Sri Lanka, South Korea, Thailand and Vietnam.

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Indian PM Backs Asian Economic Family

Press and Information Bureau, Press Release 
October 12, 2003 

Prime Minister Vajpayee’s visit to the 2nd India-ASEAN Summit in Bali (October 6-8, 2003) ended on a high note with the instiutionalisation of the annual summit level dialogue between India and ASEAN.

The event was marked by several important agreements between the India and ASEAN, the most important being the finalisation of the Framework Agreement on Comprehensive Economic Cooperation.

The Prime Minister offered ASEAN countries additional flight services from airlines of ASEAN countries to major Indian metropolitan cities and other tourist destinations and suggested strengthening India-ASEAN road links. He also proposed to the ASEAN countries the liberalization of the air cargo services sector. The Prime Minister also proposed an India ASEAN car rally. All the offers were warmly welcomed by his ASEAN counterparts.

On the other hand, several ASEAN leaders underlined the potential for cooperation with India in the field of public health, through pharmaceutical imports from India and joint research for medicines and measures to deal with diseases like HIV/AIDS, TB and Malaria.

Taking cue from the agreement between ASEAN countries to establish an ASEAN economic community, Prime Minister Vajpayee put forward the idea that ASEAN needs to be more closely integrated with India, China, Japan and Korea. He said, “ An Asian Economic Community, including the 14 countries of ASEAN + 3 + 1, would more efficiently exploit our synergies.”

The Indian-ASEAN leaders also agreed to ask their think tanks to submit to the next (Laos) India-ASEAN Summit a “Vision 2020” document, which would lay out the road map for future development of India’s relations with ASEAN.

India also acceded to the Treaty of Amity and Cooperation with ASEAN, there by initiating a new level of political cooperation with ASEAN. India also reiterated its willingness to support new projects for training, education and capacity building to hasten the process of integration of the new ASEAN members.

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Ninth ASEAN Summit, Bali

9ASEANsummit.com
October 8, 2003

The leaders of the ASEAN countries met for the 9^th ASEAN summit in Bali, Indonesia from 6^th –8^th October 2003. The event also included summit level meetings between the leaders of ASEAN and China, ASEAN and Japan, ASEAN and Korea and ASEAN and India.  

In the ASEAN leaders meet the Declaration of ASEAN Concord II (Bali Concord II) was signed to reaffirm ASEAN as a concert of Southeast Asian nations, bonded together in partnership, in dynamic development and in a community of caring societies.  

The leaders agreed to establish an ASEAN Community that would be supported by the three pillars of “political and security cooperation”, “economic cooperation”, and “socio-cultural cooperation.” To this end, they adopted the framework to achieve this ASEAN Community through ASEAN Security Community, ASEAN Economic Community and ASEAN Socio-Cultural Community and agreed to task their Ministers to implement the Declaration of ASEAN Concord II.  

 With a view to further deepening cooperation with East Asia, the ASEAN leaders held discussions with colleagues from China, Japan and the Republic of Korea on regional and international political, security and economic issues. They then also consolidated and reaffirmed their cooperation and partnership with China, Japan and the Republic of Korea.

The ASEAN+3 Leaders welcomed and firmly supported the adoption of the Bali Concord II. They also exchanged views on the situation on the Korean Peninsula and reaffirmed our commitment to a peaceful solution of the nuclear issue facing the Korean Peninsula through dialogue and welcomed the convening of the Six-Party Talk as a positive step towards this end. The leaders also endorsed the Implementation Strategy of the Short-Term Measures of the Final Report of the East Asia Study Group (EASG). They also held discussions on the progress of the Initiative for Development in East Asia in the framework of ASEAN+3 Cooperation and explored some new ideas such as to study the feasibility of East Asia Free Trade Area. 

During the meetings of ASEAN leaders with each of the leaders of China, India, Japan and Korea, Leaders, they welcomed the commitment of the ASEAN Dialogue Partners to support a numbers of areas of ASEAN cooperation as follows:

• counter terrorism and other form of trans-national crimes;

• Economic integration of ASEAN, such as the Initiative for ASEAN Integration (IAI), and sub-regional initiatives such as GMS and BIMP-EAGA;

• Establishment of Asian Bond as an alternative for regional financing;

• Efforts on containing and avoiding of SARS, HIV/AIDS and other communicable diseases.

The Leaders also discussed several important issues such as the nuclear question on Korean Peninsula, the future of East-Asian cooperation, poverty alleviation, human resources development and the development of infrastructures for ASEAN Integration.  

Amongst several important agreements, signed by the ASEAN leaders with each of their dialogue partners, were the, Framework agreement on Comprehensive Economic Cooperation between the Association of South East Asian Nations and the Republic of India, the Protocol to Amend the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China and the accession of China and India to the Treaty of Amity and Cooperation.  

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Greater Mekong Sub Regional Economic Cooperation Programme 12th Ministerial Conference

ADB Review
Nov-Dec 2003

To maximize the benefits of regional integration ministers of the six Greater Mekong Sub region (GMS) countries vowed, in mid September to strive harder to strengthen competitiveness and 

connectivity and enhance their sense of community. In a drive to attract private sector participation in the GMS Economic Cooperation Program (GMS Program), the ministers held their first meeting with representatives from the private sector at the 12 Ministerial Conference. The meeting underscored the importance of speeding up priority GMS projects, including trans border road effort.

The countries – Cambodia, People’s Republic of China, Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand and Vietnam- are already reinforcing links through roads, telecommunications networks, and the promotion of power trade.

The GMS Program assisted by ADB since its inception in 1992 , aims to create a better integrated, more prosperous, and equitable region.  ADB and its partners have financed 15 major infrastructure projects, representing investments totaling over $2 billion.

All mainland South East Asian countries will be land linked by 2007 when all sub regional infrastructure initiatives in the Mekong countries are expected to be completed.

A major step toward further opening up the borders in the GMS was taken as Myanmar joined the other five countries in reducing non physical barriers to the free movement of people and goods across international borders. At the end of the meet, Myanmar signed the Cross-Border Transport Agreement.  

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New Asian Leaders Support Greater Regional Integration

The World Economic Forum
Press Release
June 18, 2003

The World Economic Forum’s New Asian Leaders (NALs) Retreat opened on 19th June, in Seoul, South Korea. The objective of the retreat was to focus on ‘Blueprints for a New Asia’, representing visions for change in China, Korea, Japan, India and South-East Asia. The leaders at the retreat also identified Asia’s key concerns for the future which included issues like transparency and productivity in the corporate and public sectors, human capital and education, trade and economic integration for the Asian region, the next steps for technology, entrepreneurship and financing.

 At the retreat, the World Economic Forum and Taylor Nelson Sofres conducted a web-based survey, covering all participants and invitees and other Asia-based Global Leaders for Tomorrow. The groundbreaking survey revealed that Asia’s new generations of leaders were very supportive of regional integration, and mindful of the region’s need to decisively deal with nationalism, corruption and poverty.

Over 51% of survey respondents – who came from India, South-East Asia, China, Korea and Japan – said that the level of economic cooperation in Asia is “adequate, but more is desirable.” Over 37% said that there is “too little cooperation” existing now. Only 8.9% say that the current level of cooperation is “just right.” Over 37% of New Asian Leaders view an extended Asia – Asean+4, including China, Japan, India, and Korea – as the most desirable model of economic integration, with 26.8% preferring Asean+3.

When asked about the obstacles to reaching a high level of economic cooperation, New Asian Leaders identified national interests (46%) as being the primary obstacle, well ahead of historical, social or cultural differences or income disparities.

 The New Asian Leaders (NALs) are Asia’s foremost young change-makers from business, government, academia and civil society in Asia. The group was founded at the East Asia Economic Summit 2002 in Kuala Lumpur under the auspices of the World Economic Form and Malaysian Deputy Prime Minister Abdullah Ahmad Badawi. The community has extended the idea of a “Blueprint for Japan” to China, India, Korea and South-East Asia and are thus, now collectively known as “Blueprints for a New Asia”.

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Study Backs East Asian Free trade Zone

Based on the Study Conducted by Development Research Centre of the State Council of P.R China
June 2003 a high-level feasibility study has concluded that the time is ripe to set up a free-trade zone between China, Japan and South Korea.

China proposed a free-trade zone with Japan and South Korea last November at a meeting of the Association of Southeast Asian Nations in Cambodia. Xu Changwen - a researcher with the Chinese Academy of International Trade and Economic Cooperation led the study .

According to the study, the increased interflow of trade and investment among the three states made it necessary to set up a free-trade zone to streamline such trade and investment. A free-trade zone can give full play to trade and investment between the three economies and make the zone one of the most competitive regions of the world.

Japan’s adjustment of its economy made the zone more possible, the study points. The main obstacle to such a free-trade zone used to be Japan’s protection of its agricultural products. The Japanese government has been afraid that a further opening of the country’s market will hurt its fragile high cost agricultural sector. Its 3 million farmers constitute a political base for its ruling Liberal Democratic Party.

As a  result Japan has made little progress in its free trade negotiations with Thailand, Mexico and South Korea in recent years. But now, Japan is adjusting its industrial structure in a bid to revive its sluggish economy.

Since its narrow domestic market leaves little room for adjustment, Japan must use the international market through economic cooperation with neighbouring countries.

Currently, 20 per-cent of Japan’s foreign trade is with China and South Korea, and 10 per-cent of its overseas investment goes to the two countries.

The situation is driving Japan to push forward economic cooperation with China and South Korea. Unlike Japan, South Korea is willing to accept China into the planned Japan-South Korea free-trade zone.

South Korea needs China’s participation to remedy its advantages in Japanese-South Korean trade in machinery, electronic products and chemical industrial products.

The study also said there was no need to be apprehensive that industrial goods from Japan and South Korea will flood the Chinese market once the zone is set up and tariffs are lowered.

China’s current tariff rate of 11 per-cent compares to Japan’s 2.9 per-cent and South Korea’s 7.9 per-cent. But when China’s tax wavers are taken into consideration the actual rate is not much higher. So the Chinese economy will not be hurt, if the free trade zone cuts tariff rates to the same level.

Zhao Jinping, a researcher with the State Council Development Research Centre, said a China-Japan- South Korea free-trade zone would facilitate the emergence of an East Asian trade bloc with in 20 years. China signed a free-trade agreement with ASEAN last November and the zone is scheduled to be set up by 2010

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