Asian Regionalism: New Poising Architecture for Global Financial and Economic Cooperation

*Noodle bowl architecture for global economic and financial cooperations*

On September 10th 2008, Asian Development Bank (ADB) in conjunction with Center for Strategic International Studies (CSIS), launched an open forum announcing the coming ADB meeting in Bali on 2-5 May 2009. As for the ADB regionalism report, this forum acted as a warm-up event to address the emerging ASIAN regionalism.

Mari Elka Pangestu-minister of Trade, Republic of Indonesia stated that the 1997 financial crisis had taught an importance of regionalism in at least economic cooperation. Focused on Asian Economic Regionalism from the outset, the process propelled by strengthening Asia's short term financing facility which mentioned in Chiang Mai initiative, and next it will be elaborated in the ASEAN economic integration (based on ASEAN blueprint and ASEAN charter). As the growing needs, ASEAN requires real integration with China, Japan and Korea, under ASEAN + 3 PLUS the following India, which working more solid than that of EAS (East Asia Summit). The single market integration roughly estimated to produce outputs as much as to 50 percent greater than the total outputs of European and North American countries. Even the regionalism has some greatest virtues compared to European Union. For instance, free to join for any economy (not need to be an officially recognized state e.g. Taiwan), no specific economic standards to uphold as a member, and open for countries, subregions and prefectures to be partially integrated and entering at its own pace.

Regionalism can be the stabilizing factor when crisis occurs. The regionalism intended to be an open regionalism (not necessarily mean keeping business opportunities in Asia for Asian only) in which ASEAN becomes a hub for regional cooperation. ASEAN in particular oriented outwardly to all over Asia. This regionalism designed to instigate the maximum participation for all countries and use the liberalization as merely tools for countries development. By strong leaderships and innovation or technological competitiveness improvements, this design directed to share wealths amongst the regional components.

The world financial crisis had piled-up the significance of Asian Regionalism which not only market led but orderly managed by governments. As T.J. Pempel from University of California-Berkeley said that markets not always leading in direction desired or as fast as desired, because many of the goals of regionalism lie beyond economics itself (e.g. environment, drug controls, health, and anti-pandemic help). The markets yet remain open, and at the same time Asia increasing its relative influence globally through IMF, World Bank and WTO--though Asian economies is oftenly under-represented in these institutions. Asia must collectively and provide a "common front" through institutional format and aligned with that, strengthen regional stock markets and other financial links. Weaving the outlying states (not just the lower classes) such as Laos, Cambodia, DPRK, Myanmar--into Asian miracle is a matter of importance as well, since the economic gap should be overcome beforehand.

Asian Regionalism is predicted to be the outward model for single integrated market by 2020 with the ADB as the trusted partner in Asian integration. Asian Regionalism allowing each Asian countries expenditure reach minimum three percent of the point targeted by ADB (for further targets, see the ADB 2008 report on www.adb.org). The economic-based market integration would be expedited by the bank and attaining the robust economic growth for the countries involved. This indeed would snap the global economic and financial architecture centralized in global dollar standard.

Global dollar standard has been proven wrong by Gao Haihong from Institute of World Economics and Politics Chinese Academy of Social Sciences, as the US' "benign neglect" policy has uneven effects for the US and the rest of the world. The other havoc potentials come from the negative wealth effect of shrinking dollar on dollar assets holders (e.g. China, Japan, Korea, China-Taiwan, Indonesia, Malaysia, Phillipines, Singapore and Thailand). So briefly speaking, fragility arises from over-reliance on the trust in the US' ability of managing the dollar.

Asian countries should reconsider the global dollar standard and their positions as creditors to the rest of the world. To hinder the global crisis impacts, asian regionalism as an Asian economic community for cooperation is inclined to be the solution. In terms of the new architecture would create a substitute for the US dollar and invigorate a deep and sophisticated regional institusional integration (to supplement the existence of global organizations) and regional financial markets.

The Asian regionalism is apt to switch the APEC moribund since Bush insistence on securitization of economics. It's still a great boon to Asia that Bush was unilateral and US still #2 or 3 trade partner for most Asian exporting countries. Inevitably, to be the global leader through the new architecture, Asia still link to US and Europe as well as internally . Nonetheless, it does not mean Asian regionalism would necessarily use the US' economic standard.

The new archiecture involving great works of each countries in intra-region and extra-region, and fetching functional spill-over effects to the regions (successful results in one area requires cooperation in others and expansion of regional cooperation arena towards multi-track cooperations, including new issues cooperations--climate change, social security issues etc). Regional connectivity should be enhanced and while maintaining the open investment regions in the regions, the architecture should support the global trading system as well.

The open question: would the Asian Regionalism wrench the live of local farmers and home industries?

The challenge: How can the Asian countries move together to meet the economic challenge?