East Asian ambitions

The first East Asian summit has concluded with the setting of a potentially ambitious agenda: the creation of an East Asian community. What exactly this might mean is not clear, and definitions are clearly fuzzy since India, Australia and New Zealand should not really be considered part of "East Asia". The danger with very broadly defined groups is that they achieve very little because there is no real identity of interests a danger that now faces the Asia Pacific Economic Cooperation (Apec) grouping formed in the last decade, and which has been reduced to a talking shop. Certainly, the initial focus of the first East Asia summit in Kuala Lumpur this week has been on a fairly limited range of issues, like co-operation on tackling avian flu and piracy in local waters, as also terrorism. But that clearly is only for starters; a broad push for greater regional economic co-operation and even some integration is on the cards and is to be welcomed though comparisons with the European Economic Community are best avoided.

For one, Europe has greater political, cultural, religious and racial cohesion, and also belongs to the same land mass. The relative progress of the European Economic Community and the Association of South East Asian Nations (Asean) also tells its own story. Both began in the 1960s, but while one has progressed to economic union, the other is still operating in the framework of independent nation states. Any agenda set in the future for an East Asian Community cannot therefore be more ambitious than what Asean has so far set for itself. Nevertheless, integration is already taking place many of the countries of South-East Asia have already found that China has become their largest trading partner, overtaking the United States. If financial mechanisms can be created to facilitate greater integration (there has been talk of an "Asian IMF" that could pool the region's foreign exchange reserves), then matters could go beyond trade.

That India has been included in this potentially important initiative is a diplomatic victory for New Delhi, especially after its exclusion from the Apec grouping, and testifies to the growing international recognition of the country's economic promise. It also suggests that many of the countries in East Asia would welcome new counter-weights to China. Indeed, having mooted an Indo-Asean free trade agreement, it is India that started off on the wrong note this week when it presented a negative list of 1,400 items that would be kept out of the agreement. Fortunately, the Prime Minister limited the damage by promising a re-look at the list.

Diplomatic successes, however, can be built only on strong domestic foundations. And it would be well to remember that India still lags behind most of the countries in the East Asian region when it comes to the quality of its physical infrastructure, the story told by its social indicators, and the openness of its economy. Business is worried about its ability to compete in the wake of the free trade agreement signed with Thailand, and is anxious to not invite more problems with yet more FTAs. The solution, though, is to tackle the issues that undermine competitiveness (and infrastructure is the biggest problem), not to slow down integration with the rest of the region, broadly defined.