Northeast Asia’s Realism: Fated External Influences on Trilateral Economic Integration

East Asian Community Rev (2018) 1:49–59 https://doi.org/10.1057/s42215-018-0006-4 ORIGINAL ARTICLE Northeast Asia’s Realism: Fated External Influences on Trilateral Economic Integration Takashi Terada1 Received: 4 June 2018 / Revised: 19 June 2018 / Accepted: 19 June 2018 / Published online: 27 July 2018  Asiatic Research Institute 2018 Abstract This article examines the vicissitudes of Northeast Asian regional integration, with a focus on the development of the trilateral free trade agreement and the trilateral investment treaty. It emphasizes that Northeast Asian regionalism has proceeded through gradualism, informality, and lower-profile approaches as a realistic way for the development of cooperation, which in turn is due to the political fragility generated by Japan’s strained bilateral relations with China and Korea concerning persistent historical and territorial disputes, pushing the triangle to a 2:1 split. The article explores this particular structural problem in Northeast Asia as a fundamental vulnerability to the sound development of trilateral cooperation. The structural instability of Northeast Asian political relations with the cautious steps for the promotion of regionalism also exposes trilateral cooperation to potential external pressures, such as the US-led Trans-Pacific Partnership (TPP), which eventually compelled China and Japan to reach middle ground in their different approaches to integration and generated a key impetus for Northeast Asian integration. The article thus concludes that given the existence of historical and territorial tensions in Northeast Asia, the incremental growth of trilateral integration will continue to be subject to external pressures or growing US pressure on China over its trade practices, which the article identifies as This article is a revised and updated version of my chapter in Yul Sohn and T.J. Pempel (eds.) (2018) Japan and Asia’s Contested Order: The Interplay of Security, Economics, and Identity (NY: Palgrave Macmillan). & Takashi Terada 1 Department of Political Science, Doshisha University, Kyoto, Japan an independent variable. The Trump administration’s decision to withdraw from the TPP in January 2017 thus removes one of the key drivers for the development of trilateral integration. Keywords Northeast Asian regionalism
Regional integration
TPP
China-Japan-Korea (CJK) relations
Realism 1 Introduction Northeast Asian regional integration was slow to develop because of complex political relations. Japan’s political relationship to both China and Korea has occasionally become contentious, involving nationalistic demonstrations and vandalism by the respective citizens. Therefore, Tommy Koh, Singapore’s Ambassador-at-Large, declared: ‘‘Due to historical differences, the three major powers…don’t trust one another. For this reason, no regional institution can be led by them… any proposal that marginalizes ASEAN’s centrality in the region is … unlikely to succeed (Koh 2009).’’ Yet, at the fifth Trilateral Summit held in Beijing in May 2012, the trilateral investment treaty, which had undergone 13 rounds of negotiations since 2007, was eventually signed by the three leaders. This trilateral investment treaty has been important in the context of a possible trilateral free trade agreement (FTA), as Japan and Korea used to be strongly reluctant to sign such a trilateral FTA without first signing the investment treaty. China had long encouraged the reverse sequence. These differing positions on trilateral economic cooperation caused delays in the commencement of official FTA negotiations. Importantly, China’s eventual concession on this issue became possible only after Japan 50 expressed serious interest in participating in the TransPacific Partnership (TPP) in 2010 (Terada 2012). The political complexity of bilateral relations in Northeast Asia has much to do with an apparent paradox. There had been no FTA in the region until Korea and China signed their own bilateral FTA in 2015, even though China, Japan, and Korea had signed a number of bilateral FTAs with nations outside the region, including ASEAN, its member states, and Australia. Though Japan is currently China’s third largest trading partner and China is Japan’s largest trading partner, there has been no strong political initiative in either country to form a bilateral FTA. A possible FTA between Japan and Korea began as a symbolic policy to mark the new relationship in 1998 pushed by Prime Minister Keizo Obuchi and President Kim DaeJung, but the negotiations, which officially started in 2003, came to a halt in the following year when then Prime Minister Junichiro Koizumi visited the Yasukuni Shrine, which President Roh described ‘‘a challenge to South Korea’’ (Asahi Shimbun, 21 November 2005), amid strong opposition to Japan’s liberalization of fisheries products and Korea’s concerns about its growing trade deficit with Japan. Korea and China, for their part, did not seriously consider a bilateral FTA until President Lee Myung-bak, who earnestly promoted Korea’s bilateral FTAs including ones with the USA and the European Union, visited Beijing in January 2012. However, the Trilateral Summit held in November 2015 in Seoul after a three-year hiatus symbolized the improved relations between Japan and Korea, as seen in their agreement on the comfort women issues in December 2015. The summit allowed Prime Minister Shinzo Abe to visit South Korea’s capital for the first time since he came to power in December 2012. Following the successful launch of the investment treaty in May 2014, the summit saw the three leaders promoting cooperation in areas such as peace, environment, agriculture, education and, most importantly, they put forward the trilateral FTA as the next key agenda goal. This article examines the vicissitudes of Northeast Asian regional integration, with a focus on the development of the trilateral FTA and the trilateral investment treaty. It emphasizes that Northeast Asian regionalism has proceeded through gradualism, informality, and lower-profile approaches as a realistic way for the development of cooperation, which in turn is due to the political fragility generated by Japan’s strained bilateral relations with China and Korea concerning persistent historical and territorial disputes, pushing the triangle into a 2:1 split. The article explores this particular structural problem in Northeast Asia as a fundamental vulnerability to the sound development of trilateral cooperation. The structural instability of Northeast Asian political relations with the cautious steps East Asian Community Rev (2018) 1:49–59 for the promotion of regionalism also exposes trilateral cooperation to potential external pressures, such as the USled TPP, which eventually compelled China and Japan to react to reach middle ground in their different approaches to integration and generated a key impetus for Northeast Asian integration. The article thus conclu (...truncated)