East Asia Economic Caucus

The East Asia Economic Caucus (EAEC) or East Asia Economic Group (EAEG) was a regional free trade zone (FTA) proposed in 1990 by former Malaysian Prime Minister Dr. Mahathir bin Mohamad and encompasses the Association of Southeast Asian Nations (ASEAN) member states, China, South Korea and Japan. Japan though refused participation due to the exclusion of the Western nations, which were already members of APEC and many other notable regional organizations in East Asia.

The EAEC was a reaction to ASEAN's integration into the Asia-Pacific Economic Cooperation (APEC) by Dr. Mahathir, who is known for his strong Asian standpoint. His suggestion apparently articulated his dissatisfaction with ASEAN joining APEC, which includes Western nations, an idea he was strongly opposed to. Therefore, EAEC was basically an APEC without North America and Australia. Nevertheless, it was never put into action officially. Recently the ASEAN+3 rounds might be called the successor of EAEC, which prompted Malaysia to state that EAEC was a reality. In 2005, due to Japan's support of the agreement, ASEAN Plus Three(ASEAN+3 or APT)agreed to include Australia, New Zealand, and India during the East Asia Summit.

Origin

When the Uruguay Round of discussions to create more liberalized world trade was aborted in autumn 1990, the former Malaysian Prime Minister Dr. Mahathir Bin Mohamed attempted to create such a trade union in East Asia which was a much debated^[1] approach to institutionalizing regional East Asian cooperation structures.

Reactions

The aggressive Western-critical speech by Mahathir without consultations with his colleagues in other states, scared most East Asian countries away from this idea. Japan especially, felt compromised by this. The way he introduced this idea of EAEC was perceived as greatly ineffectual, as he was even rejected by his colleagues in ASEAN. Mahathir tried to support the idea by stressing that the EAEC conforms with the General Agreement on Tariffs and Trade (GATT), but this step also brought hardly any results. The exclusion of Oceania and Australia was found especially unfitting. Japan could not go along with this in the beginning of the 1990s, as it was re-orienting itself after the collapse of the Eastern Bloc and the end of the Cold War.

Perspectives

The original concept of EAEC was very difficult to implement, as there were large economic, political, and regional differences between the East Asian countries. Besides these difficulties, Mahathir's concept committed Japan to be the leading power. At the time, this perspective was not acceptable for Japan, as it was closely allied to the US and deeply linked through trade with the other nations to be excluded from the organization. South Korea was also extremely dissatisfied with Japan being placed at the center of the proposed organization, and would not support it.