March 2001

Views expressed are those of the authors, not necessarily of the AFSC.

Asian Reverberations: FTAA and the Global (Dis)Order

Joseph Gerson is Program Director at AFSC/New England.

Physics teaches us that for every action, there is an equal and opposite reaction. But in the case of NAFTA and the proposed Free Trade Area of the Americas, the responses have been multiple. One response is renewed interest and diplomacy related to the creation of an East Asian trade zone. There were similar dynamics in the 1930s when, in the midst of the depression, the Smoot-Hawley and other tariff barriers were raised to keep foreign goods out of the US in a desperate effort to protect profits and jobs. John McCloy, "Chairman of the Establishment," later wrote that this tariff made war with Japan inevitable. Desperate for raw materials, cheap labor and markets, the Japanese elite and its military establishment countered with an imperial East Asia Co-Prosperity Zone. First they challenged US and British hegemony in China. Then they seized European and US colonies, including Indochina, the Philippines, and Indonesia.

In the immediate aftermath of the Cold War, Walter Russell Meade (now of the Council on Foreign Relations) explained that the US was struggling to counter the emerging power of the European Union with the NAFTA and FTAA projects. Because Europe's combined market, wealth, and technological depth far exceeded those of the Americas, Washington was reconsolidating not only its American dominance, but its control over the resources and economies of the Middle East and East Asia.

Late in the Clinton Administration, several major bumps appeared on the road to the New World Order. The Asian economic crisis of 1997-98 threatened to go global and led desperate Asian financial planners to re-imagine East Asian monetary cooperation and insulated trade zones. More recently, France and Russia have breached the wall of unchallenged US hegemony in the Middle East through deals with Iraq and Iran. And "Seattle," "Washington," "Prague," "Davos," and "Puerto Allegre" happened.

In 1998, the US used the IMF to quash Japanese-led efforts to create an Asian Monetary Fund which was to be led by Japan and which was supported by many East Asian governments. The US response was consistent with the Bush (George I) Doctrine written by George II's Deputy Secretary of Defense Paul Wolfowitz: the first priority of US foreign and military policy is to ensure that no peer competitors emerge--anywhere. Asian elites experienced the condemnation of their effort to address their crisis with their own resources as hypocritical and as raw neo-colonialsm. Predictably, the required IMF structural adjustments that came with the IMF's bail out loans led to G.M., G.E. Capital, and other US-based trans-national corporations buying out Asian corporations and seizing ever larger market shares and control of their economies.

Today, Japanese economists continue to search for a way out of their decade-long economic decline. The Korean economy remains shaky, and China is anxious to limit the destabilizing impacts of its anticipated WTO membership on both its own polity and on the economies of its Southeast Asian neighbors. In these circumstances, many in Asia are nervous about the implications of a Free Trade Area of the Americas in terms of the markets, profits, and jobs they are likely to lose.

So, once again, elite voices across East Asia are renewing calls for an Asian Monetary Fund. They've negotiated a dollar swap agreement to insulate their currencies, and there are dreams of creating a unified currency to compete with the Euro and the dollar. Like France and Germany before them, Japan and Singapore are putting a free trade agreement in place that could serve as the foundation of an East Asian free trade zone, while think tanks and government-backed study groups in Tokyo, Seoul, Shanghai, and ASEAN capitals are exploring how this could be done. Japanese diplomats are seeking to calm international opinion and to buy time with visions of an "open," as opposed to fortress-like, Asian zone. And progressives like Walden Bello of Focus on Global South urge support for emerging Asian and third world trade zones to challenge the power and edicts of the US dominated WTO-IMF-World Bank disorder.

There are, of course, many more obstacles to an East Asian Free Trade Area than there are to FTAA. Painful historic memories, powerful national identities, and deep rivalries and suspicions characterize the region--especially the Northeast Asian Japan-China-Korea triangle. And, at this time, the Japanese and Korean elites are reluctant to take any steps that would jeopardize their bi-lateral alliances with the US. But change happens, often unpredictably. The desire to offset East Asian moves toward greater economic integration helps to explain why some strategists in Washington look to the FTAA as an additional foundation for balance of power and divide-and-conquer strategies directed against both the EU and Asia. And it is no accident that Tom Friedman of the New York Times keeps reminding us that "the hidden hand of the market will never work without a hidden fist"; that "McDonald's cannot flourish without McDonnell- Douglas ... and the hidden fist that keeps the world safe for Silicon Valley's technologies to flourish is called the US Army, Air Force, Navy, and Marine Corps."

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