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Daniel C. Sneider
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As President Bush continues his tour of Asia, Pantech Fellow and San Jose Mercury News columnist Daniel Sneider observes in YaleGlobal that growing regional cooperation threatens U.S. preeminence in East Asia.

On the surface, President Bush's week-long swing through Northeast Asia has been a strong contrast with his recent stormy (and, some say, stumbling) excursion into Latin America.

There was little sign of overt anti-Americanism. And no Asian leader will openly oppose American leadership in the flamboyant manner of Venezuela's Hugo Chavez. Even prickly China swallowed President Bush's barbs about lack of democratic freedom in China, quietly acknowledging the two powers' differences. In contrast to the meeting of leaders from the Americas, the annual summit of the Asia Pacific Economic Cooperation (APEC) forum in Korea will embrace the principles of free trade.

Beneath the polite appearance, however, there is no less a challenge to American leadership in Asia. While Washington fiddled, a powerful momentum has been building up in Asia toward the formation of an East Asian Free Trade Area or, more ambitiously, an East Asian Community, modeled on the European community. Led by China, the East Asian grouping pointedly excludes the United States.

The APEC agenda focuses on an initiative to counter the spread of avian flu and to offer a common push at the WTO meeting in Hong Kong next month to revive the Doha Round of global trade talks. The Bush administration has its own agenda for the APEC meeting: to reposition itself as a leader of economic growth and integration in the region. For this, APEC has the virtue of being a more open organization than those behind the disappointment at the American summit. Its 21 members span the Pacific Rim, bringing together nations from Chile and Mexico to Russia, China and Southeast Asia. But this attention to APEC may be a case of too little, too late. The momentum to give the amorphous APEC an ongoing institutional role, beyond its annual summit meetings, has slowed in recent years. Its pledges for mutual tariff reduction exist almost entirely on paper.

Until this year, the Bush administration barely addressed regional economic issues at APEC. It preferred to use the meetings to promote a post-9/11 security agenda of anti-terrorism. U.S. trade policy has focused more on reaching free trade agreements with a few selected "friends" in that war, such as Singapore and Australia.

Meanwhile a Chinese-sponsored move to hold an East Asian summit offers the most visible expression of a trend of declining American influence in Asia. That meeting will take place in Malaysia in mid-December. The gathering groups the 10-member Association of Southeast Asian Nations, Japan, China, South Korea, India, Australia and New Zealand. Pointedly not invited is the United States.

This meeting is an outgrowth of the ASEAN Plus Three (APT) process - an annual dialogue of ASEAN with China, South Korea and Japan that began in December 1997 in the midst of the Asian financial crisis. The APT has grown into an elaborate mechanism for cooperation in a range of areas from finance and agriculture to information technology. This reflects an underlying economic reality - the growth of regional and bilateral trade agreements and the rapid rise of intra-Asian trade.

Until fairly recently, foreign trade in East Asia was dominated by trans-Pacific trade with the United States. But the share of Asian exports headed to the U.S. has dropped dramatically, while those destined for other Asian nations has risen. In the two decades from 1981 to 2001, according to economist Edward Lincoln, the share of intra-regional exports has risen from 32 percent to 40 percent, and intra-regional imports from 32 percent to 50 percent.

Much of the growth of regional integration is being driven by China, which is generating enormous demand for imports of raw materials as well as for semi-finished goods that are assembled for export. China has not been hesitant to use this role to expand its influence in the region. It has embraced the APT as a road towards creation of an East Asian community. At the ASEAN summit last year, Chinese Premier Wen Jiabao declared that such a community was a "long-term strategic choice in the interests of China's development." China has also outmatched the U.S. in negotiating free trade agreements, both bilateral and regional. The most impressive is an FTA deal between China and ASEAN set to take effect in 2010. Beijing even dreams of an Asian currency, based on the Chinese yuan, to rival the dollar and the euro.

China is not the first nation to try for such East Asian economic unity. Back in the days when Japan was riding high as an economic superpower, it too talked of leading an East Asian bloc, based on a yen currency zone. As late as 1997, in response to the Asian financial crisis, Japan proposed the creation of an Asian Monetary Fund, a kind of alternate regional financial system. More recently, both South Korea and Japan offered their own visions of an East Asian community in 2001. And both countries tried to match China in the APT by offering to form free trade agreements with ASEAN.

Japan, however, was never as successful as China is likely to be. "It would seem that Japan is a natural counterweight to China, but Tokyo is generally perceived as reactive and incapable of outflanking Beijing," Brad Glosserman, director of research at the Pacific Forum of CSIS, wrote recently. "Its economic dynamism is no match for that of China."

The United States has never been friendly toward efforts to create an East Asian economic bloc, viewing them as chipping away at the global trading system and rivaling American leadership. But Asia is arguably only following in American footsteps -- witness the NAFTA deal with Canada and Mexico and the more recent trade pact with Central America.

Many American policymakers believe these developments are partly a product of the failure of the Bush administration to articulate - much less pursue - a strategy to engage East Asia.

"The United States has greater strategic interests in Asia now than it did in Europe before World War I or World War II,'' argued a recent report of the Grand Strategic Choices Working Group, co-chaired by John Hopkin's University's Francis Fukuyama and Princeton's G. John Ikenberry. "Thus," the report continued, "it is unfortunate that part of the problem, in East Asia in particular, is that America's relative lack of interest in tending to the region has caused some allies of the U.S. to doubt our resolve and question the value of resisting unfavorable developments alone."

The report echoes other policymakers in suggesting the U.S. form its own East Asian economic zone with Japan, South Korea and Australia."That's a non-starter,'' says Professor Vinod Aggarwal, director of Berkeley's APEC study center. "Nobody wants to be cut out of the China market."

Privately, Bush administration officials downplay the importance of the East Asian summit in December, pointing to the lack of any concrete agenda. The addition of India, Australia and New Zealand to the invitation list, along with Japan, should effectively counter any Chinese initiative, they believe.

But those countries also fear being left out of whatever may emerge from this process. They cannot afford to be left on the outside, looking in.

Ultimately, neither can the United States. The President's trip is a belated recognition of that fact. But to be more than a momentary gesture, the United States must give East Asia the consistent attention it deserves.

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Paul Stockton is the associate provost at the Naval Postgraduate School in Monterey, California, and is director of its Center for Homeland Defense and Security. Stockton is the editor of Homeland Security (forthcoming from Oxford University Press in 2005). His research has appeared in Political Science Quarterly, International Security and Strategic Survey. He is co-editor of Reconstituting America's Defense: America's New National Security Strategy (1992). Stockton has also published an Adelphi Paper and has contributed chapters to a number of books, including James Lindsay and Randall Ripley, eds., U.S. Foreign Policy After the Cold War (1997). Stockton received a BA summa cum laude from Dartmouth College in 1976 and a PhD in government from Harvard University in 1986. He served from 1986-1989 as legislative assistant to U.S. Senator Daniel Patrick Moynihan. Stockton was awarded a postdoctoral fellowship for 1989-1990 by CISAC. In August 1990, he joined the faculty of the Naval Postgraduate School. From 1995 until 2000, he served as director of the NPS Center for Civil-Military Relations. From 2000-2001, he founded and served as the acting dean of the NPS School of International Graduate Studies. He was appointed associate provost in 2001.

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Alberto Díaz-Cayeros is a Senior Fellow at Stanford University's Freeman Spogli Institute for International Studies (FSI), and co-director of the Democracy Action Lab (DAL), based at FSI's Center on Democracy, Development and Rule of Law (CDDRL). His research interests include federalism, poverty relief, indigenous governance, political economy of health, violence, and citizen security in Mexico and Latin America.

He is the author of Federalism, Fiscal Authority and Centralization in Latin America (Cambridge, reedited 2016), coauthored with Federico Estévez and Beatriz Magaloni, of The Political Logic of Poverty Relief (Cambridge, 2016), and of numerous journal articles and book chapters.

He is currently working on a project on cartography and the developmental legacies of colonial rule and governance in indigenous communities in Mexico.

From 2016 to 2023, he was the Director of the Center for Latin American Studies at Stanford University, and from 2009 to 2013, Director of the Center for US-Mexican Studies at UCSD, the University of California, San Diego.

Affiliated faculty at the Center on Democracy, Development and the Rule of Law
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The 2005-06 Academic Year got off to an exciting start for the European Forum. Following the recent terror attacks in Madrid and London, the Forum plans to be organizing a variety of events on the manners in which European countries and institutions are facing the threat of terrorism. In the first weeks of the Fall Quarter the European Forum hosted several European politicians, academics and authors. On October 12 John Bruton, European Union Ambassador to the United States and former Prime Minister of Ireland (1994-97), presented his views on Europe and the United States as global partners in a fascinating lecture for a crowd of about 100 faculty and researchers.

Earlier during the Fall term the European Forum was honored to welcome Latvian Foreign Affairs Minister Artis Pabriks. On September 21 he gave a lecture on Latvia's current challenges in foreign policy and homeland security, and answered questions on Latvia's relations with the United States and its position within the European Union.

During a visit to Stanford on October 4 German sociologist Heinz Bude, from the University of Kassel, presented his views on the most recent German elections from a broad, societal and historical perspective, paying attention to the 1968 student uprisings and their long-term impact on German society. Later on in October Christian Deubner, from the CEPII research center in Paris, shared his opinions on current developments in French politics, with a focus on the French rejection of the EU Constitution earlier this year and its impact on France's position in the EU.

On October 26 German author Peter Schneider offered his reflections on the cultural differences between Europe and the United States. He compared the relationship between the two continents to a marriage that has its ups and downs, but endures. In a seminar on November 3 Josef Joffe, Editor of the German newspaper Die Zeit, pointed at cultural, demographic, political and economic reasons to argue that the European Union is not about to become a new superpower. Both events drew much attention and a large audience from the Stanford community.

Later on in November there will be talks on the effects of the Europeanization of the holocaust on the attitudes toward Jews (November 16), by Werner Bergmann from the Technische Universität Berlin; and on Poland's current economic dilemma's (November 17), by Wojciech Bienkowski, from the Warsaw School of Economics.

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We investigate the demand for the rule of law in post-Communist economies after privatization under the assumption that theft is possible, that those who have "stolen" assets cannot be fully protected under a change in the legal regime towards "rule of law," and that the number of agents with control rights over assets is large. A demand for broadly beneficial legal reform may not emerge because the expectation of a legal vacuum increases the expected relative return to asset-stripping, and strippers may gain from a weak, corrupt state. The outcome can be inefficient even from the narrow perspective of the asset-strippers.

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The Philippines suffers from an ominous systemic deficit: the incapacity of democratic institutions to respond to pent-up social demands. A scant four years after a second "peoople power revolution" in 2001 brought down President Joseph Estrada on charges of involvement in illegal gambling, the country again finds itself in crisis. President Gloria Macapagal-Arroyo struggles to retain power as she faces allegations that close relatives are also involved in gambling syndicates and still more damaging accusations of complicity in fixing the May 2004 elections. Unlike in 1986 and 2001, when changes in leadership nurtured new hopes, the crisis of 2005 reveals a system desperately struggling for legitimacy. Prof. Hutchcroft will argue for well-considered institutional reform designed to break the cycle of recurrent crisis and tackle the country's perilous democratic deficit.

Paul D. Hutchcroft has written widely on Philippine politics and political economy, including Booty Capitalism: The Politics of Banking in the Philippines (1998). His current writing includes a book on state formation and territorial politics in the Philippines from the early American colonial period through the enactment of the Local Government Code in the 1990s; and an edited volume on Philippine political reform stemming from a workshop he organized in Manila in July. He has been a visiting fellow at the Asia Research Institute in Singapore and is now the associate chair of UW-Madison's Political Science Department.

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Christoph Zuercher CDDRL Visiting Scholar, Associate Professor Speaker Free University Berlin
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Gideon Maltz is studying the role of presidential term limits in advancing democracy, strategies for more effectively enforcing term limits, and the question of term limits in the context of parliamentary systems. Gideon has worked as a Junior Fellow in the Democracy & Rule of Law program at the Carnegie Endowment for International Peace and as a Business Analyst at McKinsey & Company. He has also spent time working on comparative constitutionalism as a part-time consultant at the National Endowment for Democracy, on Sudan and Zimbabwe at the International Crisis Group, and on international trade at the law firm of Hogan & Hartson.

Gideon graduated with a B.A. in Ethics, Politics & Economics from Yale and is currently a third-year student at Stanford Law School. He is also a graduate fellow at the Stanford Center for International Conflict and Negotiation (SCICN).

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This report provides a preliminary examination of changes in village fiscal affairs between 2000 and 2004. The basis for this assessment is a survey of 101 villages in 50 townships in 25 counties in 5 provinces in China that was carried out between March and April of 2005. The provinces include Jilin, Hebei, Shanxi, Sichuan and Jiangsu. In each province, the counties, townships and villages were selected to provide a representative cross-section. Our village survey was complemented by an investigation into fiscal changes in each of the 50 townships. In this report, we focus on the revenue and expenditure implications of these changes at the village level. We provide an overall assessment for all 100 villages, but also examine village-level differences across provinces, as well as differences between villages in the richest and poorest quintiles of our sample.

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Report to the World Bank, Village Finance: Tax-for-Fee-Reform, Village Operating Budgets and Public Goods Investment
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Encina Columns is the biannual newsletter of the Freeman Spogli Institute for International Studies. The newsletter, published in the fall and spring, highlights recent news, events, policy analysis and accomplishments of the Institute and its research centers and programs.

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