Mr. Albert Zenarosa, Chairman of ASCOJA
and President of PHILFEJA,
The Officers and Members of ASCOJA and PHILFEJA,
Distinguished Guests, Ladies and Gentlemen,

At the outset, I wish to congratulate the officers and members of the ASEAN Council of Japan Alumni (ASCOJA) on the 24th anniversary of ASCOJA. Likewise, I extend my sincere felicitations to the officers and members of the Philippine Federation of Japan Alumni (PHILFEJA) on the Silver Anniversary of their Federation, to which I am honored to also belong.

In fact, as a Japan alumnus myself, I feel strong bonds of kinship with all of you.  My own decision to study in Japan from 1959 to 1964 altered my career path and I ended up in Foreign Affairs.  Over the years, I developed a keen interest in East Asian affairs, centered on the Association of Southeast Asian Nations (ASEAN), which I have always kept.

This is why I was very happy to accept Chairman Zenarosa’s kind invitation for me to be the Keynote Speaker at this historic meeting of ASCOJA, where, for the first time, representatives from all ten ASEAN member-states are in attendance.  PHILFEJA is profoundly privileged, therefore, to be the host of this important event.

As we all know, associations and federations do not just spring naturally into life.  They have to be planted, nurtured and raised through the decades by human hands.

On this festive occasion, we should all pay tribute to those among us who had the inspiration, the courage and the patience to make ASCOJA and PHILFEJA such successful organizations.  Indeed, your vision and dynamism continue to be needed today, when our nations and our region are preparing for the new world of the 21st Century.

As Secretary of Foreign Affairs of the Philippines, I was at the forefront of efforts to make ASEAN more responsive and more inclusive as a regional grouping.  During my tenure, Vietnam, Laos, Myanmar and Cambodia all joined ASEAN, creating the ASEAN Ten.

The Philippines strongly supported the inclusion of all ten Southeast Asian countries in ASEAN.  We realized that expanded membership could slow down ASEAN regional integration.  However, we believed that over the long run, a larger ASEAN Ten grouping would be able to overcome initial adjustment problems and would reinforce stability and security in Southeast Asia.

Our region faces critical challenges as we begin the 21st Century.  Southeast Asia has to weather the strategic shifts resulting from the end of the Cold War, the all-pervasive impact of deepening globalization and the rising expectations of the people everywhere in the region.

Within a larger and more cohesive ASEAN, we hope that all Southeast Asian nations will acquire a common stake in working together to sustain peace and prosperity in the region.  A shared commitment to the maintenance of regional stability among ASEAN members will help each of them to continue the pursuit of national development at home.

Today, many countries in ASEAN have to manage fundamental domestic political, economic and social change while facing a very difficult external environment.   However, through regional solidarity arising from regional inclusiveness, ASEAN has succeeded in generating some regional solutions to regional problems.

For example, ASEAN led in restoring political calm to Cambodia. ASEAN cooperated with the United Nations and other friendly countries to find a peaceful solution to the East Timor crisis.  Recent moves towards national reconciliation in Myanmar were also made possible because that country is now a member of ASEAN and has from time to time sought the counsel of friends in ASEAN.

In all these efforts at promoting regional stability, Japan was a major partner. As someone who was closely involved in the Cambodia, East Timor and Myanmar issues, I would like to thank the Government of Japan for its invaluable support to ASEAN.

As former students in Japan, you can appreciate the positive role Japan has played in the industrialization of Southeast Asia. Thanks to investment, technology transfer, human resources cooperation and market access from Japan, the original ASEAN members have become important exporters.  Through export-driven growth, they diversified their economies, lessening their dependence on agriculture while modernizing their industrial and services sectors.

The composition of exports to Japan from Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam has changed significantly. In 1991, only 31.8% of their exports to Japan were manufactured products.  By 1999, the share of manufactured products almost doubled to 62.9%. In the process, these countries also improved the living standards of millions of Southeast Asians.

Confronted by today’s tougher global economy, ASEAN and Japan must step up their economic and technical cooperation in order to sustain Southeast Asia’s development.  With the launch of the ASEAN Free Trade Area (AFTA), the region offers a larger and increasingly integrated market to attract more investment from the Japanese and other economies.

From 1993, the year after AFTA implementation began, to 1997, intra-ASEAN exports grew to US$85.4 billion from US$44.2 billion.  Meanwhile, average tariffs on AFTA-covered products fell to 4.43% in the year 2000 from 12.76% in 1993.

The financial crises of 1998 slowed down trade within ASEAN, but the first half of the year 2000 showed significant recovery over the same period for 1999.  Intra-ASEAN exports grew by 40.8% from US$31.48 billion in the first half 1999 to US$44.32 billion in the first half 2000, while intra-ASEAN imports grew 27.8%, rising from US$25.66 billion to US$32.80 billion.

ASEAN has to continue moving forward.  The AFTA inclusion list should be made more comprehensive.  At their third informal summit, which was held in Manila in November 1999, ASEAN Leaders agreed that the six original ASEAN members would eliminate their import duties by 2010, which is ahead of the original schedule.  This agreement should be carried out.

It is in this context that your special efforts are required.  You must act as the catalysts for change in your respective countries. You should champion the full and early implementation of AFTA and other regional economic programs, like the ASEAN Investment Area (AIA) initiative.

If it wants to remain an important economic player, ASEAN must enhance its competitive position, because of China’s imminent entry into the World Trade Organization.  China is now the world’s twelfth largest trading nation.  Its exports have grown nearly five-fold from US$39.5 billion in 1987 to US$194.9 billion in 1999.  ASEAN cannot be complacent in the face of China’s emergence as a trade power.

An ASEAN Secretariat study undertaken in November last year concluded that China and ASEAN will compete in similar exports for the same world markets.  The study also concluded that competition will intensify in labor-intensive sectors like textiles, clothing, miscellaneous manufactures and electronics.

Using export volume as a criterion, the study expects the Philippines and Singapore to suffer a net loss in exports once China accedes to the WTO.  Using trade values as a criterion, the study generated more optimistic results.  Only Vietnam would end up as a net loser.

The implications of this study demand urgent attention in our countries.  For example, a 50 percent minimum wage hike in the Philippines could move its textile and garment export industry to the brink of extinction.  On the other hand, if ASEAN can improve its access to the China market, which is more than twice the size of ASEAN, then this could offset the loss of ASEAN exports to third country markets.

China’s entry into the WTO is inevitable.  Rather than be frightened by what cannot be avoided, ASEAN needs to respond:  first, by accelerating its integration in order to increase its market size; second, by enhancing its export competitiveness through more investment in human resources and technology; and, third, by collectively ensuring that China will actually live up to all of its WTO commitments.

In addition. the introduction of the Euro next year, and the realization of the Free Trade Area of the Americas (FTAA) within a few years time, will further boost the growth of regional markets in Europe and the Western Hemisphere.  In view of this, ASEAN and its close neighbors in Northeast Asia should also accelerate their own development of a more integrated East Asian regional market.

In November 1999, the Leaders of ASEAN, China, Japan and South Korea held a historic East Asian summit in Manila.  They endorsed the beginning of an ASEAN-plus-Three regional mechanism envisioned to deepen linkages among East Asia’s economies.

The ASEAN-plus-Three can be the embryo for a free trade area in East Asia that could even evolve into a regional common market.  We have recently seen some progress towards more concerted regional action in the monetary and industrial sectors. These developments may presage faster East Asian integration in the near future.  Furthermore, the ASEAN-plus-Three does not contradict APEC, which we should all continue to support as our regional mechanism to foster a more open global economy.

In its basic conception, ASEAN-plus-Three holds out the promise that regional cooperation will facilitate Asian economic integration despite the enormous diversity that exists in our region.  East Asia is far more diverse in political, economic, cultural and social terms then either Western Europe or the Americas.

Beyond the economic sphere, the ASEAN-plus-Three also opens the door towards greater dialogue on regional security issues.  If we can enhance regional prosperity through deeper regional integration, then the growth of shared economic interests will hopefully, in time, come to overshadow political and strategic differences that separate East Asian nations.

Collaboration towards this end is critical, because East Asia is still seriously divided over key security problems.  The recent South China Sea aircraft collision incident between the United States and China was only the latest reminder of this fact.

The Taiwan Straits, the Korean Peninsula and several maritime disputes in our regional waters, such as those over the Spratly, Senkaku, and Takeshima islands, are major potential flashpoints that threaten the peace and stability of our region.  Even the welcome prospect of Korean reconciliation and reunification could have unforeseeable consequences for East Asia’s strategic equilibrium.

The East Asian situation is made more uncertain by China’s rising demand for imported energy.  China’s share of Asian oil Imports is estimated to grow from 10.9 percent in year 2000 to 19.4 percent in year 2010.  ASEAN’s share of Asian oil imports is also expected to increase from 5.9 percent to 16.9 percent.

This clearly suggests that there will be greater regional demand and competition for oil imports.  Because oil is cheaper in the Middle East than in Asia, the Middle East will become even more strategically important for East Asia.

This could translate into a larger volume of oil passing from the Middle East through the South China Sea for East Asian markets. This will generate great concern over the protection of that oil flow and of the sea-lanes that transit the South China Sea.

The South China Sea’s significance will not be limited only to its strategic sea-lanes.  Its own oil and natural gas potential may become a focal point for regional rivalries.  Given these various factors, competition for the control of the South China Sea is virtually certain.

The quest for more energy may lead to the use of more nuclear energy in Japan, South Korea, Taiwan and China. North Korea is in the process of constructing two reactors as part of the 1994 Agreed Framework with the United States of America.

Increased nuclear power use will lead to increased availability of nuclear materials that could be used for weapons.  The danger of nuclear proliferation in the region may worsen.  We should remember that there were attempts in Northeast Asia to procure reprocessing facilities as early as the 1970’s.  Japan, the two Koreas and Taiwan already have – or can easily acquire -- the technical ability to build nuclear weapons.

Moreover, the Northeast Asian states have missile delivery capacity as well.  As early as February 1994, for example, Japan, using purely Japanese technology, successfully launched the 260-ton two-stage H-2 rocket from the Tanegashima Space Center in Kyushu.  The North Koreans have not stopped development on the longer-range Taepo Dong missiles.  South Korea has requested the US for permission to test missiles with a range of more than 500 kilometers.  Tokyo and Washington have agreed to conduct joint R&D for missile defense.  The reportedly successful American missile defense test over Kwajalein in the Pacific last July 15 may accelerate these trends.

What is more worrying is the history of non-compliance with International Atomic Energy Agency (IAEA) safeguards by one Northeast Asian country in particular. To further complicate the nuclear scenario in Northeast Asia, outside of the IAEA inspection system, there is no regional or sub-regional institution mandated to deal with this issue.

In the case of the European Union, whose members were at one time mortal enemies, EURATOM undertakes the inspection of nuclear facilities. The inspectors come from countries within the region and there is greater confidence among members in the inspection results. These results are subsequently verified by the IAEA.

For this reason, former President Ramos proposed the establishment of an ASIATOM during a speech at the Nihon Keizai Shimbun conference in Tokyo.  ASIATOM would be responsible for inspecting nuclear facilities in the region. This organization would, of course, include ASEAN and the Northeast Asian states.  With an ASIATOM, the regional nuclear problem would be easier to manage, especially if it is reinforced through the ASEAN-plus-Three or perhaps even an ASEAN–plus-Four framework.

East Asia will also have to consider the problems that may arise from intensified nationalism.  A growing economy has made China more self-confident and assertive on the global stage.  Popular demonstrations against the American Embassy and consulates in China after the bombing of the Chinese Embassy in Belgrade, and the South China Sea aircraft collision, attest to growing Chinese nationalism.

On the Korean Peninsula, though a final peace has not yet been attained, there is already speculation about how a reunified Korea might reshape Northeast Asia’s strategic balance.  If relations between China and Japan become strained and a reunified Korea decides to move closer to Beijing’s orbit, a reaction in Tokyo would be inevitable and not necessarily welcome.

Internal debate within Japan on defense issues has started in earnest under its new and popular Prime Minister Koizumi.  Japan remains in close alliance with the United States, but pressure is building on the continued US military deployment in Okinawa, while the Americans persist on urging the Japanese to shoulder more alliance responsibilities.  The ultimate resolution of these various currents in Japanese defense policy cannot yet be predicted.

For my part, I believe that Japan should accept wider collective security responsibilities in the region.  Such responsibilities are concomitant with Japan’s aspiration to become a permanent member of the United Nations Security Council.  The Philippines has supported such membership for Japan.

The Japanese people themselves will have to decide on the issue of Article 9 in the Japanese Constitution.  As former students in Japan, however, you may help Japan find its evolving role in the region and the world and remind Japan of the sensitivities of its neighbors as it does so.

Overlying these strategic movements is the important security role played by the United States in the region.  We should remember that East Asian stability has been maintained by the continuing presence of US troops in the region, and by the credibility of the US commitment to be the guarantor of peace in this part of the world. Any sign of change in this commitment would cause major strategic shifts in Japan, the two Koreas, Taiwan, China and even perhaps, Russia.

The new Republican administration in Washington has embarked on the most ambitious review of American global strategy since the end of the Cold War.  Asia is said to be a new focus for this review.  At the same time, the need for financial resources to fund missile defense and other new military programs may affect current US deployments in the region.  How this will all work out is unclear.

East Asia faces another challenge from an unexpected direction, namely, demographic change, specifically ageing and the appearance of a gender gap in the region.  Northeast Asia is projected to age rapidly.  Northeast Asia is also expected to experience a demographic shortfall in the percentage of women, as will Southeast Asia to a lesser extent. The aging problem will be most serious in Japan and the shortage of women between the ages of 20-64 in actual numbers will be most prominent in China.

These demographic trends have implications for regional economic integration.  Northeast Asia, except China, will become increasingly labor short.  ASEAN will have a younger and growing workforce.  A lack of workers will reshape economies in Northeast Asia, particularly in agriculture, where people have been leaving the land for decades.  ASEAN will become more attractive as a site for agricultural and industrial investment and as a source of manpower for the retirement industry and labor-intensive services like health, leisure and even backroom business operations.

If you wish to improve the chances of finding a bride for your grandsons in 2025 to 2040, send them to the United States, because America will have a male deficiency in that period.  2040 may seem far away. But, remember, many of us here went to study in Japan in 1959, and that was 42 years ago. Time flies.

Demography will generate political waves as well.  The need to take care of a growing elderly population may well become the driving political issue in Northeast Asia.  In Southeast Asia, the power of youth may force the pace of domestic reforms.  Democracy cannot be built overnight, but it certainly will not be fostered in our region unless we allow more room for political participation, economic empowerment and individual initiative.

The process of reform may at times be unsettling, as the situation in ASEAN’s largest member, Indonesia, illustrates.  Yet, political modernization is as necessary as economic modernization.  If our political and economic institutions can become more responsive to the evolving needs of our citizenry, then we can manage the future better.

Given our past history of conflict, and the various uncertainties I have described, East Asia may be living on borrowed time.  It would be wisest, therefore, if our countries could agree to work quickly on building regional institutions.  We must employ such institutions to tame our nationalisms and to encourage us to bond together in the attainment of common regional objectives.

As former students in Japan, I believe that we all have a special duty to take part in this task, whether we are in government or in the private sector.  As Japan alumni, we have all had a privileged cross-cultural experience.  Many of us have also had extensive experience in the West and elsewhere, which gives us the additional capacity to connect Southeast Asia and Northeast Asia with the wider world beyond.

Our experiences can assist our advocacy for closer cooperation between ASEAN and its neighbors in East Asia, and between East Asia and other key regions.  We have insights gained over the years that we can use to inform our respective governments and societies about how to deal with one another across borders for mutual benefit.

We should, first of all, utilize ASCOJA and PHILFEJA, as platforms to boost educational and cultural links between our countries and Japan.  Not only should we increase the number of our students studying and training in Japan, we should also increase the number of Japanese studying in our respective countries.  The same might be done by counterpart organizations vis-à-vis China and South Korea.

Second, let us harness the latest advances in communications and information technology.  The full potential of IT and the Internet as mediums for cross-cultural education and interaction has barely been tapped.  Likewise, e-commerce promises to boost business contact between even our remotest towns and provinces that have been left behind by globalization.

Third, we must contribute directly to the public debate in favor of regional cooperation.  To whom can our people turn to as resource persons on this subject if not to us and to others like us who have studied abroad?  We must be vigilant against attempts to narrow the national vision against foreigners and to close the door to positive influences from outside our countries.

Let me close by thanking ASCOJA once again for inviting me to be here with you today.  This has been a rewarding encounter.  I look forward to having more conversations with all of you.

Thank you.