Return to Home Page 1997 The Feasibility of Establishing A Common Market of the Pacific Rim: What can be learned from Europe By Paul Herbig and Ken Day both at Management/Marketing Department College of Commerce and Business Administration Jacksonville State University Jacksonville, Alabama 36265 (205) 782-5706 fax: 5312 bitnet: FPAH@JSUMUS.bitnet send all correspondence to the first author for final review and submittal to the Journal of Asia-Pacific Business The authors are deeply indebted to two anonymous JAPB reviewers for their insightful comments and suggestions on previous drafts of this manuscript. Contributors’ Note: Paul Herbig and Ken Day are from the Department of Management/Marketing of the College of Commerce and Business Administration of Jacksonville State University in Jacksonville, Alabama. Dr. Herbig’s Research interests include Cross-Cultural Negotiations, Cross-Cultural Innovation effects, and Market Signaling/Reputation. Dr. Day’s research interests include Marketing Channels and, being a Canadian, Canadian Marketing and Canadian International Affairs. Abstract of : The Feasibility of Establishing A Common Market of the Pacific Rim: What can be learned from Europe The success of the European Community is without comparison. With the newly merged European Free Trade Association as well as most of Eastern Europe, it will have a population, GNP, economic and political force second to none among the world’s great powers. Already, countries in the Pacific are taking notice of this economic giant and wondering what they might have to do to compete against it. A trilateral agreement between the U.S., Canada and Mexico will establish a North American Common Market. Efforts to set up a Common Market of the Pacific Rim may follow. This paper examines the Europe 1992 phenomenon, the factors that have made it a success story, some of the prerequisites for a similarly functioning Common Market of the Pacific Rim are offered, and several alternative arrangements of what this body might resemble are provided. Some recommendations of the final form it might take in order for it to succeed as a viable functioning entity are also given. Why The Common Market Worked and Europe 1992 Will be a Success There are a multitude of reasons why the European Community of twelve Western European countries has been so successful and why the successor post-1992 European Market will likewise be an economic powerhouse. However eight major reasons are especially noteworthy and provide lessons for any potential Common Market of the Pacific Rim: First: Purpose in unity. The success of the European Common Market is in many ways a result of NATO and its member nations uniting against a common enemy. The post-war (WWII) Soviet threat forced Western Europe to bind together. Nations that had been fighting since the beginning of the millennium (particularly France and Germany--who in the previous hundred and fifty years had fought four long hard wars against each other) now not only had the incentive and impetus to work together as well as the crisis brought on by the common enemy. The experiences gained from working together in a defense related posture later proved invaluable in the economic sphere. Western Europe has had over 40 years to unite from its Common Market and NATO experience. Second was their proximity. Being located together on a (relatively) small land mass meant economic trade between the units was natural and intense. Economic borders do not follow political lines. Belgium and France share common culture, language, and religion; the Benelux countries go well together; Netherlands and Germany are adjacent; trading between nations becomes second nature. This is one of the primary reasons why a Pacific Common Market may take much longer to form, if ever: distances between potential member countries in East Asia are measured not in the hundreds but in the thousands of kilometers. Third, all the nations involved in the European Community and those likely to join an enlarged 1992 European Marketplace are very similar. Despite cultural differences, more cultural similarities than not are to be found. The nations for the most part are Western in their outlook, derive much of their common culture from Roman and Greek origins, have a common religion (Christianity as distinct from Moslem), are all popularly elected democracies, and are all well developed and industrialized nations (Spain and Portugal and Greece despite their role as ‘undeveloped countries’ in the community still have GNP/capita higher than most other states in the world and are true first world states).The economic distance from strongest to weakest (Germany to Spain) although significant is not overwhelming (as for example the distance would be from Japan to Bangladesh). The EFTA countries would probably fit right in with the European Community. This is also why any further inclusion to the Eastern European countries would probably come after (and not before) their economic problems have been resolved. These similarities make for ease of establishing and maintaining the union. Fourth, the European Community is a balanced community. There does not exists a single dominant economy among the twelve (or eventually the 18 or 24 potential members) nation-states. Great Britain, France, Italy and Western Germany all rank in the top ten world economies as measured by GNP; all have roughly comparable populations, size, resources and economies. Even with the addition of East Germany, an unified Germany will be the largest member of the EEC but still to an important extent balance will prevail between the four major members. Even tiny Luxembourg does not feel as an economic colony of any of the big four. Fifth, the capital of the European community is not located in London, Bonn or Berlin, Paris or Rome (any city within any of the big 4) but in Brussels, a strategically located central locale in one of the smaller members. This produces more European rather than nationalistic tones. If expansion continues to include the EFTA and Eastern Europe, a likely capital would be Vienna, once again a centrally located minor country capital. This further enumerates the Europeanness of the Common Market. Sixth, it is an economic union only. It has defined the limits and boundaries of the union. Although the ECU has been proposed as a common currency, it is still a neutral currency not associated with any of the members’ own coinage. No attempts have been made nor intend to be made to dominate culturally, politically, or socially one nation over another. No attempt to impose or subjugate language, culture, or national sovereignty of the member nation-states is being made. The limits to the common market are definite. Discussions in Maastricht were held concerning a central bank, a common currency, and a common fiscal policy; yet national sovereignty between member states will not be violated. This is not to say that unity in non-economic political spheres may not come to pass but it will be a gradual process that must be delicately handled and if it comes either multiple choices or a new neutral arrangement not presently existing process will be utilized. Seventh, a willingness exists to eliminate all tariff barriers, provide uniform trade and economic regulations which existed between the nations. The member states agreed it was necessary and preceded to take whatever actions were necessary to accomplish it. There may exist unhappiness and displeasure at what this means but all member countries (as well as any future members) recognize the necessity and are complying. This can be seen in the Spain-Germany low cost-high cost labor profile where auto companies are closing plants in high cost Germany at the same time they are building new plants in low cost Spain. Some dislocations will occur, but they must be allowed to happen if the European Market is to become a truly competitive international power. The barriers and tariffs are going to go away. All have agreed and, grumble as they may, they are being dismantled. Eighth and lastly, all Europeans, especially the Germans, have subjugated their nationalistic tendencies to that of the common good of Europe through such organizations as NATO, the Common Market, and other economic trade agreements. The Germans have acknowledged the sins of their past (World War II Nazism), and have looked outward not inward for their future. That they have successfully accomplished this was seen in the rapidity of their coming to agreement with Poland over the Oder-Neisse as the Eastern Border of Germany, thus putting to rest any questions over the former German lands now in Poland. Germany has become a solid citizen of the world and member of the European Community. These eight factors are summarized in Table 1. -------------------------------------insert TABLE 1 about here----------------------------------- Background on Pacific Unity Efforts For at least two decades, there have been attempts to create some sort of Pacific Basin economic initiative. The earliest proposal for Pacific economic cooperation came from Japan in 1965, when Kiyoshi Kojima, an economist of Hitotsubashi University and Hiroshi Kurimoto of the U.N. Economic Commission for Asia and the Far East proposed the creation of a Pacific Free Trade Area (PAFTA) patterned after the European Economic Community (EEC). This Pacific trade area was to be a counterpart and a counterweight to the EEC. It was to comprise five advanced countries - - the United States, Canada, Japan, Australia, and New Zealand - - as full members and the developing nations of the Pacific as associate members. It would have entailed discriminatory tariffs and trade policies against nonmembers. This idea was taken up by the Japanese government and inspired a series of regionally based Pacific Trade and Development (PAFTAD) conferences1. In 1967, a group of businessmen formed the PBEC (Pacific Basin Economic Council). In 1968 ASEAN was created with its commitment to regional, economic, and cultural cooperation and development. In September 1980 a Pacific Community Seminar was held in Canberra, Australia. Two subsequent conferences-in Bangkok, Thailand in June 1982 and in Bali, Indonesia in November 1983, have been held under the auspices of the organization created in Canberra, the Pacific Economic Cooperation Conference (PECC). The PECC comprised fifteen Pacific counties, including the People’s Republic of China (PRC) and Taiwan. The PECC has been an annual affair since 1982, and recently agreed to set up a permanent secretariat in Singapore. Although it is a private body with mainly business and academic members, the PECC serves as an important meeting ground for the exchange of ideas between Pacific leaders. Some individuals believe that the PECC could be transformed into a Pacific OECD by strengthening government participation. However, neither PBEC or PECC could reduce the fears and suspicions, mainly among the ASEAN countries, about being dominated by the larger industrial economies-- and in particular, Japan. An Organization for Pacific Trade and Development (OPTAD), modeled after OECD was proposed in the late seventies. It was envisaged as an intergovernmental organization composed of the five developed countries -- United States, Canada, Japan, Australia, and New Zealand; five ASEAN countries -- Indonesia, Malaysia, the Philippines, Singapore, and Thailand; and South Korea. Papua New Guinea and the Southwest Pacific states as a group would make the twelfth member of the core group. Taiwan and Hong Kong could be accorded observer status because of their special circumstances. The criteria of membership was to have been based on commitment to a market economy. The Japanese have begun to give serious consideration of Pacific economic cooperation as part of their national policy. In March 1979 the Pacific Basin Cooperation Study Group was created in Japan under the authority of then Prime Minister Masayoshi Ohira. Headed by Saburo Okita, who became foreign minister later that year, the group produced a wide-ranging and detailed agenda for regional economic cooperation. MITI, in its 1988 white paper, proposed an OECD type organization. Rather too transparently, MITI indicated that the purpose of economic cooperation in the Pacific would be to facilitate continued economic growth in Japan. In MITI’s conception, agriculture would conveniently be excluded from the agenda of cooperation. The membership in the Japanese Asia Pacific Organization (APO) would definitely include the U.S., Canada, and Hong Kong, but not the PRC or Taiwan. The style of negotiations would ostensibly be multilateral. An APO would not initially be an alternative to the GATT, which Japan would like to see preserved, although Japan is currently considering un-GATT-like bilateralism and the creation of free trade areas in the region that might gradually be linked together. Japan’s hidden agenda, which was not so carefully hidden, was its own continued economic restructuring. The American counterproposal envisioned a “flexible” structure, perhaps out of deference for the known ASEAN aversion to establishing a potential rival to ASEAN. An American APO would promote “Free market democracy” and “private enterprise”. Ostensibly it would resist protectionism and promote environmental conservation. Membership would include Hong Kong, but not, officially, the PRC or Taiwan. There is also the South Pacific Forum, composed of Australia, New Zealand, and a large number of small island states. The South Pacific Forum’s main purpose is to give the counties of that area a joint political voice, which had been denied them under previous arrangements. SPARTECA is a special one-way trade agreement between Australia and New Zealand for small Pacific Island states; it allows those states to have totally free access to the Australian and New Zealand markets for certain nominated products. Regional meetings of the Commonwealth of Nations, whose membership includes most of the members of the South Pacific Forum together with Singapore, Malaysia, India, Sri Lanka, and Bangladesh have sought to concentrate on functional cooperation and established study groups in energy, industry, trade, maritime resources, agriculture, terrorism, and drugs. This was all part of the process of searching for a common identity. Although these regional groups had and have their own purpose, they have never really fulfilled the idea of a Pacific Community. The most recent initiative, known by its acronym APEC (Asia Pacific Economic Cooperation), was set in motion by a speech by Australia’s former prime minister, Bob Hawke, in January 1989. In his speech, Hawke cited supporting multilateral trade liberalization, lifting Asia Pacific trade barriers, and encouraging regional policy coordination as major objectives. These remain the declaratory objectives of APEC. The proposal envisions a permanent OECD-type organization that would carry on research and analysis of economic growth and development in the Pacific Rim economies. In addition to research and analysis, the Australians wish such an organization to develop plans for liberalizing Pacific trade and investment and to facilitate policy coordination, regional planning, industrial cooperation, and technology transfer. The style of negotiations within the organization would be multilateral. The organization would not, at least initially, function as an alternative to GATT; it would instead operate as a means of consolidating Pacific Asian opinion within the GATT. A preliminary meeting was held in November 1989 in Canberra to discuss the future of APEC with ministerial-level representatives from twelve countries attending: Australia, Japan, the ASEAN countries, the United States, South Korea, New Zealand, and Canada. These countries represent the market economies of the region with the exception of Taiwan and Hong Kong. The socialist economies of the PRC, Vietnam, and the Soviet Union were excluded from these preliminary meetings on the grounds that, given the nature of the discussions, they did not fit well in the grouping. Present at the first APEC meeting was a representative of the South Pacific Forum. APEC’s member nations make up almost the full roster of countries that have directly produced what’s come to be known these past 15 years as the Asian economic miracle. The decision to include Canada and the United States, but to exclude Mexico, the Pacific seaboard countries of Central and South America, and India, stemmed largely from attempts to define what constitutes the Asia Pacific region 2. This is a permanent and dynamic element in a real political equation and is subject to constant change.The initial decisions did not include resolution of the difficult question of membership for PRC, Taiwan and Hong Kong. In the 1991 meeting of APEC in Seoul, all three were admitted. The declared objectives of APEC were: a) to the principles of liberalizing world trade; b) to “present a united voice” at the current GATT negotiations; c) to explore means of increasing trade and investment; and d) to set up information systems will evolve into an OECD style policy clearing house 3. However, these objectives will be much more difficult to implement than they were in Europe because, unlike Europe, the participating nations are separated by great geographical distances, past rivalries, widely divergent cultures and significant power imbalances. So, for the foreseeable future, a major APEC achievement might be simply to get the various participants to meet together to discuss their mutual problems. APEC’s larger aim must be to go beyond trade difficulties and to reinforce the region’s positive trends by promoting cooperation in areas like human-resource development, information and data, tourism, telecommunication, shipping, energy, and fisheries. Foreign investment and technology transfer are two particularly important areas for future cooperation. APEC must also set up working parties to find ways of increasing regional trade, investment and technology transfer between rich and poor countries. Committees will study specific infrastructure needs, including telecommunications and transport, which answers a US push to have trade in services included in market opening studies. An APEC team will also look at conserving Pacific fishing resources, setting up a new data systems on trade, investment flows and commercial opportunities in the region - which some officials see eventually turning into a policy clearing-house like the Paris based OECD. Problems associated with Regionalism in the Pacific Attempts thus far to form a Common Market of the Pacific have failed. No other region of the world is as diverse culturally, historically, and economically as the Pacific. Nation-states range in size from the PRC to the tiny island kingdom of Tonga. Their ranks include highly modern systems like Japan, Singapore, and South Korea, as well as very thinly developed economies like Papua New Guinea. Per capita gross national product (GNP) ranges from more than $20,000 for Japan to less than $200 for Burma. Countries such as the Philippines, Bangladesh, Malaysia, and Indonesia are much less developed economically than Japan, Taiwan, Singapore, and Australia. The diverse economic status of Pacific countries may impede the possibility of a unification (similar to the situation of the EEC with Greece, Portugal and Spain but an order of magnitude worse). This poses as the most crucial challenge of the concept of a Community of the Pacific. Politically, the Pacific embraces U.S. allies such as Australia, Japan, New Zealand, the Philippines, South Korea, and Thailand; Communist states such as Vietnam, Mainland China, and North Korea; and a spectrum of nonaligned governments. There also are deep political cleavages between and problems within Pacific nations: the role of China, the fear of the return of Japan’s Greater East Asia Co-Prosperity Sphere, the legacy of the Vietnam war, the US military presence in the region, Japan’s penetration of Asian markets, the role of ASEAN, as well as the role of the Pacific Basin islands especially with respect to their political, economic and cultural penetration by Japan and the United States 4. Geographically, the region also includes parts of Latin America. Some Latin American countries, notably Chile and Peru, have in fact begun to redefine themselves as Pacific as well as South American countries. History compounds these distinctions, with memories of Japanese occupation still strong in China, South Korea, and Southeast Asia; with distrust of China also strong in Southeast Asia; and with a range of subregional tensions-for example, the Koreas, Indochina, and in the dispute of the Spratley islands in the South China Sea and the northern islands dispute between Japan and Russia. Thus the enormous diversity of the countries of the Pacific -- diversity in history, in culture, in economic development, in size and population-- present overwhelming difficulties to any potential Common Market of the Pacific Rim. There is no natural grouping as there were for the nations of the European Community, as there was for the Organization of the American States, or, indeed, for ASEAN. In addition, the cultural and religious differences between these nations cannot be overstated. These differences influence the practices of each country’s work ethic; the importance placed on the role of government; and, the normative business etiquette observed, among others. Since the aforementioned differences have been institutionalized into the structure systems of each nation, initiating change may be resisted 12. These concerns would certainly act as impediments to any proposed Common Market of the Pacific. Table 2 summarizes the perspectives for a Common Market of the Pacific Rim in terms of what made Europe’s Common Market succeessful. ---------------insert TABLE 2 about here--------------- Objectives for a Common Market of the Pacific Rim The aims of any broadly based Pacific economic community would appear to be the following: •Promote multilateral trade liberalization and share the responsibilities of world trade and economic leadership. •Lower tension between the U.S. and its East Asian economic partners over trade issues and payments imbalances. •Reduce the prospect of economic introversion in Europe as 1992 approaches. •Accommodate new patterns of competitive strength in East Asia. •Manage whatever challenge the emergence of China, with its partially reformed centrally planned system, provides when it returns as a major player in Pacific economic relations. •Seek opportunities to reduce long-standing sources of conflict in Indochina, on the Korean peninsula and with the Soviet Union as their governments come to accept the benefits of more open economic relations and political systems5. •Pacific economic cooperation should be based on independence, mutual respect and equality. •This regional cooperation should complement ASEAN’s regional activities and role in the Pacific, and should strengthen multilateral mechanisms for cooperation, particularly GATT. •This cooperation should not lead to the creation of an economic bloc or an exclusive trading arrangement. •It should be developed in a gradual fashion and be properly planned. •The objective of cooperation should be increase the welfare of the people in the Pacific region and to reduce the gaps between the developed countries and the developing countries in the region. •This cooperation should contribute to the creation and maintenance of a stable and open trading system, regionally and globally, and a regional environment which is conducive to the promotion of mutual interests, including the ability to resolve conflicts peacefully6. Alternatives for a Common Market of the Pacific: What would it look like? What are some alternatives for a Common Market of the Pacific? At least four possible scenarios can be envisioned. These are not by any means an exhaustive list of possibilities but are merely meant to provide some discussion on potential alternatives. 1)ASEAN and the market driven East Asian countries: Japan, South Korea, Taiwan, Hong Kong, Philippines, Indonesia, Brunei, Malaysia, Singapore, and Thailand. 2)All ASEAN, South and East Asian, and Pacific nations: the above countries plus India, Pakistan, Sri Lanka, Mainland China (PRC), Australia, New Zealand, Bangladesh and the Pacific Island states. This would provide two large nations--India and the PRC-- to balance the presence of Japan within the community. 3) Pacific Rim states: those countries included in (1) plus the PRC, Australia, New Zealand, Pacific Island States, Canada and the United States. This would provide economic balance to Japan as well as expanding the concept to the entire Pacific Rim. 4) The countries of scenario (2) plus the United States and Canada and perhaps other Latin American nations such as Mexico. This would be the most encompassing of all the alternatives. Prerequisites for the Common Market of the Pacific Rim Some prerequisites for a successful Common Market of the Pacific Rim can be gathered from the observations concerning the factors behind the success of the current European Community: 1) One country can not dominate, especially Japan: there needs to be a balance of power. The lesser states are not going to enter into an arrangement with Japan to end up under their economic hegemony. They remember all too well the Greater East-Asia Co-Prosperity Era of World War II and their status of subordinate members-- in reality having gone from one colonial power to another. They won one war by military means and they are not now going to yield to economic domination. This is their greatest fear. Alternative 1 is therefore not a likely scenario. Any Pacific Rim Community alternative in order to have even a mild chance of success must have offsetting elements. The inclusion of the United States/Canada is one possibility. Or the inclusion of India, PRC, and Indonesia, all with populations above or close to that of Japan, could possibly lend to the needed balance (although their economic power would be still considerably below that of Japan). 2) Tokyo can not be the headquarters. Nor should Beijing, Djakarta, or Honolulu. However there is an already existing reasonably centralized cosmopolitan city-state that would make a convenient capital: Hong Kong. Its existence as the Pacific Economic Community center would also assist to protect its own liberties after 1997. 3) All trade barriers among member nation-states of the Pacific Rim Community must be removed. These include actual and the so called “invisible” barriers of distribution, etc. This will be the hardest prerequisite to comply with. For example, Japan’s highly politically protected agricultural tariffs must go. Japan or any other member of the conjectured Common Market of the Pacific Rim must not be able to pick and choose barriers. They must accept and then implement if the community is to be a sincere economic community similar to that evolving in Europe. 4)The member nations must be willing to nurture to economic democracy the nearby Communist states. A certain amount of unselfishness must be present and necessary. When the time is right and these states are ready, Vietnam, Laos, Cambodia, PRC, and North Korea must be accepted into the Common Market of the Pacific Rim. Unselfishness and charity is not a readily available commodity for “out” groups in most of the proposed Pacific Economic Community countries. This tendency must be reversed in order to have a successful Common Market. 5) There must be some degree of commonality associated with all the members. For all the differences that are exhibited between the European nations-- different languages, cultures, etc., the major commonality that exists is that they all are European in nature. For a Pacific Common Market to succeed, the commonality can not be too general, i.e. Asian (since this is too broad and encompassing). East Asian could be too limiting in perspective . Pacific Basin could perhaps be sufficient. A Sense of Pan-Pacificism must occur. Recommendations Alternative one is not likely due to Japanese economic hegemony concerns. Alternative 2 and 4 begins to include most of Asia and then where in Asia does one stop? The most satisfactory scenario seems to be Scenario 3 where the United States/Canada could serve as economic balance to Japan. The inclusion of South Asian countries would not be necessary. The inclusion of the United States would be fitting and would probably resolve many of its trade deficit problems. Problems:Why a Common Market of the Pacific is not Likely this Decade? From Singapore to Seoul, Japan’s neighbors are suspicious-China and South Korea vociferously so. They have grounds to worry; for unlike Germany, Japan has never adequately come to terms with its past. Japan still is intent upon rewriting the history books concerning the Second World War, glossing over Manchuria and the Shanghai massacres and even to this day faulting the United States as the perpetrator behind Pearl Harbor. Nor is it bound, as Germany is, into broader institutions like the EC and NATO that make it seem less singular, and single-minded, than it was half a century ago. Until these very valid concerns are resolved, suspicion of the one dimensional selfish Japanese economic machine will be a substantial barrier to any Pacific Common Market which includes Japan. The countries of the Pacific have neither the example of the circumstance which impelled Europe towards the 1957 Treaty of Rome, nor the common economic, cultural and geopolitical interests which provide a ready basis for cooperation in North America. While most Pacific governments appear interested in increased cooperation, and while most also perceive a need for new consultative mechanisms, few appear to welcome the creation of new bureaucracies or institutions. For the near future, therefore, no formal intergovernmental organization for the region is likely. Despite the concern of some in Europe, it also appears that Pacific cooperation-whatever its ultimate form-will not be a closed process. Nor is it likely to develop into a regional trading bloc such as the EEC, despite a growing tide of resentment throughout the Pacific against European protectionism. A more likely focus will be on consultation and cooperation in concrete problem areas. The Pacific Rim countries also have had no common enemy to unite them as did Europe and NATO, and no overriding unifying force--as does Europe. Until such time, regional animosities will continue to plague an idea as the Common Market of the Pacific Rim. Until such time as the 12 or 20 or whatever number of Pacific nations decide to act in regional and not in self interest, the community will not congeal let alone survive as an economic entity. The ambiguous economic relationships of the United States must too be resolved. The United States is an integral part of NATO and as such although not formally is intimately associated with the emerging European 1992 Marketplace. At home, the United States is rapidly moving towards a North American Common Market with Canada and Mexico. And yet , the importance of the United States as a Pacific Power, as a counterweight to Japanese economic hegemony, as we have seen can not be understated. Will the United States be forced to decide between the three trading blocs or is it sufficiently large, powerful, and dominant to be truly global and associated with all three regions? The answer to this question will also impact the success and timing of the development of any future form of a Common Market of the Pacific. Summary A Common Market of the Pacific is at least a decade away from any formal treaty arrangements. The European Countries have had geographical advantages (being physically located close to each other) and historical commonality (the Roman Empire). The Pacific Common Market would be physically existing in an area ten times or more the size of the European Community. Notwithstanding the transportation and communication advancements of the last forty years, this is still an immense area. And the last time there was any commonality was when the Japanese occupied the area during the second world war with their version of a Co-Prosperity Sphere (the superior Japanese and their “little brown brothers”-- an event many a potential member state remember all too well and do not want repeated again, either militarily or economically). The Europeans have had 35 years experience of a limited Common Market before jumping into the much greater all encompassing European Market being created by the Europe 1992 process. Given the oriental emphasis on consensus, and the other problems discussed above, a decade may be too short a timeframe for anything substantial to occur, beyond establishing a framework for meeting and talking. In any case, Europe 1992 process and the North American Free Trade Area may well provide the spark of necessity for a Common Market of the Pacific, if only out of self defense. In his lecture of October 1985 on ASEAN and the Pacific Basin, Dato Masa Hitam made the following observations which are still applicable today7 : 1) “It is absolutely premature to be thinking of a single overarching organization or institution for the Pacific.” 2) “We must not take the political road but the functionalist road. Participation should be based on interest and on the ability to contribute to a particular functional collaborative effort.” 3) “It is essential that in pushing the process along, we must not only be pragmatic and flexible but also patient.” 4) “It is essential that no one try to create or even think of a strategic design”. 5) “It is absolutely essential to create in the Pacific not a rich man’s club, not a hierarchical system, but a series of arrangements and collaborative efforts that are egalitarian in character and content. 6) “Above all, to us from the point of view of the ASEAN community, it is absolutely essential that nothing come to pass that will retard or jeopardize that development of the ASEAN spirit, the ASEAN concert, the ASEAN sense of community, and ASEAN as an organization.” Therefore, discussions like those generated by APEC, and arrangements like ASEAN, must be continued and expanded in order to increase the likelihood that a Common Market of the Pacific will continue to be developed and enhance the economic vitality of the region. REFERENCES 1. Randolph, R. Sean (1984), “Pacific Overtures”, Foreign Policy, Vol. 57, pages 128-143 2. West, Dalton (1990), “ Competition or Cooperation: A Special report on Southeast Asia Region on the Rise”, The World and I, (March), pages 22-30 3. Rowley, Anthony (1989), “Parisian Model”, Far Eastern Economic Review, 16b November, Pg. 12-15 4. Inayatullah, Sohail (1985), “The Concept of the Pacific Shift”, FUTURES, volume 17, number 6, pages 581-587 5. ibid Rowley 6. Wanandl, Jusuf (1989) “Building on Asean”, Far Eastern Economic Review, August 17, pages. 24-25 7. Hitam, Dato Musa (1985),” ASEAN and the Pacific Basin” speech delivered October 29, 1985 at the Hawaii Imin International Conference Center, East West Center, Honolulu Hawaii TABLE 1: Factors behind the Success of the European Common Market 1. Experience in unity, common cause. 2. Geographic proximity to one another. 3. Cultural similarities including a common religion, popularly elected democracies, and are all well developed and industrialized nations. 4. Abalanced community with no dominant nation. 5. A neutral capital in Brussels. 6. An economic union only with defined the limits and boundaries. 7. A willingness and commitment exist to eliminate all tariff barriers and to provide uniform trade and economic regulations which existed between the nations. 8. Nationalistic tendencies have been subjugated to the common good of Europe.