Oct 23, 1992

MAHATHIR FAILS TO CONVINCE JAPAN ON ASIA BLOC.

TOKYO, 21 OCTOBER (IPS/SUVENDRINI KAKUCHI) Visiting Malaysian Prime Minister Mahathir Mohamed has failed to persuade Tokyo to back his proposal for an East Asian trading bloc.

The outspoken Malaysian leader is ending Wednesday his six-day unofficial visit to Japan during which he tried hard to sell the idea of an East Asian Economic Caucus (EAEC) which is strongly opposed by the U.S.A.

"Japan is deeply concerned over the emergence of economic blocs in the world, but it does not believe another Asian trading bloc is the answer", said Masamichi Hanabuso, a Foreign Ministry spokesman.

In a speech to Japanese newsmen Tuesday, Mahathir said the EAEC is not a trading bloc but "a single voice from East Asia in defence of worldwide trade".

But these lofty sentiments do not seem to have moved his Japanese hosts who maintain that protectionism in any form will harm the economies of East Asian countries.

Analysts say it was actually the Japanese who got the Malaysians to moot the idea of an East Asian trade bloc last year because they did not want to irritate the United States.

Since then, Washington has strongly pressured Japan not to support the idea. The then U.S. Secretary of State, James Baker, also publicly rebuked Mahathir for pushing the East Asian bloc.

Pressure from Washington seems to have finally convinced the Japanese that it was not worth risking U.S. ire. Tokyo now says it favours the Australian-sponsored proposal for the Asia Pacific Economic Cooperation (APEC) grouping that would include United States and Canada.

Japanese officials said Wednesday that they took pains to explain to Mahathir that do not want to join the EAEC because "it encourages protectionism" and goes against the GATT principles.

Despite this, Mahathir appears to be working for support for his proposal through the Japanese business community, many of whom are said to agree with him.

"Many businessmen here want the EAEC to be a sort of voice for Asia", said Masanao Ueda, a South-East Asian expert at Keidanren, Japan's largest business organisation.

A section of the business community seems to feel that EAEC has become relevant at a time when negotiations on the Uruguay Round are stalled and the GATT itself breaking down with Europe and North America coalescing into big trade blocs.

"When Mahathir says the voice of economically dynamic Asia needs to be heard in the GATT, he strikes a sensitive chord. He is addressing a Japanese responsibility that Japanese leaders have failed to carry", Ueda said.

Experts contend though that Mahathir needs to work harder if he is still relying on Japanese support.

Tokyo is waiting for the proposal to be endorsed wholeheartedly by the Asean, China and Korea, said Hiroko Senda, an economist with Jetro, the official export promotion organisation.

She said Mahathir had yet to formulate a concrete proposal on the regional trading grouping.