Thu, Nov 22, 2007 - Page 9 News List

Toward an Asia-Europe partnership

By Frank-Walter Steinmeier

Asia's rise as an economic and political player exemplifies what globalization is all about. By the decade's end, China's economy will be larger than Germany's. By 2040 three of the world's five largest economies -- China, India and Japan -- will be in Asia.

That is one side of the Asian picture. The other side is persistent poverty, lack of development, massive environmental degradation, a widespread rural-urban divide, demographic problems and troubled banking systems. The picture is further complicated by security risks such as nuclear arms proliferation, fundamentalism and weak or failing governance.

The sweeping changes under way in Asia are not just economic, but have also created new political realities that cannot be ignored. Asian countries now act with much greater self-assurance than in the past. Their military budgets are expanding, and there are regional rivalries. Thus, along with tremendous opportunities implied by globalization, political risks must also be addressed.

German and European policymakers must make clear what Europe has to offer Asia, and can do so at this month's EU/ASEAN and EU/China summits.

The "soft power" of Europe's political and social model is well known. As an Asian leader once told me, Europeans have what many Asian societies aspire to: democratic government, advanced infrastructure, civil rights, world-class companies, high educational and social standards and a rich cultural heritage. This gives us considerable standing.

It is crucial to ensure that our European model, with its emphasis on a fair deal for everyone, remains competitive.

Nevertheless, Germany stands to lose more than any other country from any protectionist-minded retreat from globalization. In the first six months of this year alone, the value of German exports nearly passed US$500 billion.

But free trade is a two-way street. Artificially low exchange rates, restrictions on capital flows and excessively large currency reserves all create global imbalances. Any strategic partnership between Europe and Asia must encourage global economic responsibility based on cooperation and transparency.

Europe and Asia must jointly commit to an agenda underscoring global resources and sustainability. Environmental, climate and energy issues concern everyone. China is already a top carbon dioxide emitter. Environmental degradation in Asia not only harms its population's health, but will become an impediment to growth.

Growth is important to us in Europe, and it is even more important to Asia's emerging economies. But, as European experience shows, it is often worth sacrificing short-term benefits for the sake of longer-term gain.

The history of European integration suggests that regional cooperation, give and take, the pursuit of shared goals and even in some areas the transfer of sovereignty are the best ways to overcome tensions and promote peaceful problem-solving. Certain elements of this European path may be relevant to Asia's own regional cooperation.

Indeed, Asian trade and commodity flows are increasingly interlinked. ASEAN members conduct almost 50 percent of their trade within Asia. Economic relations between major players such as China and Japan are increasingly close -- owing not only to booming trade, but also to direct investment and regional production networks.

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