Asean tail wags East Asia dog

South Korea's President Roh Moo-hyun (L) with Malaysia's Prime Minister Abdullah Ahmad Badawi. Picture / Reuters

Expectations are running high for the first East Asia summit, which convenes in the Malaysian capital today.

Fred Bergsten, a former US Treasury Undersecretary now at the Institute for International Economics in Washington, said the hype was about how the summit would pave the way for the birth of a new regional trade alliance and cause "a fundamental split between East Asia and the United States".

Such a seismic shift is possible, but don't count on it just yet. It is one thing for Asian leaders to get together for a chat and a photo-op, quite another for them to work in earnest on a European Union-style economic bloc.

Whether Japan and China will one day, like France and Germany, be able to set aside their past animosity and share a single currency is a question for 2025, if then. The immediate hurdle is how to define East Asia.

Beijing believes the community should comprise, besides Japan, China and South Korea, the 10 nations that make up the Association of Southeast Asian Nations: Singapore, Malaysia, Indonesia, Thailand, the Philippines, Brunei, Laos, Myanmar, Vietnam and Cambodia.

Japan is concerned that such a definition of the community may make it overly China-centric. To contain China's influence, Tokyo wants India, Australia and New Zealand, all of whose leaders have been invited to attend the summit, to be included in the community.

China's logic is that the existing Asean Plus Three grouping can be more easily turned into a seamless community in which goods, people and capital travel freely across national borders. It would be much tougher to achieve the same level of integration in a larger, more unwieldy consortium.

There are strong indications in Kuala Lumpur that, at least for now, China's point of view may have prevailed. Leaders of the Asean Plus Three nations met on Monday, ahead of the East Asia summit. The leaders vowed to "set forth the future direction for the East Asia community".

Asean Plus Three leaders said their group would be the "main vehicle" for regional co-operation. What then will the East Asia summit do? In all likelihood, it will be just another gathering that does nothing to advance the formation of the East Asian community.

As a result, India, Australia and New Zealand will not be able to take it for granted they will be part of the regional trading bloc, when - and if - it is created. All that is guaranteed to them is a once-a-year invitation to attend a meeting whose agenda will be set in another forum where they are not represented.

An organisation dominated by China that restricts its membership to Asean Plus Three nations will have the power, if not the intention, to act as a counterbalance to US influence in Asia - something Washington may not like much. A broader East Asia community, which includes Australia, New Zealand and India - and also Russia, which is keen to join - may be encouraged by the US.

The future of the East Asia community may be closely tied to how it defines itself.

Asean as a whole has a short-term interest in limiting the size of the community and keeping Washington out because the bigger the community gets, the lower will be Asean's importance in it.

Asean has a central role in the East Asia community primarily because of its relative economic and political insignificance. Even if the 10 individual Asean economies do succeed in their endeavour to become one integrated economy, the region would still lag behind Japan and South Korea in technology and would be unable to compete with China and India in terms of market size or labour costs.

Asean's leadership of Asian integration is a case of the tail wagging the dog. That's another reason why the East Asia community, for all the hype surrounding it, may never materialise.

- BLOOMBERG