PETALING JAYA: The East Asia Economic Caucus (EAEC), or East Asia Economic Group (EAEG), was originally introduced by current Prime Minister Dr Mahathir Mohamad back in 1997.
The economic pact proposed a regional free trade zone (FTA) that included Asean countries along with China, Japan and South Korea.
However, the economic pact never came to fruition. It was almost impossible for EAEC to succeed because the boundaries were never clearly defined.
There were also large economic, political and regional differences between the East Asian countries.
After 21 years, the EAEC idea is being brought up again now after Mahathir returned as prime minister following the May 9 general election.
He brought up the formation of the EAEC idea again at the Nikkei conference in Tokyo, more than two decades after he had mooted the regional free trade zone in 1997.
Mahathir said he was still in favour of the free trade zone, which he suggested be expanded to include other countries such as India and those in central Asia.
Back in 1997, Mahathir had proposed the idea but it had drawn negative reactions from most of East Asian countries, especially Japan, which was taken aback by Mahathir’s anti-West speeches, done without consultation with his colleagues in other countries.
Japan felt compromised by this as the way he introduced his idea of EAEC was perceived to be greatly ineffectual, as it was even rejected by his colleagues in Asean.
Japan could not go along with this in the beginning of the 1990s as it was then re-orienting itself after the collapse of the Eastern Bloc and the end of the Cold War.
Mahathir actually wanted the EAEC to be led by Japan as it was part of the G7 and he saw Japan’s ability to lead other East Asian countries.
G7 is a group consisting of countries with the largest advanced economies in the world.
Also, the problem with EAEC was that the United States had strongly opposed the economic pact as it saw it as a threat to the US’ influence in the region.
Seeing that EAEC could pose such a threat, the US pressured Japan not to join the pact.
Japan had to take heed as US was its largest trading partner with a lot of influence on Japan’s economy.
Mahathir was viewed as someone who was highly critical of the US and Western policies as he had also opposed Japan’s suggestion to invite New Zealand and Australia to join the EAEC.
An economist, Hoo Ke Ping, had told FMT in a previous interview that Mahathir’s call for the revival of his EAEC idea may cause an adverse American reaction towards him.
He said Washington might paint Malaysia as antagonistic to the US, said Hoo, the author of several books on international economics.
Hoo supported Mahathir’s argument that the US was now becoming protectionist and therefore had no right to oppose the EAEC.
However, he warned that a harsh reaction from Washington might include a bar against imports of Malaysian products.
“If we revive the EAEC, we might be seen as being anti-American because it will be seen as another protectionist bloc that excludes the US.
“And although China will like the revival of the EAEC, we must remember that the US is still the biggest destination for our electronic products, whether directly or indirectly,” he said.
EAEC aims to enhance economic cooperation, promote and protect free trade, accelerate economic growth, promote open regionalism and contribute to a multilateral trading system.
Mahathir insisted on removing the influence of the US and Australia from the regional framework through EAEC, replacing the Apec (Asia-Pacific Economic Cooperation) pact.