At their recent meeting in Cebu, Asean foreign ministers paved the way for India’s participation in the first East Asia Summit (EAS) to be held in Malaysia by the year end. Although India’s role in the broader (East) Asian regionalism is well-known, a few countries were trying to limit the participation to the Asean+3 countries. The Cebu meeting established a three-point criteria for participation. As India fulfills these, it can now hope to participate. EAS is likely to initiate the formation of an East Asian Community (EAC). Combining 14 eco-nomies (and possibly Australia and New Zealand), EAC can evolve into a trade bloc comparable to EU or Nafta, and become the third pole of the global economy.

The Cebu decision is welcome for another reason. The proposed EAC, combining Asean+3+India, would be close to Dr Manmohan Singh’s vision of an Asian Economic Community (AEC) to begin with Japan, Asean, China, India and South Korea (Jacik). EAS can evolve into a broader Asian Economic Community, in a phased manner. Seen this way, the EAS will be an important building bloc of the AEC, as envisioned by the PM.

 India’s participation in EAC would be fitting well with India’s Look-East policy followed since 1991. India has consciously strengthened her economic links with Asean and East Asian countries over the past decade. East Asia is now India’s largest trading partner. The region includes some of the fastest growing economies, and is widely seen as the emerging centre of gravity of the world economy. Economic integration with them could, clearly, be fruitful.

A number of these economies such as Japan and Korea, are facing increasing shortages of working-age, trained manpower due to the ongoing demographic transition. India, with its vast pool of trained work force, will be well placed to take advantage of the opportunity. At the same time, India could bring its own synergies and dynamism to the grouping. A number of Asean +3 also want India to play an active role in formation of EAC and make it more balanced rather than the one dominated by China.

Regional economic integration has been adopted as a strategy of development by all major regions, such as Europe, North and South America, and Africa. Asia has been rather slow to respond to this trend, primarily due to the deep faith of major Asian economies such as Japan, Korea and India in multilateralism. However, the rising trend of regionalism since the 1990s, and a high share of world trade conducted on preferential basis, forced Asian countries to revisit their trade policy towards the end of last decade. That regional economic cooperation presently occupies a major place in Asian countries’ trade policy is clear from the fact that they are presently evolving nearly 50 FTAs or RTAs in the region.

Various Asian leaders have placed emphasis on regional cooperation and the evolving Asian identity, and have taken initiatives in that direction. Thus, Prime Minister Shinawatra of Thailand has launched the Asian Cooperation Dialogue (ACD); China has launched the Boao Forum of Asia; Japan had called for an Asian Monetary Fund; and India’s Prime Minister has suggested an Asian economic community.

All major countries of Asia are also busy evolving preferential trading arrangements among themselves. For instance, the full-dialogue partners of Asean, namely China, India, Japan, and Korea are working on FTAs with Asean. Japan, Korea and China are studying a trilateral FTA. India is jointly studying feasibility of FTAs with China, Japan, Korea. It has been shown by RIS studies that these bilateral FTAs are sub-optimal and do not allow the region to reap full benefits of regional economic cooperation, which could otherwise be substantial. There is a need for building on these sub-regional and bilateral attempts, a broader regional architecture. This broader regional trade and investment architecture could facilitate efficiency-seeking industrial restructuring, and take advantage of their synergies for mutual advantage. The synergies or complementarities bet-ween Asian countries are obvious from the high share of intra-regional trade, approaching a 45% level.

Recent studies discussed at the meetings of Asian think-tanks organised by RIS, in New Delhi in 2003, and Tokyo in November 2004, do find a compelling case for a broader regional cooperation in Asia, built in a phased manner, with Jacik as the core. Such a grouping will comprise half the world’s population, would be larger than the European Union in terms of output, trade more than Nafta, and hold foreign exchange reserves greater than those of EU and Nafta put together.

It has been demonstrated that economic integration in Jacik could generate billions of dollars of additional output. It could also facilitate the exploitation of enormous potential of monetary and financial cooperation in the region. It has been shown that even a rather moderate e.g. 5% pooling of Asia’s foreign exchange reserves of nearly $2 trillion in an institutional framework, could facilitate financing of regional public goods and thus become an additional engine of growth besides providing exchange rate stability.

Thus, at last Asia seems to be getting ready to exploit the fruits of broader economic integration. As the Prime Minister has argued, such a grouping would be ‘an anchor of stability and prosperity for Asia and beyond’. India must get ready to play an important role in formation of such a broader community.