1. Student No. : 092SIS47 Student name: Moon Jee Young Course: INTERNATIONAL NEGOTIATIONS: THEORY AND PRACTICE Professor: Jasper Kim The China and Japan’s disagreement slowing down Asia’s regional economic integration & Suggestions

2. The Rise and Need of East Asian Economic Integration Community The Need of Economic Integration  Emergence and success of other regional integration such as EU, NAFTA (North American Free Trade Agreement)  Strong rebound and increasing economic influences of Asian countries  Increasing and activating intra regional trades so that declined exports or trade dependency on the U.S. or Japan and expanding global markets

3. Approaches for the Integration Seeking Regional Economic/Financial Integration through 1) Regional summit, 2) RTA(Regional Trade Agreement)s, 3) Regional financial cooperation Regional summit ex) EMEAP, EAS, EAEGS, ASEAN, ASEAN+3(CN·JP·KR), ASEAN+6(AU·IN·NZ), CEPEA(within ASEAN+6)

4. Approaches for the Integration RTAs (Regional Trade Agreements) : bilateral or multilateral ex) EAFTA, AFTA (within the ASEAN membership) Regional financial cooperation ex) CMI, ABMI, AMF

5. Economic Benefits of the Integration  Intra-regional tradeoffs increasing  Exports dependency on US, JP decreasing  Insulating Asian economy from following Asian economy crisis  Transfer of technology from developed to underdeveloped accelerated

6. Economic Benefits  Intra-East Asia tradeoffs are increasing Intra-region exports rates change of world-level regional integration (Unit: %) ASEAN +3 ASEAN+5 Resources: As for EU, statistics for 15 memberships before 2000, 27 memberships after 2000. Main: IMF, Statistics DB.; WTO (2008). International Trade Statistics 2008.

7. Economic Benefits  Exports dependency on US, JP decreased KR, JP and Asian countries except CN, whereas CN’s exports in general increased, as intra-East Asian tradeoff increased Resources: IMF, Statistics DB. Structure of Intra-East Asian exports (Unit: %) Korea Japan China ASEAN ASEAN+3 +HK+TW USCN ASEAN+3 +HK+TW

8. Positional Interest & BATNA of China & Japan Positional Interests  mutual interests - being a ‘center’ of political, economic power of the integration.  Building a world credibility –  CN as a world power equivalent to US  JP- eliminating a war criminal during World War 2. BATNA (Best Alternative to Negotiated Agreement)  CN -1) leaving the table 2) Seeking FTAs with intra-Asian nation  JP -1) leaving the table 2) Keep providing regional collaboration organ izations for being a leader

9. Tit-for-tat Strategy Tit-for-tat strategy with four principles; clarity, niceness, provocability, and forgiveness.  Clarity -revealing their positional interests as leaving the table that they could not achieve the hegemony  Niceness - without claiming counterpart in public for disagreement  Provocability - when a counterpart does not follow or compromise  Forgivingness -case counterpart give in the interest

10. Winset China  Being flexible in compromising certain portion of industry profits on the government-driven economy ex) CN-ASEAN FTA(AFTA) compromising 1 trillion farmers jobs  Being nationally unacceptable to a compromise to Japan for a regional leader - Japan being a cruel invader or a criminal of Nanjing Massacre, representatively  Liking Principle hurt for Japan

11. Winset Japan Being strong to compromise in terms of increasing threats and concerns against China’s rise Being unacceptable to a compromise of certain industry such as agriculture or fishery.  A brinkmanship strategy does not work in terms of the Winset ; due to an attitude of pursuing national interest but at the same time reaching an amicable agreement

12. Prisoner’s dilemma * Numbers above or below in each box = each nation’s favorite order (priority) - the lower is the better ** Numbers in bracket = China’s profit in left, and Japan’s in right.

13. Prisoner’s dilemma How to approach and analyze in terms of ;  Profits- the integration would (+) for both, the disagreement would be null(0), Suggestions of an agreement a good national image as a leader.(+)  Priority; both open to an agreement, however fine to disagreement, there is nothing really loses in front for them.

14. Summary and Suggestions Still, integration is in need due to 1) increasing Asia’s regional economic cooperation value 2) rising consumer markets Suggestions/ Resolutions  Winset : putting regional mutual interests ahead of each economy’s own interests  RP (Reservation Point) : accurate calculation in need  Japan : above compromising agriculture and fishery field  China : more than a compromise of automobiles or other infant industries that Japan has strength in  openness toward neighboring nations’ participation and supports