Summary of Proceedings at the 4th Plenary Meeting

Outline of the 4th Plenary Meeting of the NAECOC

3rd September 2001 Khabarovsk

Main Points

During the first session, Mr Kayahara, Chairman of the Transportation Subcommittee, reported on the current direction of the subcommittee’s activities, such as the creation of the Northeast Asia Transportation Corridor Concept (Vision) ready for the next Economic Conference.

Furthermore, with regard to the 2002 Northeast Asia Economic Conference in Niigata, the proposal drawn up by the Secretariat was accepted in essence. The main suggestions made by committee members during the discussion were: “expand participation by people from the world of business, members of the Japanese Government and Prefectural Governors”; “adjust the key report themes and session discussions”; “hold a discussion on multilateral trade”; “reduce the distance between the speakers and the audience and allocate more time to floor speeches”. The Secretariat will take these comments into consideration in making preparations for the conference.

At the second session, Mr Koga, Dr Yamazawa, Dr Cho, Mr Gombo and Mr Yonekawa gave an explanation of various initiatives aimed at implementing multilateral cooperation projects.

At the third session, Dr Ishaev reported on “The State and Perspectives on the Economic Development of the Russian Far East” and Mr Syrkin reported on Dr Minakir’s paper on the theme of “Regional Cooperation in the Context of the Russian Far East”. Mr Yoshida gave his comments on these and a free discussion took place.

Outline of the Proceedings

First Session

1. The host, Dr Victor Ishaev (Governor of Khabarovsk Territory) and Mr Hisao Kanamori (Chairman of the Board of Trustees of ERINA), Chairman of the Organizing Committee, opened the meeting with some preliminary greetings.

2. Mr Susumu Yoshida (Director of ERINA), Director of the Secretariat, introduced all the committee members present, the observers and the guests. Following this, the new committee members Dr Woong-Bae Rha (former Deputy Prime Minister of the ROK) and Mr Ip-Sam Kim (Senior Advisor to the Federation of Korean Industries), and Mr Kwang Pak (Managing Director of the Korea-Japan Import-Export Company), who was participating as an observer representing the DPRK, addressed the gathering.

3. Mr Hideo Kayahara (Senior Advisor to ERINA and Director General of the Japan Port and Harbor Association), Chairman of the Transportation Subcommittee, indicated that, in order to realize the Northeast Asia Transportation Corridor Concept, it is necessary 1) to monitor the situation regarding improvements to each corridor and promote their use by means of good PR; and 2) to develop the corridors via the cooperation of the government of each country and international institutions. In addition, he reported on the subcommittee’s current activities, including the joint inspection of the Suifenhe Transportation Corridor, in which subcommittee members were to participate on September 5th and 6th.

4. In response to a question from Mr Ikuo Hirayama (Governor of Niigata Prefecture) regarding the assignment of priorities to projects in the Northeast Asia Transportation Corridors, Mr Kayahara said that “at this point in time, there is no order of priority and all projects are being treated equally. The assignment of priorities is a difficult problem, as each country’s interests differ”. He also expressed his opinion that a route from China’s three northeastern provinces and Mongolia to the Japan Sea is important.

5. Based on the materials previously distributed, Mr Yoshida explained the proposed plan for the 2002 Northeast Asia Economic Conference in Niigata. The questions and comments outlined in points 6-15 below were made in response to this.

6. Mr Hirayama indicated that research on transportation corridors is progressing, with the next Economic Conference in mind, and stated that measures aimed at the development of the Northeast Asian Economic Subregion through linking resources, workforces, capital and technology in each country, are in the process of materializing. In addition, on the theme of the accumulation of existing discussions on such topics as development finance schemes, including the Northeast Asian Development Bank concept which is being considered by Dr Cho and others in the Northeast Asian Economic Forum, he expressed his desire on behalf of Niigata Prefecture to make the greatest effort possible, while making use of everyone’s opinions at future Economic Conferences. Furthermore, he asserted his wish to hold the next Economic Conference but one in the spring of 2003.

7. Mr Yoshinobu Yonekawa (Program Coordinator, Department of Economic and Social Affairs, United Nations) made the following remarks. Mr Shianlung Lai retired at the end of August, but the UN will continue its cooperation in future. The bringing up of the problem of social development at the meeting of experts in regional cooperation is welcomed. In terms of the technical aspects of running the conference, it would be preferable if the time allotted to discussion from the floor were increased and if the practice of holding multiple sessions at the same time (for example, the meeting of experts in regional cooperation and the IT panel) could be eliminated as far as possible.

8. Dr Pavel Minakir (Director, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences) made the following remarks. In order that participants on the floor can engage in an exchange of opinions, it is necessary to adjust the time allocated to each part and decrease the distance between the speakers on the rostrum and the participants on the floor. Will discussions take place with regard to China and Russia’s membership of the WTO during the trade and investment session?

9. Mr Tsogtsaikhan Gombo (Team Leader, Tumen Secretariat, United Nations Development Program) praised the following two items. Firstly, the system of sessions, which allows several themes to be discussed simultaneously, thereby saving time. Secondly, the efforts that are put into running the conference, such as the drawing up of documents and the preparation of presentations by the Secretariat. However, it was requested that the Secretariat strengthen its approaches with the aim of realizing greater participation from members of the Japanese business community and governmental representatives.

10. Dr Rha raised a question with regard to initiatives being undertaken by the Secretariat in connection with the importance of the participation of the DPRK in the Economic Conference. In reply, Mr Yoshida explained that when Mr Kanamori visited the DPRK last year, he issued the Ministry of Trade with a request for participation and that a letter of invitation has already been sent this year.

11. Dr Ishaev commended the shift in participation in the conference from mainly academia to those active in the business circles, and indicated the importance of greater participation by regional leaders, such as prefectural governors from throughout Japan. Moreover, he asserted his intention to make efforts from the Russian end to realize the participation of the DPRK.

12. Mr Guinian Liao (Executive Director, Asia-Africa Development Research Institute of the State Council Development Research Center) made the following remarks. He said that he was extremely interested in the issue of the establishment of the Northeast Asian Development Bank. If this were established, it would contribute greatly to the development of Northeast Asia. Attention should also be paid to the macro aspect of Northeast Asian economic Development. He expressed a desire actively to debate the various problems of the six nations and to spur discussion at the governmental level.

13. Mr Hirayama made the following remarks. The participation of the Japanese Government and of prefectural governors is important. In addition to representatives of the Ministry of Foreign Affairs and of the Ministry for the Economy, Trade and Industry, who take part every year, we have decided to request the participation of the Ministry of Finance in the next conference. He said that until now, no other prefectural governors have participated in the Economic Conference, so he would like to consider this with a view to realizing a wider participation. It was also hoped that the Organizing Committee could become something like PECC, from which APEC was born.

14. Mr Kensuke Koga (Chairman, Japan-China Northeast Development Association) made the following remarks. He said that the Association is interested in the Tumen River development project and recognized that the transportation issue is an important one. As major businesses in the Japanese business circles belong to the association, he also expressed a desire to promote their participation in the Economic Conference.

15. Mr Yoshida divided the above comments and questions into three areas: 1) issues connected with the general running of the organization; 2) recommendations; and 3) technical issues. He then made the following comments, outlined under points 16 to 18.

16. The four important issues connected with the general running of the organization are 1) realizing the participation of the heads of regional governments; 2) realizing the participation of Japanese Government representatives in sessions other than the concluding session; 3) increasing participation from the world of industry and making the trade and investment panel more practical; and 4) realizing participation from the DPRK. With regard to the final point, all participants present agreed to issue an invitation to the DPRK to participate in the name of the Northeast Asia Economic Conference Organizing Committee.

17. The two most important recommendations were 1) that the research theme in the field of the economy and trade be widened from bilateral issues to multilateral issues and that research be carried out into a multilateral free trade area; and 2) that the activities of the Organizing Committee be strengthened, not to mention the comment that by holding it in each country, it was hoped that it could become an organization like PECC. He said that he would like to give specific consideration to both these points.

18. On the technical side, Mr Yoshida said that he would like the Secretariat to do as much as possible to put into practice the suggestions that 1) the relevance of the keynote speech to the content of the sessions be increased; 2) the time allotted to comments from the floor be lengthened; and 3) greater harmonization take place in terms of the time of sessions taking place simultaneously.

Second Session

19. Mr Koga told the gathering about the 2001 Japan-China Economic Cooperation Conference in Jilin, which was held by the Japan-China Northeast Development Association and China’s three northeastern provinces (Jilin, Liaoning and Heilongjiang) in Changchun in May 2001, and outlined the rewarding discussions that took place on the subjects of 1) exchange between cities and the reform of distribution, including that of agricultural produce, in connection with the development of the Tumen River area; and 2) the practical application and development of information technology (IT) and cutting-edge technology. Moreover, he called for participation in the 2002 Japan-China Economic Cooperation Conference in Heilongjiang, scheduled to be held in May 2002.

20. Dr Yamazawa said that at the Shanghai APEC meeting to be held in October 2001, the main focus was to be on 1) IT and capacity building for the new economy; and 2) the opening of a route for the inauguration of a new round of talks at the WTO cabinet ministers’ conference in Qatar. Furthermore, touching on the trend towards regionalism in East Asia, he stated his view that 1) East Asia was late in participating in the global trend of regionalization; and 2) FTAs are considered to be a realistic way of achieving liberalization within the WTO system. He also expressed his hope that an FTA between Japan and the ROK or between Japan, China and the ROK would play a part in strongly promoting the formation of a Northeast Asian Economic Subregion.

21. Dr Cho reported that a round-table discussion regarding the establishment conference for the Northeast Asian Development Bank took place in Osaka in June 2001 and that a memorandum of understanding has been drawn up based on the discussions that took place. Furthermore, he mentioned that the Northeast Asian Economic Forum took place in Changchun in April 2001 and that the next meeting was planned for October 2001 in Anchorage.

22. Mr Gombo reported on the Tumen River Area Development Advisory Committee Meeting and an economic forum on Northeast Asian regional cooperation, which took place in April 2001 in Hong Kong. At the meeting, the possibilities for expanding the geographical scope and strengthening the institutional structure were discussed. Agreement was reached and at present, the 3rd phase of the Tumen River Area Development Program (3 years in duration) is being implemented.

23. Mr Yonekawa reported on the international workshop on capacity building and the creation of networks for social development in Northeast Asia, which took place in Harbin in June 2001, under the joint auspices of the United Nations, the People’s Government of Heilongjiang Province and the China Society for Promotion of the Guangcai Programme. It is planned that the results of brainstorming at the conference by policy-makers and experts from each country will be included in the list of final results after further work in the future.

24. After this, a free exchange of opinions took place. Firstly, Mr Kanamori raised the issue of the danger of free trade agreements being seen as inward-looking and asked whether they might be inconsistent with APEC’s open regionalism. The following points 25-29 are comments made in response to this.

25. Dr Yamazawa expressed his opinion that the view that “free trade agreements revitalize the regional economy but inhibit economies outside the region”, while traditional, is rather old-fashioned and that if the economies of the relevant countries were revitalized as a result of a free trade agreement, other countries should also reap the benefits.

26. Mr Liao expressed his opinion that progress should be made in the formation of a free trade area in Asia, like those in Europe and America, and that it is necessary to inspire more interest in this among related governments.

27. Touching on the content of past conferences, Dr Cho judged it to be the case that experts in Japan and the ROK believed that a free trade agreement between them should be concluded as the necessary preparation has already been completed, but that experts in China were of the opinion that an agreement should be concluded between Japan, China and the ROK, no matter how long it took to iron out.

28. In relation to this, Dr Yamazawa expressed the view that although China will join the WTO, it has not made the preparations for a free trade agreement. Moreover, he expressed the opinion that preparations for a free trade agreement should be made in parallel with preparations for a new round of WTO talks.

29. As a separate line of discussion from free trade agreements between states, Mr Yoshida emphasized the role that a free trade zone could play. He expressed his hopes that cases of cooperation between Chinese and Russian businesses and small and medium-sized Japanese companies in Suifenhe and Hunchun would increase.

30. Mr Chun Yang (Chief Investigator, Comprehensive Section, Economic and Trade Commission, Heilongjiang Province) informed the gathering that the regional government was also highly interested in the liberalization of trade and that discussions are already taking place with Primorsky Territory and Chita Region. He also expressed the opinion that inter-regional contact will be important for strengthening ties at the state level.

31. Mr Hirayama expressed his opinion that 1) the attitudes of the Japanese and US governments and 2) how much creditworthiness the bonds that the bank would issue would have, may be the key to the concept of establishing the Northeast Asia Development Bank. Dr Cho replied that, based on the case of the ADB, because 1) it is conceivable that even if the US Government opposes it until part of the way through the process, they will ultimately face requests to participate from the private sector; and 2) the establishing countries will in effect have guarantees from the governments, the bonds will probably have sufficient creditworthiness to circulate.

32. In response to Mr Hirayama’s question about the Russian Central Government’s recognition of Northeast Asia, Dr Ishaev explained that at present, recognition by regional governments was more advanced that that by the central government. However, as President Putin was beginning to place some emphasis on the Asia Pacific region, he expressed his hope that the country would choose the right policy in the future.

Third Session

33. Dr Ishaev reported on “The State and Perspectives on the Economic Development of the Russian Far East”. The report touched upon the results of economic reforms in the Russian Far East up until now, the situation regarding economic growth since 1998, and long-term development concepts and projects of the utmost importance in the Far Eastern Region. In particular, the importance of reforming the structure of industry, and the importance of international cooperation in the energy field were emphasized.

34. Mr Syrkin (Vice-Governor, Khabarovsk Territory Administration) reported on the paper prepared by Dr Minakir on the subject of “Regional Cooperation in the Context of the Russian Far East”. In his report, Mr Syrkin indicated that the main trading partners of the Russian Far East are Asia Pacific countries such as China, Japan and the ROK, and that the Far Eastern region has an important role in Russia’s trade with these countries.

35. Mr Yoshida commented that the Russian development strategy to 2010 concept has been prepared in the Russian Far East; that he believes that a state capitalist strategy is necessary to the development of the Russian Far East; that energy development has an important significance; that the Japanese government is cooperating in projects in the Russian Far East (mainly energy-related) and that tourism is a new topic. Moreover, with regard to the establishment of the Japan-Russia Investment Promotion Mechanism proposed at the 2001 Northeast Asia Economic Conference in Niigata, he reported that Mr Imai, Chairman of the Keidanren, suggested it to President Putin when he visited Russia in June.

36. Dr Yamazawa indicated that the Russian Far East shares similarities with Australia, which also has a low population density and is rich in resources. Furthermore, as the Far Eastern and European regions of Russia have a completely different economic and trade composition, he argued that the most appropriate exchange rate should differ and that an independent Far Eastern rouble might be a good idea.

37. In response to Mr Kanamori’s question about why the free trade zone project was not progressing smoothly, Dr Minakir expressed the view that it was because the government of the Russian Federation had embraced a little too simple an idea of the “equal market”.

38. Mr Hirayama expressed his awareness that natural gas in Siberia and the Russian Far East is one of Northeast Asia’s treasures, and stated his opinion that it should be utilized by all related players within the region after deepening mutual understanding, rather than leaving it solely to the invisible hand.

(Compiled and translated by the Secretariat)