America's motto in the Pacific in 1990 could have been: "If it ain't broke, don't fix it." The region remains America's largest export market ($21 billion larger than Europe in 1989), and its politics represents much of what the United States has long sought: healthy nationalism, pluralism and even democracy in places where not long ago there was mainly military-led authoritarianism and, finally, the absence of any single dominant nation.

Such an environment does not call for major new U.S. initiatives. Instead Washington needs to encourage East Asia's many favorable trends and dampen the few others that could undermine progress. The one exception where the United States did initiate important new steps in 1990 was in Southeast Asia-involving the American presence in the Philippines and a more substantial policy shift in Indochina.


The Philippines issue concerns U.S. bases, principally at Subic Bay Naval Station and Clark Air Force Base. Agreements on these installations expire in 1991, and the renewal negotiations have not gone well. President Corazon Aquino's administration is divided on the issue, and despite many years of nationalist campaigns against the bases Philippine public opinion remains decidedly in favor. One poll reported as much as 80 percent for retention, a higher figure than previous polls; this support probably reflects a growing realization of how much the economy will lose if the Americans leave. Twenty-two thousand Filipinos work at the air force base alone, and the Philippine economy, with a $26 billion foreign debt, remains desperate.

Manila's problem is compounded by its partners in the Association of Southeast Asian Nations, who believe Aquino and her foreign secretary have missed opportunities to develop broader support for the bases, especially in an ASEAN context. They regard the bases as important for regional stability and are not anxious for an American departure. In that environment Manila's negotiating position has not been strong, while the American side has clearly concluded that if it has to leave the main losers will be Filipinos.

Washington certainly would prefer to retain the installations, but is also reconciled to the prospect that it may not be possible to meet all of Manila's demands. Two concerns stand out: the issue of money and the question of who is ultimately in control at the bases. A Philippine insistence that American aid programs be regarded as "rent" for the bases has been a long-standing irritant, heightened during 1990 when Manila argued there had been a $222 million shortfall. The United States conceded a sum less than half that, and the climate was not helped when President Aquino refused to meet Secretary of Defense Dick Cheney on his visit to Manila in February. The United States is prepared for a 10-12 year phased withdrawal, especially at Clark, but remains very doubtful about the Philippine proposals for shared usage. And in a time of very tight budgets in Washington, there is little support for increased aid to Manila.

Just how strong the U.S. position was became evident in November, precisely when the Manila negotiations were about to resume. First the United States announced that it would withdraw its largest fighter aircraft unit from Clark and would no longer deploy fighter planes in the Philippines. Then, in Tokyo, outgoing Prime Minister Lee Kuan Yew of Singapore and Vice President Dan Quayle signed an agreement providing for regular flights of F-16 and F-18 aircraft to Singapore, as well as some naval maintenance. Several hundred U.S. personnel will now be based in Singapore.

Lee's departure from office will have no impact on U.S.-Singapore relations. The new prime minister, Goh Chok Tong, is his designated successor, and the main consequences of the transition are likely to lie in Goh's less confrontational style, rather than in any foreign policy matters. For years Singapore's leaders have stressed the importance of maintaining an American military presence in the region, and the November agreement has to be seen as a hardball aimed at Manila. To underline the point, similar discussions took place in Thailand and even Brunei. These steps represent both an adjustment to new conditions and a firm indication that, whatever happens in the Philippines, the United States does not intend to leave Southeast Asia.


A more surprising change came in Indochina. Washington has long opposed Vietnam's 1978 invasion and occupation of Cambodia. It has taken the lead in isolating Hanoi, and in 1982 joined with ASEAN to deny legitimacy to the Vietnam-installed government in Phnom Penh.1 But in 1990 the Bush administration moved decisively to change its posture. Secretary of State James A. Baker signaled this new approach in Paris on July 18 after a meeting there with Soviet Foreign Minister Eduard Shevardnadze. He announced the United States would no longer support the occupation of Cambodia's U.N. seat by a coalition that includes the Khmer Rouge. More broadly he opened the way for direct political talks with both Phnom Penh and Hanoi. They began in September when Baker met in New York and Washington with Vietnam's foreign minister, Nguyen Co Thach.

These meetings, the first held at that level in 17 years, reflected a substantial departure for the United States. Its significance was underlined in December when Assistant Secretary of State Richard Solomon announced in a speech to Americans interested in trade with Vietnam that the United States would soon be prepared to "formally begin the process of U.S.-Vietnam normalizations." He cautioned that it is likely to be two years away, and depended on several conditions-including Hanoi's satisfactory resolution of the MIA-POW issue and the installation of a democratically elected government in Cambodia. Nevertheless the meaning and scope of the shift in U.S. policy on Vietnam and Indochina is undeniable, and was prompted by three developments: declining support at home for the administration's position on Indochina, significant changes in Southeast Asia and growing optimism about a U.N. plan for a peaceful settlement in Cambodia.

The falloff of domestic support was evident throughout the year. There were several bipartisan efforts in the House and Senate to change the administration's Indochina policy of refusing to deal with Hanoi. The business community also called for an end to the trade embargo with Vietnam. A further rebuff for the administration came in October, in the 1991 foreign aid bill. It authorized $25 million for the non-communist Cambodian resistance, but it also called for an early end to the trade embargo against Cambodia and required an Agency for International Development team to visit Phnom Penh-an act that would help legitimize the Cambodian regime of Hun Sen.

These congressional moves were in part a reaction to signs of a Khmer Rouge military resurgence. With forces numbering 45,000 (including 25,000 armed), it represents the largest and most capable element operating against the Phnom Penh government. At a minimum the Khmer Rouge could continue to wreak havoc in some sectors of the country, and by July it had indeed created "liberated zones" in the north and west. The result was growing fears among Americans that, unless a Cambodian settlement came soon, the perpetrators of the "killing fields" might once again seize power. This concern was heightened in April by a devastating and widely discussed ABC News television program, which criticized the U.S. position and its policy of secret U.S. aid for the Cambodian resistance, broadly implying that some of it was helping the Khmer Rouge. The visibly uncomfortable State Department denial that followed was not persuasive.

The logic behind the administration's policy in Southeast Asia was also being made invalid by events there. Thailand had originally styled itself as ASEAN's frontline state confronting Vietnam, and it was mainly for Bangkok's sake that the United States adopted its hard-line stance in the first place. Yet since 1988 Thailand's aim had been to turn Indochina "from a battlefield into a marketplace." This new approach clearly reflected Bangkok's assessment of a decreasing Vietnamese threat: Vietnam's economy was in shambles, Hanoi's invasion and occupation of Cambodia had cost more than 200,000 Vietnamese casualties, and by 1989 it seemed committed to leaving Cambodia. Secretary Baker acknowledged as much in Paris; when asked about the Vietnamese withdrawal, his answer was clear: "We've now seen that accomplished."

Against this background at home and abroad, Baker's July announcement was both a departure and an adjustment to the new realities.2 Even so, Representative Stephen J. Solarz (D-N.Y.), a principal actor in U.S. policy toward Cambodia, sought to downplay the significance of the Baker announcement. Solarz was deeply involved in the third factor behind the change in U.S. policy-a U.N. plan for settling the Cambodian conflict-and in that context he did not want to signal to Phnom Penh and its Vietnamese supporters that they could now have their way unopposed.

The U.N. proposal, put forward in late August by the five permanent members of the Security Council, is widely seen as "the last best chance" to bring peace to Cambodia. It builds on long-standing Indonesian and other international efforts to end the conflict. All previous efforts foundered because of the deep mutual resentments among the Indochinese parties and their ability to continue fighting. The five-point U.N. approach, which owes much to an Australian initiative, is more ambitious, and aims ultimately at elections to establish a legitimate and neutral government. Until elections can be held, the proposal calls for the establishment of a U.N. peacekeeping force of perhaps 10,000 troops to monitor a ceasefire and confiscate hidden weapons, for a partial U.N. administration, and for the creation of a Supreme National Council that would include all the Cambodian parties.

The costs will be several billion dollars, and the difficulties horrendous. For example, how much will Japan and the United States pay for the international peacekeepers, and from which countries will they be drawn? As the year ended, the Cambodian parties themselves were not at that point; they were still wrangling over who and how many should compose the national council. The Cambodians' distrust was symbolized by the manner in which the parties arrived at a negotiating session in Bangkok: all piled out of one Volvo bus provided by Thailand. That way, the prestige-conscious Thais explained, "everybody arrives first."

At that rate, the Cambodian conflict could continue well into the future, as the "perm five" recognized in late November. They agreed in Paris on the final details of the U.N. plan, having decided that the best way to bring peace to Cambodia was to meet there without any Cambodians. Eight prominent U.S. senators, including Foreign Relations Committee Chairman Claiborne Pell (D-R.I.) and Richard Lugar (R-Ind.), arrived at a related conclusion; they asked the president to open a new chapter in relations with Vietnam: "We should not allow the prolonged endgame in the Cambodian peace negotiations to prevent us from taking the next step of lifting the trade embargo with Vietnam."


The U.S.S.R. shifted some important policy gears in 1990, not only in Indochina, but in Korea as well. The most striking was symbolized by a June meeting in California between Mikhail Gorbachev and South Korean President Roh Tae Woo, followed by an announcement in September that the two governments would establish formal diplomatic relations by year's end. This was a momentous Soviet decision, especially since it was Moscow that had taken steps to launch a separate state in northern Korea in 1945 and had endorsed its attack on the South in 1950. But it was also a clear indication of the Soviets' hard times: Seoul would provide Moscow with $2.3 billion in loans.

Strong mutual interests will promote the rapid expansion of the Moscow-Seoul relationship.3 Soviet specialists have long understood that their economy lags behind even such a newcomer as South Korea, and that much can be learned from its export successes and rapid industrialization. They also know that much of what they seek from Tokyo in technical assistance and loans is also available from Seoul. And unlike the Japanese dispute with Moscow over the northern territories, Seoul comes into the picture with few strings attached.

In the context of its still-bitter confrontation with Pyongyang, the most important gain for the South Koreans is the political legitimacy that negotiations represent. What could be a more final imprimatur than Moscow's stamp of approval, reinforced by a burgeoning trade relationship-in which it is South Korea that extends aid to the Soviet Union? Seoul, moreover, needs the business. Inflation and labor costs are up, exports and GNP growth are down, and Koreans fear more trade tensions and growing protectionism in the United States, their biggest customer. Reinforced by the ever-present goal of "beating Japan," these realities led Seoul to develop important trade relations with Moscow even before the formal diplomatic connection.

Soviet relations with Japan also warmed during the year. Gorbachev is expected to visit Tokyo in April 1991-the first trip ever by a Soviet leader-and there is much anticipation over the outcome of the northern islands issue. Tokyo has long sought the return of all four groups of islands north of Hokkaido, but Moscow rejects outright any discussion of the issue. There was some signaling of a possible change, however, when Foreign Minister Shevardnadze visited Tokyo in September. An unofficial Japanese delegation to Moscow followed up on those rumors and reported that the U.S.S.R. would indeed return Shikotan and the Habbomai group, the two southernmost territories.

That statement was quickly denied by the U.S.S.R., possibly because it may remain undecided on the issue or may want to bring this as a gift when Gorbachev visits Tokyo. More likely the Soviet Union has not yet given up on its long-standing attachment to a "system of collective security" in Asia. Moscow would expect Tokyo's participation, which would provide a face-saving exchange for an arrangement on the islands. For the United States the "collective security" proposal will again require careful scrutiny, unless one believes that Russian geography and history and an entire generation of Soviet foreign policy positions on the Asian-Pacific region can be discarded.

The big losers from the shift in Soviet policy have been its erstwhile allies in the Pacific: Vietnam and North Korea. Hanoi's increasingly desperate situation has led Moscow, which is experiencing its own economic hardships, to reassess their relationship. The Soviet Union has largely vacated its large installations at Cam Ranh Bay, although flights and ship calls continue. Vietnamese-Soviet ties were never very close in any case, but the departure of the Soviets and their subsidies will only further underscore the exceedingly dismal prospects of the Vietnamese economy. That realization was reflected late in the year when Hanoi hinted the United States could now again use the facilities at Cam Ranh Bay-for a price.

On the Korean front, Moscow's diplomatic connection with Seoul was particularly galling to Pyongyang, but North Korea has exceedingly little to bargain with. Yet the U.S.S.R., not wanting North Korea to entertain any rash new thoughts about striking at the South, has continued to supply Pyongyang with weapons. Even so, Moscow's decision to provide MiG-29s is best understood as a "golden handshake."

Partly as a result of the Soviet changes, talks begun in 1989 between the two Koreas sharply accelerated in 1990. The animosity between these two is deeper than exists almost anywhere else, but their high-level meetings in 1990 nevertheless must be regarded as historic. In July they agreed that their prime ministers would visit each other's capitals, and meetings of several days followed in September, October and December. The major significance of these meetings so far is that they were held at all, the first two under relatively civil circumstances. The December sessions were marked by a return to sharp acrimony, partly reflecting Pyongyang's anger that even as their prime ministers met, President Roh of South Korea was pictured smiling in Moscow with Gorbachev. Nevertheless the two sides will resume their meetings in 1991, but there are three important caveats.

First, these are not presidential visits between the effective leaders of the two states. Second, while the South wants to promote nongovernmental ties (as in Europe's "confidence-building" measures), North Korea insists no progress can be made until the South breaks its ties with the United States and American forces leave. Last, the two countries face very different circumstances. Seoul is far wealthier, it is being openly wooed by Moscow and Beijing, and it is an increasingly significant factor in world and Asian affairs. In contrast, Pyongyang's isolation becomes more apparent every day, and its military strength-its principal asset-is in relative decline as the weaknesses of its Soviet supplier become equally apparent. Such circumstances, in which one party perceives that time is on its side while the other has reason to suspect that its best days are gone, can be incendiary. Pyongyang's refusal to sign a nuclear safeguard agreement with the International Atomic Energy Agency underlines that point.

The result is that few South Koreans want U.S. forces to leave. In a recent poll, two-thirds say the United States should stay until South Korea can defend itself, and a fifth do not want the Americans out until unification. That is the good news. The bad news is that trade tensions threaten to disrupt U.S.-Korean relations, and there is a growing view that the United States bears considerable responsibility for Korea's division in the first place. That sentiment is common among younger Koreans, helped along by scholars who should know better.4 Both issues feed South Korea's rising anti-American sentiment and reinforce Pyongyang's siren song: if only the Americans would go, we Koreans could get together again. Seoul will be challenged to stave off that North Korean campaign, as will the United States, if Seoul decides the American presence is ultimately counterproductive.


China, in its gerontological immobility, experienced relatively little change in its Asia policies in 1990. Yet like the U.S.S.R., it moved, though much more slowly, to improve ties with South Korea and even Vietnam. And as in the Soviet-Korean case, mutually beneficial factors played an important role. Just how much China stands to gain was illustrated last fall by the Asian Games, held in Beijing. Korean firms spent about $15 million for billboard space, its tourists packed Beijing's hotels, and its automobile manufacturers donated 400 cars to help transport the athletes. Like Moscow, Beijing knows how much it can achieve by improving ties with Seoul, especially in terms of investment and joint ventures, but it also wants to avoid any further alienation of North Korea. Indeed Kim Il Sung took his case to China's leaders just before the Asian Games. The dimension of China's problem is reflected by the fact that trade with South Korea (through third parties) totals about $3 billion-five times the amount of trade with the North.

South Korea wants to regularize these arrangements and, as it did with Moscow, will continue pressing for formal diplomatic ties. For the time being, the two agreed in October to establish trade and consular offices, under euphemisms that pretend the two governments are not directly involved. Even so, one of Deng Xiaoping's sons, Deng Zifang, recently visited Seoul to discuss economic ties, and while neither the father nor the son holds any official Chinese position, the message was lost on nobody.

More slowly and with less enthusiasm, there are also signs of improvement in China's relations with Vietnam. Here the issue is one of improving already existing diplomatic relations, which have been in a deep freeze since the late 1970s. Hanoi and Beijing bring a thousand years of troubled history to their relationship, made worse in the past decade by three factors: Vietnam's invasion of Cambodia, China's own "punishment" invasion of some northern Vietnamese provinces soon after, and their rivalry ever since over which party should control Cambodia.

Nevertheless Sino-Vietnamese talks to improve ties shifted to a higher gear in 1990. In June a senior Chinese official visited Hanoi; in September Vietnamese party leader Nguyen Van Linh led a high-level "secret" visit to China; and the famous military leader Vo Nguyen Giap, now holding the honorific role of deputy prime minister, went to the Asian Games. All this led Vietnam's foreign minister to announce in late October that the Chinese and Vietnamese communist parties had settled on the process of full normalization. Speaking in Tokyo (itself an indication that Vietnam's isolation was over), he remarked that once the Cambodia agreement is signed, "I hope that I could visit Beijing."

In the bilateral Sino-U.S. relationship, while many in Congress and the public remain angry over the Tiananmen Square massacre, the administration continues to nurture the wounded relationship. A principal sanction of the Bush administration-the suspension of arms sales-remains in effect, but in fact and in rhetoric, American policy has been shaped by the president's view, as expressed by Deputy Secretary of State Lawrence Eagleburger in February: "He knew . . . that we had only limited leverage on the Chinese leadership."5

China has taken steps to ameliorate America's anger, but very much at its own pace. It continues to insist that any bilateral difficulty is entirely Washington's fault, and many of those arrested in the wake of Tiananmen (some of whom face grave charges) are still imprisoned. Nevertheless large numbers were released in the spring, and that continued all year. Similarly, other sticking points were resolved: China lifted martial law in Beijing, announced that it was no longer selling medium-range missiles to Syria, and allowed the return of the Voice of America correspondent, along with Peace Corps volunteers and Fulbright scholars. Finally in June the prominent dissident and astronomer Fang Lizhi was allowed to leave China and given safe passage to England from his refuge in the American embassy.

The Bush administration responded by lifting its opposition to large-scale loans to China, both by the U.S. Export-Import Bank and by the international lending agencies. Likewise, there were substantial sales of U.S. grain to China, and while few U.S. business representatives returned to China, trade in general continued to rise to an estimated $21 billion in 1990, from $17.7 billion in 1989 and just about double the amount in 1987. And while Congress repeatedly tried to force the president to discontinue most-favored-nation (MFN) status and provide sanctuary to Chinese students in the United States, its efforts failed.

China raises a question as old as American foreign policy since the First World War: What is the best way to deal with a nation that is repressive, dictatorial and often at odds with the United States? Since Nixon's time the answer has been simple: narrow the foreign policy differences, encourage internal change and, most important, avoid steps directly counterproductive to American security. The last has always been the most difficult because of China's capacity, if not for extending influence, at least for troublemaking. And while it is true that the United States does not need China today as a strategic counterweight to the U.S.S.R. (American administrations always denied it ever did), Washington nevertheless has adopted foreign policies that continue to make it dependent on Beijing.

The Indochina issue is the most obvious illustration. Because Beijing has been the principal arms supplier and political advocate of the Khmer Rouge, no effective settlement of the Cambodia conflict could be reached without China's assent. This gave China the effect of a veto, even before its permanent membership in the Security Council formalized its veto power in the context of the U.N. plan. Since China (and the Khmer Rouge) have not been anxious for a settlement, and since the United States committed itself to Vietnam's withdrawal from Cambodia, the continued importance of Beijing's approval to the United States has been assured.

Washington has achieved the same dependence on Beijing in the gulf crisis, through its emphasis on Security Council support for resolutions condemning Iraq. True, the United States has also sought Soviet cooperation there, but Moscow's assent stems largely from its own desire to reduce regional tensions and thereby restrain its military budget. In contrast, China goes along, as in Indochina, because it has little to lose and much to gain. It wants to reduce the ability of President Bush's domestic critics to argue that he has "coddled China" and received nothing in return, and it particularly wants to avoid losing MFN status and suffering other sanctions called for in Congress. Largely for these reasons, Beijing has not opposed the Security Council's resolutions on Iraq.

But because of the asymmetrical importance to Washington and Beijing of the Iraqi and the Vietnamese withdrawals, China continues to extract a high price for its cooperation. Taiwan's application to rejoin the General Agreement on Tariffs and Trade provides illustration. On fairness grounds alone, and also for more practical reasons, American opinion supports Taiwan's membership. With more than $11 billion in U.S. imports, Taiwan is among America's ten largest customers and has become a major factor in world trade. It also has a large trade surplus with the United States, which the U.S. trade representative is anxious to reduce through GATT negotiations. But the State Department needs China's vote in the United Nations, and China opposes GATT membership for Taiwan.

Beijing's veto power will give it disproportionate leverage in American foreign-policy making as long as the United States continues to "need" China, whether in connection with Cambodia, or in cases involving a U.N.-centered "new world order." The point was underlined in November, one day before a critical Security Council vote on Iraq. The State Department announced that Foreign Minister Qian Qichen was coming to Washington for talks with Secretary Baker-and President Bush, as it turned out-even while insisting that this was not a departure from its sanctions policy against official exchanges. A State Department spokesman explained: "We have vital issues with China right now, in the Persian Gulf and with the progress on Cambodia."


Japan, ironically, has no such leverage in the United States. It is seen increasingly as a "problem" by Americans and, unlike China, it has no executive branch advocates to publicly champion its cause. The irony is even greater because Japan has so closely responded to American demands: its defense budget is now among the world's top five, it is the world's largest aid donor, and its trade with the United States is much more favorable to Americans than daily headlines suggest.

Consider these trade facts: Japan is America's best overseas customer by far, second only to Canada. Its imports from the United States totaled $44.5 billion in 1989, and are rising very sharply: up 18 percent from 1988-89 and 34 percent from 1987-88. Those figures are much higher than the growth of Japan's exports to the United States. Moreover 60 percent of those U.S. sales were manufactured goods, and half of those were "hi-tech" products. This means that in 1989 U.S. manufactured exports to Japan totaled $27 billion-higher than U.S. exports to Germany and France combined.6

Critics invariably point to Japan's trade surplus-it sells more to Americans than it buys from them. But America's population, its market, is more than twice as large, and a per capita comparison shows that each buys about the same amount from the other: in 1989, $374 in U.S. imports from Japan per capita, and $360 in Japanese imports from the United States.

None of this has made much difference in the worsening U.S.-Japanese relationship. The reason is the broad American suspicion that Japan does not behave fairly, whether in trade, technology transfer, defense burden-sharing or the costs of U.S. forces there. A threat from Congress in September to begin withdrawing American forces until Japan paid "all" the costs brought this outburst from the chief of Japan's Defense Agency: "The U.S. Congress lacks common sense. Japan did not ask for the stationing of the U.S. forces. We will have to say 'Please return the forces home'." Japan now pays for almost 40 percent, or $2.8 billion, of the cost of U.S. troops stationed there, and within two to three years will be paying essentially all yen-related costs, leaving the United States to pay only for Americans' salaries.

Yet there is little indication that American-Japanese ties are headed for anything but more trouble, as three developments in 1990 illustrate. The first, designed to tackle the trade problem, was the July report of their "Structural Impediments Initiative" (SII). This effort reflected the diversity of the two economies. America's economy, especially since the 1940s, has been consumer-oriented: it is characterized by discount stores, low-margin retailing with few "middlemen," and 24-hour shopping. Japan approximates what shopping was like in America two generations ago: neighborhood "mom-and-pop" stores with fixed prices set by the producer, and normally five distribution steps between producer and consumer.

These are truly structural differences that the SII sought to resolve. The United States requested that Japan change its laws and practices to become more like America, while Japan-influenced by American economists-urged the United States to become more like Japan. Thus Japan should allow more large retailers, expand public works, end the cozy relationships among firms in allied industries (the keiretsu), change land-use practices so more people can buy homes, and strengthen antitrust measures. For its part the United States should reduce its federal deficit, save money and invest in industrial research and development, promote exports, and improve education to become more competitive globally.

Major agreements on these points were announced in April, and Japan has already begun to allow more large stores to operate. Similarly, when President Bush met with Prime Minister Toshiki Kaifu at the Houston economic summit in July, he pointed to his struggle with Congress to reduce the budget deficit. But these are cosmetic efforts. In reality, Americans want lower budget deficits and improved education for their own reasons. Likewise, Japanese want lower land costs because few now can expect to buy a home, and different retailing practices because a Nikon can be bought for less in New York than Osaka.

The deeper failing of the SII is to raise hopes for a quick fix in the U.S.-Japanese trade deficit. Because its main purpose-to move the trade issue from page-one coverage-is unlikely to happen anytime soon, the probable outcome of the SII will be to further aggravate the growing ill will between the two sides. In Japan the SII conveys once more America's presumptuousness and suspicion regarding Japan. It is presumptuous because Americans seem to believe they can tell Japanese how to organize their internal affairs. It reflects the American suspicion that Japan is intentionally structured to keep out foreigners, when for the most part Japanese business and merchandising practices stem from roots established long before today's trade disputes were even on the horizon.

The same mind-set, but with more poisonous consequences, led to the disastrous FSX controversy. This grew from a Japanese desire, no doubt fueled by its heavy industry, to build its own next-generation fighter aircraft. Responding to congressional and industrial fears that Japan aimed to enter the commercial aircraft business, President Reagan persuaded Japan to drop that idea, and instead to jointly develop a new aircraft-the FSX. While much hard feeling developed on both sides, the result was a coproduction agreement between General Dynamics and Mitsubishi Heavy Industries. What then happened was a textbook illustration of how allies should not behave.

After being elected president, Bush demanded that the just-settled FSX agreement be renegotiated. That too was done, although it is difficult to exaggerate the extent to which leading Japanese were now convinced that Americans simply did not trust Japan. The American side has insisted that critical navigational software be withheld from Japan, and it further believes that Japan will not genuinely share its newly learned technologies, especially in composite materials. By the end of 1990 intense mutual suspicion placed the entire project in jeopardy. Even if FSX fighter aircraft are produced, each will cost $64 million-much more than initially projected-and will probably be nearly obsolete when built. Beyond the waste of money, the greater waste will have been in an even scarcer resource: mutual trust among allies.

The third illustration of troubled U.S.-Japanese relations stems from Washington's campaign against Iraq. Tokyo quickly agreed to help defray the embargo-related costs of neighboring nations, but its offers were sharply criticized in Congress as insufficient. Even its promise of $4 billion has been denigrated; critics commented that Japan was willing to spend money but not blood. Prime Minister Kaifu then proposed sending Self-Defense Forces personnel, though not from active-duty units. After more domestic criticism, he proposed sending SDF personnel for nonmilitary support. That effort also failed and indeed backfired. In Japan he was portrayed as a doormat for either President Bush or Japan's "militarists," or both. Ultimately, the Japanese parliament refused to authorize any militarily significant personnel, to which an American officer responded, "We have enough cooks and drivers already." The result has been a political disaster for Kaifu, another setback to U.S.-Japanese relations ("proof" that Japan receives unfair alliance benefits) and, to the Japanese, another indication that nothing they do is enough.


Precisely because the Asian-Pacific region today reflects so much that the United States has long sought there, American policy now needs to be sensitive to the pitfalls of success. With regard to America's military posture in Asia, the Defense Department has begun that process in a report that Under Secretary of Defense Paul Wolfowitz sent to Congress in April. Titled "A Strategic Framework for the Asian-Pacific Rim," it called for "reappraisals of our national security objectives in Asia and the force structure required to meet them." It is a model document-sensitive both to developing Asian realities and to enduring American interests.

Beyond the specifics of military policy, a similar rethinking is needed for the overall U.S. approach to the region. It will reflect the reality, as Assistant Secretary Solomon remarked in November, that "we live at a time when geopolitics is being shaped by geoeconomics." America's Asia policy should be based on that new reality, and guided by the following points:

-Japan's alliance with the United States is the key to every other issue of Asian stability, from nonproliferation to a reduction of trade tensions. Yet trade tensions are deeply poisoning U.S.-Japanese relations today, and ways must be found to heal the wounds. An immediate framework in which the United States and Japan can begin that healing process might be found in the new Asia-Pacific Economic Cooperation effort. Launched in Canberra in November 1989, APEC is intended to foster a wide range of Pacific-region economic cooperation measures. Among the fields included are trade, investment and economic policy coordination.

It is encouraging that follow-up meetings of APEC already have been held, and that Secretary Baker-who sees it as a way to achieve OECD-like cooperation in Asia-attended APEC's first meeting. He called it an "idea whose time has come," because Asia's intensive economic interactions also carry within them the seeds for much dissension. That conflict is precisely what the United States must avoid in the Pacific, and why Washington has agreed to host APEC's fifth ministerial conference and wants to include China, Taiwan and Hong Kong. APEC should now be given the highest priority in Washington and Tokyo.

-The collapse of the GATT "Uruguay Round" in December will heighten the importance of regional economic arrangements, and APEC in particular, in fields such as service and intellectual property where GATT has been stymied. The GATT framework may be revived, at least in the short run, but the United States should be prepared with eventual alternatives. These alternatives must include a better understanding of the gains and losses from potential free-trade arrangements in the Pacific. In particular a U.S.-Japan free-trade arrangement needs to be given new attention, as former Ambassador to Japan Mike Mansfield recommended several years ago. Preliminary studies have already been undertaken with regard to a U.S.-ASEAN free-trade arrangement, and it is now time to intensively explore arrangements with others. APEC can provide that framework.

-Since sharp changes in Korea would prompt major reassessments elsewhere, notably in Japan, the United States must maintain a very close security relationship with Seoul. Rapidly growing tensions rooted in trade and economics must therefore be contained and reduced. Integrating Korea with regional economic cooperation and APEC may best achieve that effort. Nevertheless a U.S.-Korean free-trade arrangement should be explored.

-As Gorbachev stressed in a speech given at Vladivostok in 1986, the Soviet Union is no less a Pacific nation than is the United States. The task for the United States is to assure that this Soviet commitment is realized in ways consistent with the continued open nature of the Asian-Pacific region. Soviet proposals for a new collective security system do not achieve this goal, but American policy can, by working for eventual Soviet involvement in APEC and other steps toward regional economic cooperation in the Pacific.

-Similar thinking needs to be extended to China. It will remain a very underdeveloped economy for a long time, but will retain considerable ability to undermine, especially with regard to Taiwan and Hong Kong, essential steps toward regional economic cooperation. The United States can neither adopt a posture of benign neglect toward China nor simply oppose its expectations. Instead it must encourage China to seek greater integration with the outward-looking economic policies on which most nations in the region have already embarked.

Of course there is a thicket of problems here, and doubts have been expressed about free-trade arrangements in the Pacific because of the wide differences in levels of income and development between the United States and several Pacific economies. But no such obstacle has been raised in the path of the U.S.-Mexico arrangement called for by President Bush, or similar proposals from several South American leaders. Free-trade arrangements in the Pacific, whether bilateral or under an APEC umbrella, promise even greater benefits because they will be based on trade patterns between the United States and the East Asian economies that are already more intensive than anywhere else. The free trade issue is not one of economics narrowly construed, but of politics and political will.

The perfect as the enemy of the good is a familiar danger in politics, and it is the challenge for the United States today in the Pacific. Much that has been sought has been accomplished, but it is the United States itself, more than any other single factor, that is liable to sour the already-good environment Asia now represents. In Vietnam, in the Philippines, and hopefully in Korea, American policy has begun to indicate it recognizes that danger. Now it must take the next step, and press ahead with regional economic cooperation. That will help defuse the trade tensions that now threaten its most important political connections.

1 For a discussion of the historical background and state of the war, see the author's "The Third Indochina Conflict," Foreign Affairs, Fall 1986.

2 At their foreign ministers' meeting a few days later, the irritation of the ASEAN ministers was evident. When the Philippines foreign minister was asked whether ASEAN was satisfied with the U.S. explanation, his response was sharp: "Was there any explanation?"

3 For example, The Wall Street Journal reported on Nov. 6, 1990, that direct phone links were established between Seoul and Moscow in November, reflecting the fact that in 1990 there were 5,000 calls a month, compared with only four in all of 1987.

4 Korea's division is described as "a result of the great power rivalry between the United States and the Soviet Union" in a recent Asia Society publication (Asian Update, October 1990). The reality is that the 1945 partition was solely for the purpose of accepting Japan's surrender.

5 Statement before the Senate Foreign Relations Committee, Feb. 7, 1990.

6 All trade data from the U.S. Commerce Department, U.S. Foreign Trade Highlights, 1988 and 1989.

You are reading a free article.

Subscribe to Foreign Affairs to get unlimited access.

  • Paywall-free reading of new articles and a century of archives
  • Unlock access to iOS/Android apps to save editions for offline reading
  • Six issues a year in print, online, and audio editions
Subscribe Now
  • Bernard K. Gordon is Professor of Political Science at the University of New Hampshire. His most recent book, New Directions for American Policy in Asia, was published in October.
  • More By Bernard K. Gordon