Another issue will be securing peace and stability of the Asia-Pacific region, which continues to be the economic growth center of the world.

In the newly emerging economies around the world, about 70 million people join the ranks of the middle class each year.

Along with the advance of globalisation, however, there has been a corresponding widening of economic disparities and a lack of opportunity among nations.

Although an emerging middle class can provide stability to a society, it can also serve as a force seeking to overturn the status quo through its demands for justice and distribution of wealth.

Members of the middle class participate in a cyberspace that is boiling over with guerrilla-like democracy and boorish nationalism.

Asia must stimulate regional demand to place it on a course of autonomous growth. One reason is that the limits of growth have been reached through the accumulation of current account surpluses by exporting to the United States.

The region must also overcome the hurdles associated with problems involved in energy, water and the environment.

Asia’s dependence on petroleum imports stood at 36 percent in 2005, but the figure is estimated to expand to 65 percent by 2030.

Against this background, Japan has lost sight of its position in Asia.

It cannot continue to cling to the G7 forever. At the same time, it remains to be seen if the G20 can serve as the new control tower for macroeconomic policy. APEC also continues to function at a decelerating pace.

The time has come for Japan to return to its starting point as a trading nation and establish a trade and investment strategy that will further connect it both to the Asia-Pacific region and the world.

Asians by and large seem to feel that their region will grow, no matter what. One reason for this is the animal spirit that drives many Asians’ success.

More than half a century ago, French President Charles de Gaulle referred to Prime Minister Hayato Ikeda as ‘a transistor salesman.’

Now, the nations of Asia are salesmen to the world of a whole line of products and services, including home electronics, personal computers, automobiles, nuclear power plants and call centers. Yet, many Asians take for granted the liberal international order that sustained their miraculous growth.

However, three major challenges lie ahead for the economic integration of this region.

The first is the course of China’s state capitalism.

Friction with neighboring nations will be inevitable if China further seeks vertical economic integration of Asia using its gigantic domestic market as a lever and by implementing industrial policy that threatens to violate free trade rules, as in the recent unclear export controls on rare earth metals.

What will be important is for all nations, including China, to abide by and to foster a free and liberal international order based on the rule of law. That will be vital for sustained peace and stability of the region and the world.

The second challenge will be the growing economic gap.

There will be a need to promote economic and social development along with market liberalisation.

At its inauguration, APEC placed liberalisation and development cooperation as its two main pillars.

Subsequently, it bent to pressure from the United States and focused almost exclusively on liberalisation.

Fortunately, the Obama administration has stressed development along with diplomacy and defense to prevent threats from failed states as well as terrorism.

In particular, economic and technological cooperation for the development of human resources will be vital for closing the economic gap.

Japan should cooperate with the United States to place development cooperation as a core theme of APEC.

The final challenge concerns the inability of key nations of the Asia-Pacific region to come up with a shared vision of international order so they can cooperate on policy.

In particular, no progress is being made on developing a mature relationship between Japan and China.

The history of European integration that began with a coal and steel community and led eventually to the formation of the European Union has been described by the late historian Tony Judt in his work, ‘Postwar: A History of Europe Since 1945,’ as ‘a political vehicle in economic disguise, a device for overcoming Franco-German hostility.’

There should be further efforts for a regional ‘vehicle’ in Asia that could lead to a more harmonious coexistence between Japan and China.

Japan will host the APEC summit meeting this year for the first time in 15 years. Although Japan was responsible, along with Australia, for bringing about the establishment of APEC, it has fled from the market liberalization that was the major purpose of the endeavor.

The ‘lost 20 years’ of Japan in the post-Cold War era is also a 20-year period when it turned its back on liberalization. Through its protection of vested interests, Japan’s politics and economics have stagnated, its investment and employment have shriveled and its agriculture has been exhausted.

Learning from those lessons, Japan must resolve to open up its markets.

The time has come for Japan to clearly state to the world its intention to participate in negotiations towards a Trans-Pacific Partnership agreement.

The negotiations were begun by Singapore, New Zealand, Chile and Brunei, four small nations eager to spread liberalization within the region. The trans-Pacific, multilateral negotiations seek to establish a tariff-free and pure free trade agreement.

In the background to the move is the fear felt by smaller nations about being swallowed up in a vertical economic integration system that China favors.

The TPP seeks a horizontal integration among the economies of the region. It would re-establish free trade rules and the principle of the rule of law.

All nations, big and small, would be equal under such an arrangement, an absolutely vital principle of rule of law, as well as the foundation for a free and open international order.

The TPP would be nothing more than an economic alliance for such an order. Both the United States and Australia have entered into negotiations to join the TPP.

Japan should also join the negotiations and take part in the writing of the rules from the outset. However, the government still appears to be hesitant about taking that jump.

On Oct. 24, all members of the Cabinet of Prime Minister Naoto Kan gathered along with executives of the ruling Democratic Party of Japan for a study session on the TPP.

One participant was Tadahiro Matsushita, a senior vice minister of economy, trade and industry.

Although Matsushita now belongs to the People’s New Party, he once belonged to the Liberal Democratic Party, where he was a dyed-in-the-wool member of the farm lobby. In the winter of 1993, he took part in a day-long sit-in in front of the Diet in opposition to liberalizing the rice market under the Uruguay Round of trade talks.

Matsushita subsequently flew to Geneva, where the GATT (General Agreement on Tariffs and Trade) headquarters were located, and joined with South Korean legislators to shout their opposition to liberalization of their rice markets.

At the October study session, however, Matsushita took a different tone.

‘I now feel deep regret. What was the result of our absolute opposition to agricultural liberalization? Did that strengthen Japanese agriculture? About 6 trillion yen in funds has been funneled to farming villages to deal with the effects from the Uruguay Round, but about 70 percent of it went to public works projects. It did not help agricultural reform at all. During the period of dealing with the Uruguay Round, the agricultural income per farm household declined by 32 percent.

‘On the other hand, South Korea, whose lawmakers joined us in the sit-in, has pushed for reform of its agricultural sector over the past 15 years. It has signed free trade agreements with the European Union and the United States. We must not repeat that mistake again.’

Matsushita’s statement underlined the strategic connection between Japan’s trade and agriculture policy.

There is strong resistance within the DPJ to the TPP. However, if the DPJ should barricade itself behind a protectionist banner like the LDP had done while it held the reins of power over the past 20 years, what would be the significance of last year’s historic change in government.

Wasn’t one campaign pledge of the DPJ to move spending away from concrete, and the public works projects it symbolizes, and toward people, in this case, independent farmers?

At the very least, the LDP created the Japan-U.S. security alliance that has served as the foundation for prosperity in Japan and Asia in the second half of the 20th century.

The DPJ should create an economic alliance that will be the base for a free and open Asia-Pacific region in the 21st century.

Yoichi Funabashi is editor in chief, Asahi Shimbun.

This article first appeared here in Asahi Shimbun.