Postwar economic development over half a century has given rise to substantial urban middle classes in Southeast Asia. Constituted through rapid global and regional industrialization driven by foreign direct investments and finance capital, their horizontal solidarity is dependent on, but no longer confined only to, their ability to express themselves politically through the state and culturally as a nation. Because the middle classes are constituted not solely through a homogeneous national culture, but rather through networks of markets, global cultural and financial flows, middle class consciousness is fostered through interactions between national governments, domestic and transnational markets. These people share a lot in common among their professional lives and their lifestyles, in fashion, leisure and entertainment, in their aspirations and dreams. The kind of life they espouse and live carries social and environmental costs. Their survival and expansion as a class are largely dependent on the economic performance of their respective countries, which are increasingly intertwined with and influenced by the regional and global economy. Above all, the regional market of which the middle classes are the main consumers mediates new forms of national and regional identities that can potentially advance regional integration.

What distinguishes the postwar emergence of the middle classes is, as I argued elsewhere more extensively, the extent to which the formation of these classes has been shaped by the military, intellectual and cultural hegemony of the United States in the region (see Shiraishi 2006). The waves of middle class formation took place in postwar Japan, the so-called Newly Industrialized Economies (South Korea, Taiwan, Hong Kong and Singapore), and Southeast Asia within the context of an East Asian regional system fashioned under U.S. hegemony.

The creation of middle classes was part of the American informal empire's ideological vision to contain and combat communism. But of equal importance is the role of 20th century American middle class formation in mediating the construction and self-representation of the middle classes in Asia. Unlike their counterparts in Britain, who defined themselves in relation to the aristocracy, American middle classes that came into being in the 1920s took as the object of their social consumption and self-representation the idea of ‘the standard package’ (Matsubara 2000, pp. 52–58).

Something interesting has happened to the Japan-ASEAN (Association of Southeast Asian Nations) relationship over the past 15 years.

Things had begun on a hopeful note. Japan took a series of initiatives in regional cooperation up to the 1997–98 East Asian economic crisis and did everything it could to help the crisis-hit countries. The ASEAN-Japan Summit was held for the first time in 1997 at the initiative of Prime Minister Hashimoto Ryutaro (1996–98), who announced that Japan would work closely with ASEAN to stabilize Asian currencies and the Asian financial market. Japan, under his leadership, also proposed to establish an Asian Monetary Fund to provide liquidity support for the crisis-hit countries. In 1998, Finance Minister Miyazawa Kiichi spearheaded an initiative to provide funds to reflate the crisis-hit economies, which led to the establishment of the Chiang Mai Initiative in 1999. The ASEAN-Japan Summit, which was institutionalized along with the ASEAN Plus Three (APT) in 1999, has been held every year since. In 2002, Prime Minister Koizumi Junichiro (2001–06) called for a Japan-ASEAN economic partnership agreement as a first step to building an East Asia community. The Japan-ASEAN Commemorative Summit was held in Tokyo in 2003 when Japan signed the Treaty of Amity and Cooperation (TAC). Japan, together with Indonesia and Singapore, played a crucial role in establishing the East Asia Summit (EAS) in 2005, which extended its membership beyond APT to India, Australia, and New Zealand. In the wake of the 1997–98 crisis, ASEAN Plus processes thus emerged as a major framework for regional cooperation, with ASEAN as the hub.

Subsequently Japan-ASEAN collaboration stagnated and Japan's profile declined in the region. There were domestic and regional reasons for the stagnation. With prime ministers changing practically every year from 2006–12 after Koizumi stepped down, Japan hardly took any important diplomatic initiatives concerning ASEAN. Japan's economic stagnation also led to the decline in its Official Development Assistance (ODA) and Foreign Direct Investment (FDI) to ASEAN. On the other hand, China has risen economically and hence in its power and profile in ASEAN. It has also taken its own initiatives in shaping the region, such as its FTA proposal, accession to TAC, and the Declaration on the South China Sea.

In the autumn of 2011 I proposed a joint study on ASEAN-Japan relations to Ambassador K. Kesavapany, then director of the Institute of Southeast Asian Studies (ISEAS), and Professor Takashi Shiraishi, president of the Graduate Institute of Policy Studies (GRIPS). They gave their consent to my proposal. Ambassador Tan Chin Tiong, director of ISEAS, added his support to the project.

The objectives of the proposed joint study were to re-examine and critically analyze relations between ASEAN and Japan and to give future perspectives and directions. I was of the view that despite its importance, the ASEAN-Japan relationship had been undervalued and overlooked on both sides in recent years. In this respect, however, I am happy to observe that there has been a favorable change, especially since Shinzo Abe came back to power as prime minister of Japan in December 2012. He is focusing on ASEAN as one of the pillars in his foreign policy.

To implement the joint study, Professor Shiraishi and I tried to recruit competent contributors not only academics but also practioners from ASEAN and Japan to cover various fields such as foreign policy, security, business, development assistance, and fiscal cooperation and to shed light from different angles. We are grateful that Professor Tommy Koh, ambassador-at-large at Singapore's Ministry of Foreign Affairs, Professor Kishore Mahbubani, dean of the Lee Kuan Yew School of Public Policy, and Rodolfo Severino, former ASEAN secretary-general, accepted our request to contribute.

I acknowledge the support of the Japan Foundation, which provided the grant for the publication of this monograph. I would like to express my appreciation also to six generous donors to the project: Mitsubishi Corporation, Mitsui, Sumitomo Corporation, Itochu Corporation, Marubeni, and Sojitz Corporation.

I am indebted to Sunandini Arora Lal, Wee Wong, and Dr. Motoko Kawano of GRIPS for their painstaking efforts at editing this monograph.

Last but not least, I thank Professor Shiraishi, co-editor of this monograph. Without his distinguished expertise and extensive network, this publication would not have been possible.

The symposium on which this book is based was held in the darkest days of the U.S.-originated global financial crisis. In the wake of the collapse of Lehman Brothers, demands were frozen and economies with high export dependency experienced radical contraction. No one knew how long this would last and what the consequences would be.

In a time of crisis we tend to speculate on known unknowns. We knew that the U.S. market would not be in a position to pull the East Asian economies along from the demand side. The triangular trade system of the United States, China, and the rest of Asia that had evolved after the 1997–98 Asian economic crisis would have to undergo radical transformations. With U.S. demand frozen, China's exports to the United States declined, which, in turn, led to the contraction of China's imports of intermediate and capital goods from the rest of Asia including Japan, South Korea, Taiwan, and ASEAN countries. This is the reason economists and business people called for turning regional demands into “domestic demands”, in the hope that China would emerge as the market to pull the rest of Asia as well as the world out of this crisis.

Recalling the Great Depression of the 1930s, many of us were aware that hard times would breed nasty politics. Signs were there in the form of trade protectionism, currency manipulation, the maltreatment of illegal migrants, and the rise of political parties calling for policies to protect very narrowly defined “national interests”.

And yet nothing as serious as the worst-case scenario came to pass. The United States and the European Union recovered economically, and while they are a lot weaker than we hoped, we can be far more optimistic about the future now than in December 2008.

Yet two things remain. First, the transformation of East Asian triangular trade still has a long way to go. Recent IDE-JETRO research shows that China has upgraded its intermediate and capital goods production while flooding the countries in its vicinities with inexpensive final products, a move that compels Japan, South Korea, and Taiwan to upgrade their industries while posing a threat to ASEAN economies. The Indonesian Government's call for review of the ASEAN-China FTA is a sign of this increasing tension.

The Institute of Developing Economies-Japan External Trade Organization (IDE-JETRO) organized a symposium in December 2008 on the theme, “Engaging East Asian Integration: States, Markets and the Movement of People”. It was held in the wake of the Lehman Brothers collapse and in the midst of the deepening global financial crisis that originated in the United States.

The crisis reminded us of other historic events that marked turning points in the history of East Asian region making. One was the Plaza Accord in 1985 which marked the beginning of the region's economic development and regionalization. The yen appreciated enormously in the wake of the Plaza Accord, forcing Japanese firms — above all, electronics, machinery, and automotive firms — to move abroad and deploy their production facilities regionally to remain competitive in the world market. South Korean, Taiwanese, and Hong Kong as well as Southeast Asian ethnic Chinese business also went transnational and became regionalized. This expansion and deepening of business networks and production chains led to de facto economic integration. It was against this background of regionalization that people such as Mahathir Mohamad, then prime minister of Malaysia, and Takeshita Noboru, prime minister of Japan, started to talk about East Asia as we do now when referring to the region extending from Japan and South Korea through China, Taiwan, and Hong Kong to Southeast Asia. It was also in those years that China transformed itself from socialism to a socialist market economy while being integrated into the regional and global economy.

A crisis that marked another turning point in the history of East Asia was the Asian economic crisis in 1997–98. In the midst of this crisis, the first ASEAN plus 3 (Japan, China and South Korea) summit meeting was held in 1997. The summit meeting was institutionalized in 1998, which also saw the establishment of an East Asia Vision Group to map out the future of the region. A year later, in 1999, the Chiang Mai Initiative laid the foundation for currency cooperation at the bilateral level among states in the ASEAN plus 3. Through these steps, there emerged a regional political project of building an East Asia community in the wake of the 1997–98 Asian economic crisis, in part to create a mechanism for regional cooperation, especially in currency, as a hedge against the kind of U.S.

Shiraishi: I am supposed to wrap up the speeches and presentations made so far, but I am not going to do this because so many points were raised that I simply cannot summarize or wrap up all these. Instead, I would rather go directly into the discussion given the fact that time is quite limited. I start the discussion by raising perhaps two or three questions.

Professor Katzenstein's lecture was very comprehensive and I suspect that many people here find it quite different from the kind of discussions you normally hear about East Asian regional integration. Normally, it is economists, rather than political scientists or area specialists, who talk about integration. The kind of language deployed in discussing regional integration is very often, or almost, always economistic, but here, it is not the case and I hope that this already shows a different way of looking at regional development.

A number of people raised the question of the importance of the current [global financial] crisis. I would like to ask Professor Katzenstein about the implication of the current crisis for the American imperium.

And another thing I noted, and found quite interesting, is the point Dr Surin Pitsuwan made in his eloquent speech and excellent presentation. Dr Okamoto argued that the kind of institution building over the last ten years or more in this region is offering us quite different perspectives. Dr Surin emphasized the centrality of ASEAN as well as incrementality. Dr Okamoto agreed with some of the points Dr Surin made, but stated that ASEAN is not exactly in the driver's seat. I would like to invite Dr Okamoto as well as others to respond to this point.

And finally, I invite some of the people to think about the ways in which the region or regional institutions which have been created over the last decade can be deployed to deal with the current crisis. I have in mind, of course, the Chiang Mai Initiative, and the questions of how feasible it is, what the role of the World Bank is, and of the Japanese Government and so on. Maybe Dr Nehru can at least comment on this.