Foreign Relations of the United States, 1981–1988, Volume I, Foundations of Foreign Policy

114. Note From the Director of the Policy Planning Staff (Wolfowitz) to Secretary of State Shultz¹

Washington, August 27, 1982

Mr. Secretary:

We received some very general guidance from S/S that you wanted a paper on U.S. strategy for the Pacific. We have tried earlier to develop an overall strategy just for East Asia. Even here, where our Asia expert is not burdened with the concentration on a particular bilateral relationship, that effort foundered on the difficulty of looking at Asian policy as anything more than a series of bilateral, or at most sub-regional, policies. There is a real question whether it makes sense to look at Asia any other way, given among other things, the deep differences that divide the region, the possible tensions between such an effort and smaller regional groupings (such as ASEAN) that we are seeking to encourage, and the advantages to the U.S. of dealing with individual countries bilaterally rather than en bloc.

The attached paper does not actually present a strategy for the Pacific, with all of the necessary country detail. Nor does it present a plan for a Pacific-wide institution (another subject that S/S thought you might be interested in). Rather, it addresses the issue of whether either of these enterprises is worth pursuing further.

My own feeling is that it does make sense to look at the region as a whole, despite the arguments mentioned above and the unquestioned need to pay primary attention to our rich and varied bilateral relationships. We already have to do so in developing our military strategy. That is paradoxical since the security issue is one subject on which it would be pointless to try to organize a Pacific community. Nevertheless, the U.S. military role underpins the stability that is essential if the remarkable dynamism of the region is to continue. Broadening our strategy to include a political and economic dimension could:

1) help to secure and strengthen our basic security role;

2) expand our participation in the economic growth of the region;

3) provide a useful complement to our European policy (and perhaps a bit of a nudge to the Europeans); and, finally,

4) if skillfully managed, might help to overcome some of the sense in this country that our involvement in foreign affairs is increasingly nothing more than a formula for taking on the burden of other people’s problems.

Those are my hunches, but before proceeding further I would like to get some more precise guidance from you—and from others in the Department—about where we should be heading. Hopefully, the attached paper can be a useful vehicle for that discussion.

Paul Wolfowitz ²

Attachment

Information Memorandum From the Director of the Policy Planning Staff (Wolfowitz) to Secretary of State Shultz³

Washington, undated

SUBJECT

• US Posture Toward the Pacific Basin

Introduction

In an article entitled “Illusions of Distance,”⁴ Albert Wohlstetter once cautioned against “mechanical regionalism:”

“. . . Some (economic) unions might represent a gain; some surely would be a loss, particularly if their composition were determined solely on the basis of criteria as unrelated to economic efficiency as contiguity. They may be mainly rival exporters of the same commodities. . . . Neighborhood in international relations, as Jacob Viner has pointed out, has never guaranteed neighborly feelings, and often has prevented them. . . Indeed, one of the largest defects of regionalism in the postwar period has been a frequent neglect of the hard truths of differences in political interest inside regions and the varying bonds of interests with countries outside. Regionalism, which has seemed a halfway house between nationalism and a utopian universalism, has itself sometimes been a kind of utopia for hard-headed Realpolitikers. . .”

Despite those cautions—but with them in mind—it is worth considering whether U.S. interests in the Pacific might in some way be usefully served by considering the region as a whole and developing a strategy for it. As a basis for such a consideration, this paper considers: (1) what are US interests in the Pacific region; (2) whether, and in what respects, it is useful to look at the Pacific region as a whole; and (3) whether the Pacific should receive increased emphasis in our overall strategy and if so whether that is best done through existing bilateral relationships or whether some broader organizational arrangement would be useful.

I. The US in the Pacific

(A) Dynamism of the Pacific Region

— The Pacific Basin is an area of remarkable economic growth and dynamism. This is based in part on the region’s wealth of human and natural resources. It is also based on successful Asian adaptations of some of our most fundamental economic and political principles. This makes the Pacific region a showcase for key American values.

— In recent years the Pacific area has witnessed the emergence of: ASEAN; economic dynamism among the NICs; Japan as a global economic power with growing international responsibilities; a somewhat more open China; a more activist Australia with major trade links to Japan and a substantially more powerful and growing Soviet presence. These developments increasingly engage major US interests.

— US trade is shifting toward the Pacific. In 1981 US Asia-Pacific trade surpassed trade with all of Western Europe. If our key trading partners, Mexico and Canada (also Pacific nations) were included, this shift would appear even more pronounced (see Table II).⁵ In addition to major trade in consumer goods and machinery, the US relies on the Pacific for more than 90% of its natural rubber, and large amounts of imported wool, tin, meat, plywood, bauxite, sugar and oil. In the latter part of 1981 Indonesia replaced Nigeria as our second largest source of oil, after Saudi Arabia. On the export side, the Pacific has now surpassed the EEC as our largest market for agricultural products (see Table IV).⁶

— The Pacific is an area of comparative stability at present, despite deep antagonisms and substantial military imbalances. These latter factors also make it prone to instability, should current political balances be disrupted.

(B) US Interests and Objectives in the Pacific Region

The US is the only major Pacific power, in a comprehensive sense (political/military/economic). It enjoys significant trade and positive political relationships with most nations of the region (an advantage not shared by the USSR). US interests and objectives in the region should include:

— Strengthening of formal and informal security cooperation with and among friendly states, so as to create a favorable security environment in which the enormous potential of the region can be realized. In this context, should the US encourage: (1) greater reliance on American power; (2) greater self-reliance; (3) greater reliance on other regional powers (such as Australia and Japan); or (4) some combination of these strategies?

— Promotion of communication/cooperation among friendly states in the area (e.g., closer Japan-ROK, Japan-Australia, ROK–ASEAN, Australia-ASEAN-Pacific Island ties) as a means of strengthening regional political stability.

— Strengthening economic ties with the growing economies of the region in a manner which will promote strong economies and the free trading system, counteract protectionist pressures, and create a strong market for US exports.

— Encouragement of economic growth in regional LDCs through balanced multilateral and bilateral aid, and private sector involvement (e.g., investment and technology transfer).

(C) Other Possible Objectives of a Comprehensive “Pacific” Approach

— Develop a comprehensive global policy, more effectively linking friends and interests in the Atlantic with those in the Pacific.

— Develop a coherent focus of US interest outside Europe, as a means of developing visible alternatives to a Euro-centered strategy.

— Improve US export competitiveness through the development of a more effective working relationship between the US Government and business communities.

— Develop an initiative which would add a new sense of dynamism and direction to US foreign policy, and help to build and maintain the domestic consensus needed to maintain a strong US role in the Pacific.

II. US Policy: What Basis for a Regional Focus?

(A) Pacific Rim vs. Pacific-Oriented Countries

(1) Location on the Pacific Rim alone does not create shared interests. The core of a Pacific policy should focus on these states with a common Pacific orientation. Such an orientation clearly exists among the US, Japan, Australia/New Zealand, ASEAN, South Korea, Taiwan, Hong Kong, and (on a smaller scale) the Pacific Island states. Common interests include market-oriented economic systems, significant trade, investment and capital flows, a greater or lesser adherence to Western democratic values, and shared (explicit or implicit) security concerns.

(2) Canada and Mexico, though not fundamentally oriented toward the Pacific, are also Pacific nations. As our #1 and #3 trading partners Canada and Mexico, when taken together with East Asia, constitute the top three areas of US economic interest, aside from Western Europe.

(3) The Pacific countries of Latin America are seeking to expand their Pacific ties, and therefore should not be excluded from a Pacific policy. For the moment, however, their hemispheric orientation suggests that they relate to US Pacific-wide interests in only a secondary sense.

(4) The Soviet Union at present relates to US and other Pacific-area interests primarily—but very importantly—in the security area.⁷ Our desire to encourage the constructive integration of China into the world community suggests that China should clearly be part of our Pacific policy. Chinese security concerns and developmental objectives link it to the US and the Pacific. The overlap of shared interests is only partial, however, and systemic differences may, for the time being, preclude integration of the PRC into a broader Pacific community.

(B) How Do US Interests Interact with Those of the Other Pacific Nations?

(1) Trade and Economic

There is considerable regional interdependence in trade flows. The pattern, however, is asymmetrical, with domination by the US and Japan. With the exception of the United States and Japan, whose regional trade is only a fraction of their global trade, all market economies in the Asia-Pacific region do over 50% of their trade within the region. The importance of regional trade is greatest for the LDCs. The NICs fall in the middle, with heavy regional trade, but a declining fraction of the total as they seek to expand into wider global markets. (See Table I.)⁸

Significant interdependence also exists in regional investment and aid flows, with the US and Japan again as the principal investors/donors (this is despite the fact that US investment in East Asia—$22 billion in 1981—is only about 11% of total overseas investment, and US bilateral aid to the region is significantly less than it was 10 years ago).

(2) Political Interests

A sense of political community is at best incipient. Outside of already-existing groupings, the region is divided by distance, ideology (in the case of the Communist states), history (e.g., profound historic animosities toward Japan that affect relations with Korea, China and the ASEANs), economic competition (between the US and Japan and among several of the NICs), and aligned/non-aligned distinctions. Nevertheless, shared political interests do exist. Common security concerns underlie political and military ties with the US and in some cases with each other. Growing trade ties serve as a unifying as well as a diving force. Generally harmonious relations with the US and an array of shared bilateral US interests with nearly all Pacific nations is a further thread which runs throughout the Pacific Basin.

(3) Security

All states in the Pacific (with the exception of the USSR, North Korea, and Indochina), whether aligned or non-aligned, share a common interest in preventing the growth of Soviet regional power. To a greater or lesser extent, all states (outside of the South Pacific and the PRC itself) share a common fear of China. On both counts, the US is looked to as the explicit or implicit guarantor of regional security. This reliance could increase if Sino-Soviet tensions were to significantly lessen. With US support providing the underpinning of Pacific area stability, from a security perspective the region should be looked at as a whole.

In the wake of the US withdrawal from Vietnam and declining global capabilities during the Carter Administration, deep and persistent doubts remain in Asia concerning the reliability of US defense commitments. While progress has been made during the past two years in reassuring Asian friends and allies, continued efforts will be required to demonstrate our sustained role as a Pacific power.

At present we have no pressing security problems in the Pacific. We should not forget, however, that this is the area where the US has fought its two major post World War II conflicts. This is no accident. Though quiescent, there are great military imbalances in the region. The local balance favors the USSR, the PRC, Vietnam and North Korea, leading to a heavy dependence on the US for a countervailing role. That dependence is aggravated by the rapid increase of Soviet military forces in the area. The substantial stability of recent years is in part a product of tensions and conflicts among actual or potentially hostile countries. This situation makes the US continually vulnerable to the possibility of a Sino-Soviet rapprochement, and individual national susceptible to political or military intimidation.⁹

(C) Has the US Given Sufficient Attention to Its Pacific Ties?

— Growing US interests in the Pacific Basin, both economic and political, may require greater US engagement.

— While lacking the same ties of history and culture, our present level of Pacific involvement has grown to the point where it is arguably comparable to the Atlantic. We should consider, therefore, moving toward a policy which would place our Pacific and Atlantic relationships more on a par.

III. Proposals for a “Pacific Community” Mechanism

Over the past 15 years a number of proposals have been made for the formation of a Pacific Basin-wide organization, to draw together the threads of an incipient Pacific Community.

(A) Structure

— First officially articulated by the Japanese in 1967 with a proposal for a Pacific Free Trade Area (PAFTA). PAFTA was to function as an equivalent and counterweight to the EEC. This idea led to the initiation of a conference series, the Pacific Trade and Development Conference (PAFTAD), which has included eleven meetings since 1968. Participants have been mostly academics and businessmen.

— Organization for Pacific Trade and Development (OPTAD) was proposed by the Conference as a successor concept to PAFTA. OPTAD would be modeled after the OECD, and would include the five Pacific members of OECD, the ASEANs and South Korea, with special status for Taiwan, Hong Kong and the Pacific Island states. Its organization would consist of a secretariat in each member country with regional problems being dealt with on a task force basis.

— Other proposals for Pacific Basin cooperation include the formation of a private, non-governmental body with limited consultative functions, as a preliminary step toward an OPTAD-type structure.

— In 1978 Japan’s Prime Minister Ohira added new impetus to the discussion by publicly calling for a new Pacific area association. Further momentum was also given by the Canberra Pacific Community Seminar, held in Australia in September 1980 pursuant to a joint communique by the Japanese and Australian governments.¹⁰ It also became clear in Canberra, however, that there existed substantial ASEAN opposition to the setting up of a Pacific-wide inter-governmental organization. The result was the establishment of a Pacific Cooperation Committee (PCC), which was to be a private, informal body composed of 25 unofficial representatives of the countries attending the conference.

— On July 31 of this year South Korea’s President Chun Doo Hwan issued a call for a Pacific Basin Summit.¹¹

(B) Attitudes of Pacific Nations

— Japan has historically been the strongest proponent of a Pacific Basin Community. (Japan has an important interest in regional stability and open markets, as its principal markets and sources of raw materials are in or pass through the region.)

— Significant support exists in Australia, on an unofficial basis (as demonstrated by PM Fraser’s backing for the 1980 Canberra Conference).

— South Korea can be presumed to be supportive.

— ASEAN, which is essential to any Pacific organization, is skeptical. The ASEANs are concerned that:

(1) the concept remains too unfocused to be of interest;

(2) the United States and Japan will dominate any Pacific region organization;

(3) ASEAN’s non-aligned status will be compromised by great power involvement;

(4) ASEAN as an organization will be submerged or divided;

(5) economic benefits may also entail political costs (in terms of sovereignty).

— The US has taken a non-committal position. While offering passive support, we have been clearly unenthusiastic.

IV. Possible US Strategies (Should We Support a Pacific Mechanism?)

It should be considered whether a bilateral approach to regional problems alone is sufficient. US interests are currently being effectively served by bilateral diplomacy, but emerging regional challenges—particularly in the fields of trade, investment, aid, and resource development—suggest that a broader, multilateral approach could serve as an effective supplement. Possible options are:

(A) Continue Our Present Bilateral Approach Essentially Unchanged

Outside of annual consultations with ANZUS and ASEAN, US problems and objectives in the Pacific region are addressed on an essentially bilateral basis. Continuation of this policy would conserve resources and avoid the compromises which necessarily come with broader multilateral endeavors. Regarding a possible Pacific Community organization, the United States would aim to let the idea mature at a private level before committing itself to government involvement. Without active US support, it can be expected that the Pacific Basin concept will not advance in the near future beyond private and academic circles.

(B) Assume a More Active Posture

(1) Expand our Existing Bilateral Efforts

This should include increased conceptual focus within the Department on means for enhancing our Pacific relationships. The level and number of high-level visits might be expanded. Bilateral consultations on subjects of mutual interest (military as well as economic and political) could be intensified. In addition, thought should be given to the shifting of additional human and financial resources to the Pacific area.

(2) In Addition to Expanding Bilateral Efforts, Consider Moving in the Direction of a Multilateral Approach to the Pacific, Looking Toward Making First Steps to Build a Pacific Community Consultative Mechanism.

This approach would focus on the Pacific area in a manner both directly and indirectly supportive of US interests. Common concerns might be addressed through either:

(a) a broadly-based, general consultative mechanism; or

(b) more narrowly-focused, functionally-oriented working groups, organized initially on an ad hoc basis.

Initial topics for region-wide consultation might include the promotion of regional trade and investment, the management of trading relationships so as to forestall protectionism and support the free market system, the coordination of regional aid flows, the facilitation of technology transfer, or the management of marine resources. Though essentially economic, common efforts along the above lines could have the added advantage of indirectly nurturing support for US political and strategic interests in the Pacific by encouraging a general perception of shared interests among nations friendly to the US and emphasizing US interest in the Pacific.

1. Source: Department of State, Executive Secretariat, S/P Records, Memoranda and Correspondence from the Director of the Policy Planning Staff to the Secretary and Other Seventh Floor Principals: Lot 89D149, S/P Chrons PW Chrons to Secy AUG 1982. Confidential. Shultz’s stamped initials appear at the top of the memorandum. In the top right-hand corner of the memorandum, Shultz wrote: “Paul—An interesting paper—Pls organize a discussion of people inside Gov’t (say 6 or 8, no more than 10) to spend an hour or two with me on this—some time in the next month. G.”
2. Wolfowitz signed “Paul” above his typed signature.
3. Confidential. Drafted by Randolph on August 26; cleared by Glassman. Adams initialed the top of the memorandum and wrote “8/27.” A stamped notation in the top right-hand corner of the memorandum reads: “’82 AUG 27 P2:08.” Table III, “US Trade with East Asia, January to December 1981,” was not found.
4. Printed in Foreign Affairs, Vol. 46, No. 2 (January 1968), pp. 242–255.
5. Not attached is Table II, “US Trade With Major Areas 1981.”
6. Not attached is Table IV, “Rank of Country as Importer of Commodity from the US in 1981.”
7. An unknown hand changed “related” to “relates.”
8. Not attached is Table I, “Pacific Bain Intraregional Trade (1981 data).”
9. An unknown hand changed “national” to “nations.”
10. Held at Australian National University, September 15–17, 1980. In telegram 272163 to all East Asian and Pacific diplomatic posts and Ottawa, October 12, 1980, the Department transmitted the text distributed to the press in Canberra regarding the results of the conference. (Department of State, Central Foreign Policy File, Electronic Telegrams, D800488–0163)
11. In telegram 8123 from Seoul, August 4, the Embassy discussed Chun’s proposal, outlining the five principles designed to aid in the creation of a “‘Great Pacific Age’,” noting: “The proposal remains vague, but the ROKG seems determined to pursue the idea despite the apparent lack of enthusiasm for it on the part of other potential participants.” (Department of State, Central Foreign Policy File, Electronic Telegrams, D820404–0008)