Trade
The question of global leadership: anemocracy or finding new collective authority
Author: Editorial Board, ANU
Many now believe that the aggressive strategic competition that has emerged so suddenly between the United States and China is driving the global order towards a new bipolarity. The destructive trade conflict between the world’s largest and second largest trading nations will visit instability and division upon the global economy and shrink the potential for global prosperity and amity.
Calculation of the exact trajectory of this course is difficult. But the direction and the broad magnitude of its impact are possible to estimate. These are global order-destroying choices on which the United States is now settling and to which China seems impelled to respond with little regard for what standing up to Washington bilaterally might do to the order under which China and the rest of the world have prospered.
These are not two-bit players slugging it out in a trade brawl of little consequence to the whole system. It may still be difficult to predict which side will be damaged most in this game and how the rest of the world will bear the cost. But deal or no deal between the two big powers, huge costs there will most certainly be. And on the current path the whole world will take an almighty pasting.
It won’t simply be the trade and income losses inflicted by the restrictions on trade upon which the micro modellers focus in their analysis of the effects of higher prices on the scale and structure of production and trade, although those losses will, on a variety of estimates now, be high. It is the fracture of confidence in doing business in the international economy and infection of political suspicion about global economic partners — the core assets of the postwar multilateral economic order — that will impose vastly higher costs on the global economy. Those effects are already visible as investors in global enterprise and prosperity pull back in nervous expectation of continuing and deepening policy unreliability in the two biggest centres of world economic power. And beyond the economic chaos, there’s destruction of what’s commonly called ‘Pax Americana’ — though wrongly since the influence that the United States has exercised around the world for the past three-quarters of a century was never only or largely the product of raw military power. It’s the dream of American liberalism that has wielded greater influence than any other ideology over these decades. And China’s rise today, though it will expand the influence of that country’s traditional values, will do so widely if, and only if, it can accommodate that American legacy.
It may also be possible to explain what will determine the direction of transition from the post-Cold War unipolar order that was led by the United States. But, despite the entrenched power of the incumbent states and where the psychology in the exercise of their power is currently leaning, it’s perhaps not too optimistic to hope that there’s still room for choice.
‘Moral realism explains the transition from a configuration with one dominant state to a configuration with a rising state…
Trade
Self-Reliance and Openness: Core Principles of China’s Third Plenary Session
The Third Plenum communique from the CCP indicates a prioritization of stability and compromise in response to China’s economic challenges. It highlights the concept of Chinese-style modernization and establishes political guidelines for balancing regulation and market forces.
The CCP’s Third Plenum communique signals a focus on stability and compromise in the face of China’s economic challenges. It emphasises Chinese-style modernisation and sets political directions for balancing regulation and market forces. While not as groundbreaking as previous plenums, it acknowledges the importance of market mechanisms and technological self-reliance, aiming to address issues like high youth unemployment and private sector uncertainty. The communique seeks to navigate the complexities of global competition and domestic innovation, potentially reshaping global supply chains and trade dynamics. Overall, it presents a pragmatic blueprint for China’s economic future.
Source : Self-reliance and openness central pillars of China’s Third Plenum | East Asia Forum
Trade
Trade Prevails Over Political Persuasions in China-Germany Relations
China and Germany maintain a strong bilateral relationship, rooted in economic cooperation despite ideological differences. Recent visits and agreements focus on expanding trade and addressing mutual concerns, navigating challenges while nurturing ties.
Evolving Bilateral Ties
China and Germany share a strong bilateral relationship, rooted in history since 1972. This connection has seen moments of cooperation intertwined with periods of tension. German Chancellor Olaf Scholz’s April 2024 visit underscores Germany’s commitment to fostering this partnership, reflecting a mutual interest in maintaining economic ties despite ideological differences.
Economic Pragmatism
As the second and third largest global economies, China and Germany’s economic interdependence is crucial. Germany emerged as China’s primary trading partner in 2023, with trade values reaching €254.4 billion (US$280 billion). In response to global scrutiny, Germany has taken a balanced approach, emphasizing economic stability over political discord. This was evident during Scholz’s prior visit in November 2022, where his diplomatic tone contrasted with broader EU sentiments.
Facing Challenges Together
Despite increasing public skepticism in Germany regarding China’s global influence and human rights issues, both nations continue to seek common ground. Their October 2023 Joint Statement highlights intentions to pursue cooperation in areas like carbon neutrality and open markets. To navigate these complex terrains, Germany can utilize its institutional frameworks to enhance dialogue, while also considering supply chain diversification to reduce dependency on China. The intertwining nature of their economies suggests that, despite challenges, both countries will continue to prioritize their substantial trade relations.
Source : Trade trumps political persuasions in China–Germany relations
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
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