Trade
The rules based economic disorder after Osaka G20
Author: Shiro Armstrong, ANU
The Osaka G20 summit may yet be remembered in history as the moment the global rules based order was lost. There was no mention of the rules-based order in the communique, signaling an edge towards rule by might rather than rules among the major powers. The uncertainty that has clouded the global economy over the past few years is child’s play compared with what could come now without a major effort by middle powers to avert catastrophe.
Leaders of the most powerful 20 countries in the world met last week in Osaka for their most important meeting since the leader’s summit was first convened to respond to the global financial crisis. Prime Minister Abe and the Japanese government found themselves at the helm of the global grouping at a time when multilateralism is under its biggest threat since the global multilateral regime was created after the second world war.
At stake is the future of the multilateral trading system and global economic cooperation. The current global hegemon is intent on tearing down the rules in the face of a rising power that is challenging its supremacy. The United States has gone from underwriting the order for the past 70 years to becoming its biggest threat. China’s rise was always going to be difficult to manage but US President Trump and Chinese President Xi are making it perilously close to impossible for the rest of us.
There appear to be no constraints on the populist backlash against globalisation in much of the advanced world that is threatening prosperity globally. The future of the multilateral trading system is in doubt as the enforcement of the inadequate though crucial WTO rules look to fall apart in December with the United States vetoing the appointment of judges to the appellate body of the dispute settlement system.
After recognising the need to update the WTO rules at the last G20 summit in Argentina only 7 months ago, the leaders in Osaka could barely manage lowest common denominator language in their Osaka communique that raises more doubt than confidence. Gone are the empty words copy and pasted into past communiques denouncing protectionism. The best that could be managed was a single watered down paragraph on trade that did not mention protectionism or multilateralism.
For a group that is essentially the steering committee for the global economy, there is no mention of the importance of markets in their long-winded and at times farcical communique. There is an America First paragraph shoe-horned in explaining the US disdain for the Paris Climate Accord. It’s difficult to know what to make of the other dozen or so pages.
There was some good news amongst the train wreck. There was a temporary truce in the escalating trade war between China and the United States. And Australian middle power diplomacy managed to broker a consensus statement to combat terrorist and extreme violent material online.
The most promising sign at Osaka was that countries like Indonesia took a proactive stance, standing up for their interests in multilateral trade. Indonesia’s efforts were frustrated by a…
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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