Trade
ASEAN anchor to Asian trade policy strategy
Author: Editorial Board, ANU
As the global trade regime threatens to unravel under the Trump administration’s assault on the WTO dispute settlement disciplines and its tearing up the rules in its trade war with China, ASEAN — the motley Southeast Asian grouping that includes Indonesia, Singapore, Malaysia, Thailand, Myanmar, Vietnam, Cambodia, Laos, Brunei and the Philippines — would seem the most unlikely bloc to spring effectively to its defence.
But that’s exactly what has happened.
Japan’s initiative with Australia and others to double down on the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) — TPP-11 or TPP minus the United States — earlier made a statement that helped to keep regional trade open in the face of the Trump administration’s disavowal of it. But the leaderships of countries like Japan and Australia has been hamstrung in defending of the multilateral trade regime as they deal with aggressive US bilateralism under the constraint of protecting their US alliance relationships.
In November, around the East Asian Summit meetings in Bangkok, ASEAN and its Regional Comprehensive Economic Partnership (RCEP) partners, Australia, China, Japan, South Korea and New Zealand (minus India) declared the agreement all-but-done and their intention to sign off on it in 2020. India’s political nerve broke at the last moment and it demurred.
This was a decisive moment in both regional and global economic and political affairs. The path that ASEAN and its East Asian partners had chosen was a game-changing push-back against the tide of populist-inspired isolationism, protectionism and nationalism and a stand for the multilateral trading order. That’s why it was welcomed so warmly by a trade-war weary world, not just as another regional trading deal. A group of countries that comprise close to a third of global trade and income had taken a stand.
RCEP is a green shoot in the otherwise deserted field. As the world divides, Asia has come together. RCEP is not just a trade agreement, it’s an economic cooperation arrangement. And RCEP brings together a group of countries, a number of which had no free trade agreement that linked them previously. More importantly, RCEP commits what’s still the most vibrant trading region in the world to the common pursuit of global interests and goals.
The RCEP victory was ASEAN-made and ASEAN executed. It has not been ASEAN’s only contribution to the effort to turn around the dangerous tide in international economic diplomacy. Indonesia, at the Osaka G20 summit in June, tabled an important ‘non-paper’ in defence of the WTO and defined a pathway forward on its reform that none of the other major players had the fortitude or strategic space on which to take a stand. That initiative provides a beachhead for more broadly based collective action by middle and smaller powers to protect their interests in the established global trading rules and improve the functioning of the multilateral trading system.
‘ASEAN consistently and quietly delivers peace to one of the most Balkanised regions in the world. Yet, no one notices’, explains Kishore Mahbubani in this week’s lead essay, and….. ‘the understated and quiet leadership of ASEAN managed to pull off one of the biggest coups in recent economic history by announcing the completion of negotiations of RCEP’.
India’s Look East and Act East policies ‘will mean absolutely nothing if it does not join RCEP’, warns Mahbubani. Ironically, the Indian negotiators were ready with the deal on RCEP for Prime Minister Modi to sign off in the lead up to Bangkok. But nationalist and protectionist political forces at the last moment warned the Indian leader off, casting India once more in the role of international trade agreement spoiler.
The cost of the wrong-call to India is large. Its languishing economy sorely needs the boost that RCEP-stimulated reforms would give to long term growth, employment for a bulging workforce and poverty alleviation. Such Indian wrong-calls continue to condemn India (and South Asia that it dominates) to economic welfare indicators just a small fraction of those of East Asia — South Asia has just 2.7 per cent of global trade compared with East Asia’s 30.1 per cent, 2.2 per cent of global foreign investment compared with East Asia’s 48.1 per cent, and 4.0 per cent of global GDP compared with East Asia’s 30.2 per cent, while they account for 23.9 per cent and 30.7 per cent of the global population respectively.
The 15 other RCEP leaders are…
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
- China’s Golden Rooster Film Festival Kicks Off in Xiamen – Thailand Business News
- Italy and China New DTA Set to Take Effect in 2025: Important Changes and Implications
- China’s New Home Prices Stabilize After 17-Month Decline Following Support Measures
- U.S. national debt is its Achilles’ heel, but China sees it as an opportunity
- Business Update: Southern Sun Reports Earnings Growth; China Stimulates Property Market – News24
- Vietnam’s Approach to China: A Balance of Cooperation and Struggle