Trade
COVID-19 challenges Downing Street’s post-Brexit Asia ambitions
Author: Oliver Turner, University of Edinburgh
What implications does the COVID-19 pandemic signal for the United Kingdom’s role and presence in Asia? The Conservative UK government’s post-Brexit vision for a ‘Global Britain’ identifies the Indo-Pacific as one of three ‘centres of the global economy and political influence’ crucial to national prosperity and security. But the Global Britain vision is criticised for lacking substance and for being grounded in the problematic logic of — and nostalgia for — the British Empire.
Worse still, COVID-19 brings additional complications to UK relationships in Asia.
Because of the Brexit transition period in which the United Kingdom and European Union plan to negotiate their future relationship, little between them will change before at least January 2021. This is when comprehensive frameworks for trade, security, business, travel, and scientific collaboration, among many others, are scheduled to be agreed. Doubts already circulated that this could be achieved in time, but the COVID-19 pandemic has amplified calls for the transition period to be extended.
In the first instance, the ongoing pandemic makes it more likely that the UK’s new relationship with Europe will remain undetermined for longer. This is important because the United Kingdom’s Asian partners want clarity on that relationship. The extent to which arrangements will diverge from EU laws and regulatory standards, for example, is key to the long-term planning of future trading relationships.
The Chairman of the Japan Business Federation has confirmed that trade talks with the United Kingdom ‘depend on how negotiations with the European Union are settled’. The Chinese government is similarly adopting a ‘wait and see approach’ before committing to any process of changing their trading relationship.
More drawn out UK–EU negotiations would be frustrating for the United Kingdom’s Asian partners and a problem for the UK government, whose 2019 election victory rested on the promise to ‘Get Brexit Done’. A prolonged absence of new trade deals or even serious negotiations with China, India, Japan and Australia — partners that UK Prime Minster Boris Johnson told voters were ‘queuing up’ to talk — may initially be blamed on COVID-19. But before long they would become a source of domestic discontent.
Second, a priority for the post-Brexit United Kingdom is to become a knowable international entity. If it is no longer a colonial power, a great power or even a European power (at least one with significant influence in Europe), then what is it? In Asia as much as anywhere, it has the reputation of being willing to uphold international rules and norms. However, the international landscape is evolving and COVID-19 is intensifying questions about future global leadership and where rules of international engagement will be written.
China’s government — which is transitioning from international rule-taker to rule-maker — attracted criticism for hindering early efforts to contain COVID-19, including censoring medical professionals. COVID-19 is harming Beijing’s reputation as a responsible global leader. Even efforts to support Europe during the crisis have backfired. This could make attempts by the United Kingdom to pursue post-Brexit trade deals with China more problematic and controversial than before, internationally and domestically. This is especially true if such deals come with increased involvement in areas of UK infrastructure or the economy which recently proved contentious.
The so-called ‘Golden Era’ of UK–China bilateral relations under former UK prime minister David Cameron achieved little. Spats over freedom of navigation exercises in the South China Sea and the future of Hong Kong further exposed its shallow foundations. After the COVID-19 pandemic, London will assess the relationship more soberly. Indeed, hostility towards China’s government is already emerging from prominent UK politicians, with the Foreign Secretary arguing that it will no longer be ‘business as usual’ in the relationship. The British national intelligence services also now seem to favour a tougher approach.
The United Kingdom’s international presence is traditionally tied to US interests. Broadly speaking, US–UK ties are strong. But in Asia, by joining the Beijing-led Asian Infrastructure Investment Bank the United Kingdom experienced a diplomatic fallout with the United States. Washington also criticised UK accommodation of Huawei, with one Senator arguing that the…
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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