Trade
APEC’s pursuit of global cooperation
Author: Justin Kwan, Asia Pacific Foundation of Canada
As COVID-19 takes its toll on the global economy, the need for international cooperation has seldom been so urgent. A recent report from APEC predicts a 3.7 per cent contraction in the region’s economy — a total output loss of US$2.9 trillion in 2020. The first-ever virtual Ministers Responsible for Trade (MRT) meeting between trade ministers from 21 APEC economies is an encouraging step towards a post-COVID-19 recovery. At the meeting, the APEC trade ministers reaffirmed commitment to facilitating the flow of goods and services and the need for a stable and predictable trade environment.
The ongoing trade war between the United States and China had made APEC a battleground between the two. The forum had earlier failed to reach a consensus on a joint communique during the APEC leader’s 2018 week. However, the recent MRT meeting and commitment to multilateralism under Malaysian leadership sends an overdue signal in favour of collaboration. APEC now has a unique opportunity to address challenges through diplomacy and its resources to raise and facilitate cooperation in specific areas over the next stage of pandemic recovery.
First, APEC can set intermediate objectives for facilitating return to travel. According to the International Civil Aviation Organization, COVID-19 is expected to reduce airline bookings by at least 46–51 per cent, with an overall reduction of 2.6–2.8 billion passengers. As restrictions and lockdown measures stifle international aviation and reduce operating revenues by an estimated US$352–$390 billion, restoring the movement of people is a necessary step in the long road to normalcy.
Drawing upon the achievements of the APEC Business Travel Card (ABTC) — facilitating easier entry for business travellers within the APEC region — economies that have brought COVID-19 under control can act as pilots to test the growing concept of travel bubbles. With the ABTC requiring approval by each of the member economies, this existing framework can help with intergovernmental coordination.
APEC economies that have managed their COVID-19 cases can pilot smaller travel bubble schemes that, if successful, could potentially be scaled up from business travel to a more extensive government-vetted COVID-19 traveller program. Rather than individual governments repeatedly attempting to work out separate bilateral travel bubble agreements, APEC economies can benefit from the existing ABTC framework.
Second, with the impact of COVID-19 taking a toll on micro, small and medium-sized enterprises (MSMEs), APEC should continue to encourage the long-term structural transition of small businesses to the emerging digital economy. As government policies on social and physical distancing limit consumption, traditional MSMEs that rely on in-person interactions are under threat from lockdowns. With 98 per cent of the APEC region comprising of MSMEs that employ over 60 per cent of the region’s workforce, governments are providing fiscal stimulus packages to keep MSMEs — the backbone of many economies — afloat.
Long before the pandemic, APEC’s Small and Medium Enterprises Working Group (SMEWG) emphasised the digital transformation of entrepreneurs and MSMEs as well as innovation in the digital economy. But as e-commerce and digital solutions emerge in response to restricted travel and disrupted work environments, skills development and training will be required if MSMEs are to succeed in the rapidly changing international market.
The SMEWG should continue to encourage a framework that governments can use to support MSMEs during this critical time. APEC would also do well to revisit initiatives such as the Boracay Action Agenda to Globalize MSMEs which can provide a wealth of knowledge for MSMEs to pivot towards new international growth drivers being created due to COVID-19’s acceleration of the digital economy.
Finally, APEC demonstrates valuable foresight and leadership by continuing to support multilateral dialogue through the adoption of new digital technologies. New Zealand, the host of APEC 2021, has already made the decision to commit entirely to online programming during its hosting year. With closed international borders and quarantine making in-person forums uncertain, digital multilateralism can serve as a remedy to address both regional and global threats, as well as help APEC economies find common ground.
With Malaysia and New Zealand taking on the challenge of hosting APEC during the pandemic, they highlight the importance of continuing…
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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