Trade
How Australia and China can begin the great defrost
Authors: Peter Drysdale, ANU and Yongjun Zhang, CCIEE
During the pandemic, the trade relationship between China and Australia has got bigger, not smaller. Strong commodity prices have cushioned the economic downturn in Australia during the COVID-19 lockdown.
Australia’s resource exports will help fuel a strong economic recovery in China with low-cost, high-quality inputs into global supply chains. The Australia-China economic relationship is important for the recovery of both countries and all of Asia.
Economic interdependence is enormously beneficial but stands in marked contrast to the deterioration of the bilateral political relationship that has coincided with increased uncertainty in the international political environment. Foreign investment and trade in services – education, tourism and other areas – will not automatically revert to pre-pandemic levels without work that repairs the fracture of trust in the relationship.
In the aftermath of COVID-19, Australia and China share strong interests in ensuring public health and safety, financial stability and an open, rules-based trade in the region. Both governments can contribute towards these goals most effectively by working actively together in multilateral settings such as the ASEAN + 6 group, the East Asia Summit, APEC and the G20.
To chart a course to economic recovery and reconstruction, Asian countries must deal with the international health policy and economic policy challenges of exit from the crisis simultaneously; failure to do so will cause more social disruption, more deaths and more economic hardship.
The foundations for post-COVID-19 coordinated regional policy action were laid at an ASEAN+3 summit on April 14 that included leaders from south-east Asia, China, Japan and South Korea, and committed to health and economic policy coordination. China now has an important contribution to make with other key neighbours such as Australia, India and New Zealand in building on that initiative to meet the continuing challenges.
Australia and China have successfully managed the public health dimensions of the crisis and will benefit from coordinated economic recovery in Asia to escape a serious economic slump caused by the health-related lockdowns.
The breakdown in bilateral political relations can be reversed by, as a first step, jointly declaring and then realising the deep shared interests of peace and prosperity Australia and China have in an open and rules-based order and commitment to working with other partners in the region to prosecute those interests.
In managing the public health dimensions of the crisis, Australia and China can support arrangements to ensure equitable access to pandemic countermeasures and elevate medical and research exchanges. That should include timely and open sharing of data and information to support an early warning system for disease outbreaks with pandemic potential by expanding ASEAN+3’s commitment to a COVID-19 ASEAN Response Fund to include Australia, New Zealand and India.
On the economic agenda, Australia and China can use the ASEAN-centred frameworks, APEC and the G20 to learn from each other about the impact of the pandemic on the macroeconomy and support a globally coordinated response. There are important opportunities for informal collaboration between Australia and China around the G20 on these issues.
Both Australia and China can encourage the region’s central banks and finance ministries to expand bilateral currency swap arrangements to create a more robust regional financial safety net and avoiding a mess of bilateral arrangements with gaps.
Conclusion of the Regional Comprehensive Economic Partnership (RCEP) among 15 members – ASEAN plus Australia, China, Japan, New Zealand and South Korea, less India initially – will help keep markets open in East Asia and provide a platform for continuing cooperation. RCEP also has the weight to make a difference in keeping the global trading system open. Australia and China, in particular, can help keep India engaged and define a path towards eventual Indian membership.
While the WTO is no longer fit-for-purpose for the globalised economy of the 21st century, it’s a critical bulwark in avoiding disintegration of the international economy and markets after the COVID-19 economic crisis. The core rules that govern goods trade and underpin the global trading system need to be preserved. That will be easier if progress can be made with updating and expanding WTO rules to new areas of importance to international economic exchange today, promoted…
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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