Trade
Australia needs to revamp the Japan relationship to secure its Asian interests
Author: Shiro Armstrong, ANU
Prime Minister Scott Morrison’s trip to Japan in November 2020 for a historic summit deepened a relationship with Japan that is Australia’s strategic anchor in Asia — his sole official trip overseas in close to 19 months. The most important geopolitical, economic and security fault lines in the world run through Australia’s and Japan’s own backyard.
Australia’s relationship with Japan has never been closer, and Japan is of growing importance to Australia. The world’s third largest economy, it is Australia’s second largest source of foreign investment and third largest trading partner — having been second until commodity exports fell last year.
The Special Strategic Partnership between the two countries rests on deep economic complementarity, shared strategic interests, and deepening trust and familiarity.
But the Japan relationship must be reimagined to cope with accelerating economic, environmental and social changes in both countries and a dramatically changing geopolitical environment. Japan must be embraced as a most favoured partner to deliver on its potential to help deal with these challenges.
There is no room for national complacency about how ready the relationship is to serve this purpose. In addition to the transformation of the economic relationship, much about the region’s direction is yet to be negotiated and is too uncertain to take the present-day congruence of strategic outlooks between Japan and Australia for granted. The active, vital task of reimagination must be grasped by Canberra and Tokyo now.
The energy trade underpinning the two countries’ growing security relationship is already ebbing as Japan turns to decarbonisation of its economy. The shared strategic approach to China and the rise of global protectionism — notably in the United States and Europe — makes a far closer political, cultural relationship essential to both nations.
Australia, Japan and the region face a rising and more assertive China and an increasingly inward-looking United States that no longer commands economic or political primacy in Asia.
The US alliance framework remains the bedrock of Australian, Japanese and regional security and stability. The Quad that includes India alongside Australia, Japan and the United States reinforces that. But it is through open economic engagement that Australia needs to entrench US interests in Asia where US policies have been less supportive of the multilateral rules-based system. Japan shares those interests and brings serious economic heft to the task. Australia’s experience in the face of Chinese trade coercion demonstrates to the world that the open and contestable markets that the multilateral system helps to guarantee significantly blunt the effect of intervening in markets for political or economic gain because it offers alternative markets and suppliers.
The multilateral trading system is a vital strategic and security interest for Australia and Japan. It is also a crucial element in comprehensive regional security that integrates national security, economic and environmental sustainability objectives. This is the agenda to which the two countries must persuade their partners in the region, including China.
Today’s thriving Australia–Japan relationship cannot be sustained and elevated without substantial strategic investment from Australia. The old complementarities in fossil fuel-based energy and raw materials trade will not sustain the relationship as it has done in the past.
It is true that billions of dollars of Japanese investment now seek opportunities in hydrogen and renewables in Australia. That is the promise. Working closely with Japan, one of the world’s largest energy importers, will bring technology and investment to Australia’s trade and economic transformation. But that won’t happen without substantial national investment and joint national strategies to encourage and facilitate the massive transition in our trade that needs to take place to encourage it. The challenge requires a joint Australia–Japan Energy Initiative that combines government, industry, experts and stakeholder groups to accelerate and facilitate the energy transition needed in our trade.
There are significant assets from both countries’ investment in the relationship since its historic post-war foundation in the 1950s and 1960s. But the government-to-government, institutional and interpersonal ties that have serviced the relationship to date are not adequate to service the relationship now emerging.
A huge investment…
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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