Trade
ASEAN economic integration under Cambodia’s chairmanship
Author: Stepan Golovin, Institute of World Economy and International Relations
The economic component of Cambodia’s ASEAN chairmanship in 2022 was less visible against the background of US–China tensions and the Ukraine and Myanmar crises. But promoting prosperity, deepening economic integration and bridging the region’s development gaps remain key ASEAN goals.
It is important that ASEAN follows this track, especially as Phnom Penh’s priorities build on ASEAN’s previous initiatives to bring important deliverables in strengthening the ASEAN Economic Community (AEC).
ASEAN member states showed good results in their post-COVID-19 economic recovery. According to ASEAN data, the association’s nominal GDP in 2021 surpassed its pre-pandemic levels and reached US$3.3 trillion, while in 2022 it is projected to grow by 5 per cent. This prognosis is echoed by both the Asian Development Bank and the IMF’s outlooks.
ASEAN in 2022 further underscored that recovery should be people-centred and climate-resilient. The member states decided to prolong the validity of the Memorandum of Understanding on the Implementation of Non-Tariff Measures on Essential Goods until November 2024. This document, adopted in 2020, ensured the unhampered flow of agricultural and food products, as well as goods relating to the manufacture and distribution of vaccines, medicines, medical supplies and equipment. It now consists of 351 tariff lines (up from 152 initially).
Reflecting the considerable share of tourism in ASEAN economies, the association adopted several documents aimed at facilitating mutual recognition arrangements for industry professionals and the development of sustainable tourism.
In 2021 ASEAN’s trade in goods reached US$3.34 trillion, up from US$2.67 trillion in 2020, and FDI inflows into ASEAN jumped to US$174.1 billion from US$122.4 billion in 2020. But to stay relevant amid global supply chain disruptions, technological shifts and climate challenges, ASEAN needs to modernise its policy arrangements.
In March, negotiations were launched for upgrading the ASEAN Trade in Goods Agreement. Since trade liberalisation is arguably the most visible achievement of the AEC — duties for 98.6 per cent of tariff lines were eliminated — further efforts in this sphere are crucial. The agreement notably plans to include provisions surrounding paperless trade, the digital and circular economy and sustainable development.
ASEAN is also working on upgrading free trade agreements (FTAs) with its dialogue partners. A positive result is the conclusion of negotiations for the ASEAN–Australia–New Zealand FTA to make it more business-friendly. It improves transparency measures, lowers costs and time for trade, includes digital technology and education services and smooths the flow of essential goods during crises. Chapters encouraging the increased participation of micro, small, and medium enterprises (MSMEs) in economic activities — including government procurement —and trade and sustainable development were also added.
Another achievement is the launch of negotiations for upgrading the ASEAN–China Free Trade Area, ASEAN’s oldest FTA with its dialogue partners. It should become more future-oriented by including the digital and green economy, supply chain connectivity, competition, consumer protection and support for MSMEs. Considering the volume of trade and investment between China and ASEAN (trade with China amounts for 20 per cent of the overall association’s turnover), the results will be important for both sides. Big hopes in the region for the post-pandemic recovery and inclusive development are placed on the Regional Comprehensive Economic Partnership (RCEP), which entered into force on 1 January 2022. As was discussed during summits, the key issue is to encourage businesses to utilise the RCEP agreement, as well as to ensure greater trade efficiency among ASEAN members.
Connectivity was highlighted through a leaders’ statement on the post-2025 regional connectivity agenda. The idea is to take a comprehensive, cross-sectoral approach to promote people-to-people exchanges, innovation and industrial transformation, MSMEs and female entrepreneurship. It also aims to bridge gaps in development.
Due to changing political and economic landscapes, experts were anticipating further developments with the ASEAN Outlook on the Indo-Pacific (AOIP), particularly regarding the role of the association’s external partners. This document is often considered ASEAN’s attempt to propose a new architecture of regional…
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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