06.12.2017
The APEC Leaders ‘ Summit in Da Nang, Vietnam, held in November 2017, reflected a new geopolitical context in the development of trade in Asia (which, as the largest region of the world, well reflects the global situation).
At this meeting, the leaders of the three largest economies in the world – the United States, China and Japan – presented to the world what roles their states will play, defending, forcing or adapting to the new, emerging global trade order (the contours of which are not yet clear).
Also, according to analysts of the American Brookings Institution, there is still no certainty about how free trade and multilateral obligations will be respected if each of the world powers offers to “bet” on themselves in the race for leadership (in fact, they offer their own rules of the game, which exclude other alternatives).
So, during this first visit of President Trump to Asia, the American side attached key importance to trade issues. At the same time, their own vision of trading was presented. The trade policy in the “America First” format was loudly announced during Trump’s first speech at the APEC summit-a forum aimed at promoting the rapprochement of the economies of the 21 participating states.
Analysts noted that President Trump noted that during his reign, the United States will not sign any regional or multilateral agreements, because these agreements unfairly “tie the hands” of the United States.
The US president directly criticized the WTO for, in his opinion, unfair treatment of America. He warned that he would not tolerate the “fraud” of other countries (in particular, by this term he meant the negative trade balance in the United States). But the participants were also surprised when Trump began to blame not “crooks” (for example, Trump noticed that these countries only defend the interests of their citizens), but the past governments of the United States (which apparently did not quite effectively defend American trade interests).
In a more expressive part of his speech, Trump also talked about the Indo-Pacific Dream, based on a number of bilateral trade agreements that the US is ready to discuss with states seeking to conduct fair trade. However, in practice, this idea was not supported by any Indo-Pacific State (with the potential exception of the Philippines).
According to economists, two important factors are holding back many Asian countries from supporting Trump’s initiative: the
inability of trade negotiations to solve the trade deficit, which is caused rather by macroeconomic forces;
multilateral agreements promise greater economic benefits by boosting the chain of global production sales.
In turn, according to American experts, Chinese President Xi Jinping has taken another step to take the vacant place of the United States – the world leader in multilateral and free trade.
Speaking to the same audience, immediately after US President Trump, Xi expressed the opposite position in his speech. In his speech, the Chinese leader once again defended the values of international trade as a mutually beneficial business and as a tool for development. He also described globalization as “an inescapable but flexible force that can be more inclusive and balanced.”
Experts note that China’s economic and political influence has significantly increased with the launch of the Asian Infrastructure Investment Bank (AIIB) and the “One Belt and One Road”initiative.
At the same time, liberalization, “a commodity that, according to Xi, is a deficit in the PRC,” may become the last obstacle to Chinese leadership in global trade. The 19th CPC Congress did not define a clear path for China in the direction of developing free trade. On the contrary, according to American analysts, at the November congress it was fixed that the impulse to carry out useful internal reforms has dried up in China, and the state will continue to play a priority role in the economy.
But the “exciting drama” at the APEC summit was not only the polite duel between the Americans and the Chinese about the weaknesses and strengths of globalization, but also Japan’s ambiguous attempts to resurrect the Trans-Pacific Partnership (TPP) trade agreement. This project is in uncertainty, because US President Trump refused to participate in it.
In addition, the peak of tension was reached when Canadian Prime Minister Trudeau did not attend the 11th TPP summit, where leaders gathered to “give the go-ahead” to a broad agreement within the framework of the TPP. As a result, after difficult negotiations, an agreement was eventually reached on key elements within the framework of the newly created” Comprehensive and Progressive TPP ” (also known as TPP 2.0).
At the same time, the remaining 11 states have achieved an amazing understanding: they approved market access with obligations to fully liberalize duties (as originally planned in the TPP), and limited the temporarily discontinued regulatory measures to 20 points (until the US returns to the project).
The temporary suspension of the TPP is caused by minimizing the dispute settlement operations of investor states (by extracting investment agreements and investment permits) and freezing the copyright rules that the United States defended (for example: data protection on biological products, deepening copyright, and the range of patents).
During the negotiations, the parties did not put pressure on each other to delete any part of the text of the final document. On the contrary, the experts noted a virtually “surgical” approach in an effort to keep the agreement intact and keep the ambitiousness of the agreement at a high level.
As you know, TPP 2.0 is still far from being completed. The statement of the governments of the participating countries announced a list of four issues awaiting final decision: cultural reserves in Canada, a list of Malaysian state-owned enterprises, criteria for non-compliant coal in Brunei, and one article of trade sanctions on Vietnam.
Experts believe that none of the presented points is an insurmountable obstacle, as well as the revision of the rules of origin of goods with regard to cars, which Canada insisted on, which was not specified in the government statement (this issue suddenly arose as an attempt by the Canadian side to delay the completion of the process of signing the final trade agreement).
In general, experts at the Brookings Institution believe that today the geopolitical context of trade in Asia is actively changing, as the three main powers are now trying on new roles.
Today, the United States is critical of multilateral and regional initiatives, while not being able to achieve coherence within the framework of bilateral trade agreements, and seeks to resort to unilateral pressure as the main direction in trade policy.
China is trying to “consolidate” the Asian region through extensive infrastructure financing, and at the same time it is competing for the title of “champion of multilateral agreements”, but, unfortunately, such initiatives, according to Western estimates, are not yet sufficiently liberal.
Japan, in turn, in pursuit of leadership in trade, is “breaking its teeth” about saving the disintegrating TPP, not out of an effort to replace the traditional role of the United States in Asian economic diplomacy, but rather out of a desire to regain its own positions. But Tokyo’s success will depend on its ability to conduct successful negotiations of all TPP participants (even if the United States-previously acting as a natural driver of trade in the region – will stay away from this ambitious project).
Source: https://www.brookings.edu/blog/order-from-chaos/2017/11/15/the-new-geopolitics-of-trade-in-asia/
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