Can the West Learn From East Asia?
East Asian Economies can Strengthen Global Trade and Economic Cooperation

 

Felix Plakolb @ Unsplash.com Felix Plakolb @ Unsplash.com

 

Trade and economic cooperation always remain in the foreground of international relations as they have a direct and immediate influence on conduct of business in the bilateral and multilateral relations, and in the multilateral governance systems.

 

A Decade of Crisis and Disruptive Transition

 

The post financial crisis decade has brought out the fault lines, and gaps in markets, politics and civil society. The economic and financial woes are often surpassed by the social angst among communities, in every part of globe.   Even as countries are slowly recovering from nearly a decade of slow, and even stagnant growth, there are global headwinds challenging policies that promote openness and growth in the global economy. The uncertainties created by Brexit in Europe and the withdrawal of the US from the Trans Pacific Partnership (TPP) are still being assessed for adverse impact on global investment and trade.  There is a rising support for trade restrictiveness on one hand, and rising borders against movement of people on the other. In a scenario where globalization and its benefits are under a cloud, support for globalization is also under strain. The current decade has brought the focus on ‘left behinds’ both in the developed and developing world. The scenario is further complicated by disruptive transitions in ideas and market forces. And yet, an informed and forward looking policy discussion must recognise that a more, not less connected world is the answer to this dilemma. A connected world, where growth and prosperity are shared by all, is the way forward. There is a greater need for all countries and regions to participate in trade, investments and economic cooperation. Multilateral forums and policy makers should reflect this inclusive strategy in their workings, and in managing the disruptive transitions.  Multilateralism itself must become more inclusive.

 

Learnings from Asia for Reducing Protectionism

 

In the current slowdown of trade, and rising questions against globalization, East Asia[1] has been providing the momentum to global economic growth through multilateral efforts. East Asia accounts for half of global population, 30 percent of global GDP and nearly 30 percent of global trade. The following figures reflect the engagement of East Asia in global trade.

 

20170162-OHNE-East Asia Trade (Exports) -01

20170162-OHNE-East Asia Trade (Imports) -01

 

The ASEAN Economic Community (AEC) has made important gains towards trade and investments liberalization. The Regional Comprehensive Economic Partnership (RCEP) is an outcome of East Asia’s continued commitment to trade and economic partnership among member countries. RCEP negotiations have taught that trade and economic growth plans must incorporate policies to address social imbalances, income inequality, and development gaps in their framework, and bring them closer to Sustainable Development Goals (SDGs).

 

Open trade policies and participation in global value chains have brought growth and prosperity in large parts of Asia. Most Asian economies have benefited from trade and investment rules underwritten by World Trade Organisation (WTO), enabling them to increase their participation in global trade, improve their incomes and productivity, and attain better health and education standards. Other improved social and economic outcomes are corollary to this growth in the developing economies of East Asia.

 

East Asia has largely resisted the headwinds to global trade and anti-globalization trends in past years.  The region continues to participate in regional and global value chains producing goods and services, and has successfully used trade and economic cooperation as a tool for development, and to eliminate dire poverty and raise incomes over successive decades. International Trade is a cooperation model in this region and South-South Cooperation in trade for development is the running thread in the development strategy of Association of South East Asian Nations (ASEAN) and East Asia region.

 

There is a great commitment among the developing and emergent economies of Asia, especially in Southeast and East Asia, and now increasingly in South Asia, to integrate their economies deeper into the global value chain of production and trade of goods and services. These economies aspire to participate in, and determine the outcomes of negotiations of rules of multilateral governance related to trade, human development, connectivity and growth in the coming years.

 

In the current trend of anti-trade, and anti-globalisation discourse among the developed economies, the policy positions of developing economies of Asia have been largely unheard. Economies such as Vietnam, Thailand, Cambodia, and even Singapore (which is a high income country, though the size of economy is small) do not support the anti-trade and anti-globalisation positions inside or outside multilateral platforms. Participation in production networks of goods and services has allowed the CLMV (Cambodia, Laos, Myanmar, Vietnam) to use trade and economic cooperation for their respective economic development and income growth.

 

Similarly, sixteen major economies of East Asia continue to pursue negotiations for a free trade agreement – the Regional Comprehensive Economic Partnership (RCEP).  Twelve of the sixteen countries in RCEP are developing or emergent economies, of which three are LDCs. These countries face strong political economy and socio-economic hurdles at home, and yet are eager to invest their resources in a regional trading system that is open, rule based and transparent. It is important that openness and willingness for greater economic connectivity of these countries be factored into the multilateral narratives on bringing down protectionist practices among countries.

 

The Hamburg Communique of 2017 of the G 20 Leaders has shown a way forward by calling out to the multilateral processes to take greater note of voices from the developing economies, and to help in creating rules and norms for the global community to get more connected and inclusive in its quest for development. A wider dissemination of trade and economic cooperation experience in East Asia among the global forums will help in understanding the need for greater connectivity, and cooperation among economies. This experience also makes a strong case for trade and economic policies that must incorporate mechanisms to address social imbalances, income inequality, and development gaps in their framework to ensure an even distribution of growth.

 

 

[1] East Asia here means the geographical spread of Southeast Asia and East Asia which are closely linked through sophisticated production networks, Originally, East Asia was ASEAN+6, namely, 10 ASEAN Countries, Australia, China, India, Japan, New Zealand, South Korea. However USA and Russia are also now members of East Asia Summit, but are not a part of the production networks, and trade reflected here.

 

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