Asean
Is New Zealand trapped in the Anglosphere?
Author: Gary Hawke, NZIER
The best headline among the usual profusion of journalistic reviews of New Zealand in 2012 is ‘Trivial Pursuits: The big news of the year is a margin-of-error-scale shift in the polls’.
Even in this context foreign affairs played little role in political commentary
but the longstanding importance of Asia to New Zealand remained a well-recognised and controversial issue.
New Zealand’s Defence White Paper 2010 gave primacy to ‘security partnerships’ with Australia, the United States, the United Kingdom and Canada as partnerships that are ‘grounded in common traditions, experiences, and values’. ‘Values’ was mentioned frequently throughout the White Paper, although it specified only ‘primacy of the rule of law, constraints on the unilateral exercise of force, and extending the same rights and responsibilities to all nations regardless of size or allegiance’ — values that are hardly unique to the Anglosphere. Preferring traditional allies can be supported by an idea of ‘social distance’, but its biggest element is really familiarity. Different economic interests and even different strategic alignments relative to Asia necessitate more incisive and innovative thinking.
Through 2012, diplomatic events, all minor and unquestioned in isolation, contributed to warming relations with ‘traditional’ allies. But key developments were elsewhere. Even in the South Pacific, usually seen as offering the clearest advantages of cooperation with the US and Australia, the biggest event in the year was the agreement with China and the Cook Islands for a tripartite approach to a specific aid project to improve water quality.
New Zealand’s stance on the Trans-Pacific Partnership (TPP) remained unchanged — it is a step toward a Free Trade Area of the Asia Pacific that would include China and all major economies in the region. It cannot be a means of ‘containing’ China.
Domestically, the controversy over the TPP was part of political theatrics. Critics concentrated on two issues: secrecy and extension beyond ‘trade’. Yet on the first issue, nobody showed that TPP procedures differed markedly from previous agreements, such as FTAs, WTO rounds, or, especially significant to New Zealand, the Closer Economic Relations negotiations. Open agreements secretly arrived at has been the rule. Of course, conventions change; not only are executive agreements now subject to parliamentary scrutiny — and if the efficacy of that can be questioned, it is hardly peculiar to the TPP — but there are also indications of a wider movement toward ‘participatory’ governance. The ‘stakeholder events’ in TPP negotiating rounds recognise this, going well beyond the business consultations that were an important part of the New Zealand–China agreement.
The second argument, that the TPP goes beyond ‘trade’ and infringes on sovereignty, is even more misconceived. The issue has always been economic interdependence, not ‘trade’, and the range of explicit agreements has been widening ever since tariff reduction was initiated. More importantly, all international agreements impose some constraint on domestic ‘policy space’. The protest is not against the TPP, but against a New Zealand government the protestors dislike but which is acting within its constitutional mandate (and presumably within its assessment of electoral opinion).
The new element in 2012 is the Regional Comprehensive Economic Partnership (RCEP), a proposed instrument for anchoring the ASEAN Economic Community in an appropriate regional and global setting, through an agreement with the existing ASEAN FTA partners: China, Japan, Korea Australia, India and New Zealand.
Beyond the obvious difference in membership of the RCEP — the US and other non-Asian members of the TPP being excluded and all of ASEAN and India being included — the approach of the RCEP will differ from the TPP. It will be much more focused on economic interdependence as a vehicle for inclusive economic growth, including explicit attention to development gaps. It will see international production networks as central rather than a chapter added to the familiar set of goods, services and investment. It will also probably rely more on agreed objectives and peer review than on ‘binding’ rules.
It is worth noting that the difference is not between a rules-based system and one built on capacity enhancement and cooperation. The difference between the RCEP and the TPP lies in the content of rules, not their existence, and about whether commitment is best developed through peer review or via some kind of supranational enforcement. All are differences of degree, but they amount to a need for New Zealand to adjust from the comfortable familiarity of the TPP format.
The New Zealand government has welcomed the RCEP and sees no incompatibility between it and the TPP — a view that is presumably shared in other countries which are parties to both the TPP and RCEP, Australia, Brunei, Malaysia, Singapore and Vietnam. Although incompatibility between the two agreements could emerge in specific provisions, this would first be addressed within ASEAN. In the meantime, New Zealand can continue to seek to avoid any divide between Asia and the Americas.
A wish to avoid any line through the Pacific Ocean is widely shared outside New Zealand as well as within it, but is under pressure. The United States is increasingly merely a significant partner of the Asian economies rather than their leader, while it remains a powerful and leading party in Asian security.
What differs in New Zealand is an unusual degree of complacency and a retreat to the familiar in non-economic affairs, resulting in an exclusion of the economic realities from public political debate. In 2012, New Zealand’s fear of change did not diminish, despite being the most significant constraint to the country’s future social and economic development.
Gary Hawke is an Associate Senior Fellow at the New Zealand Institute of Economic Research, and a member of the Academic Advisory Council of the Economic Research Institute for ASEAN and East Asia.
This is part of a special feature: 2012 in review and the year ahead.
Asean
ASEAN weathering the COVID-19 typhoon
Author: Sandra Seno-Alday, Sydney University
The roughly 20 typhoons that hit Southeast Asia each year pale in comparison to the impact on the region of COVID-19 — a storm of a very different sort striking not just Southeast Asia but the world.
Just how badly is the COVID-19 typhoon thrashing the region? And what might the post-crisis recovery and reconstruction look like? To answer these questions, it is necessary to investigate the strengths and vulnerabilities of Southeast Asia’s pre-COVID-19 economic infrastructure.
Understanding the structure of the region’s economic house requires going back to 1967, when Southeast Asian countries decided to pledge friendship to one another under the ASEAN framework. While other integrated regions such as NAFTA and the European Union have aggressively broken down trade barriers and significantly boosted intra-regional trade, ASEAN regional economic integration has chugged along slower.
Southeast Asian countries have not viewed trade between each other as a top priority. The trade agreements in the region have been forged around suggestions for ASEAN countries to lower tariffs on intra-regional trade to within a certain range and across limited industries. This has lowered but not eliminated barriers to intra-regional trade. Consequently, a relatively significant share of Southeast Asian trade is with countries outside the region. This active extra-regional engagement has resulted in ASEAN countries’ successful integration into global value chain networks.
A historically outward-facing region, in 2010 around 75 per cent of Southeast Asian commodity imports and exports came from countries outside of ASEAN. This share of extra-regional trade nudged closer to 80 per cent in 2018. This indicates that ASEAN’s global value chain network embeddedness has deepened over time.
Around 40 per cent of ASEAN’s extra-regional trade is with the rest of Asia. From 2010 to 2018 Southeast Asian countries forged major trade relationships with four Asian countries: China, Japan, South Korea and India. Outside Asia, the United States is the region’s major trading partner. ASEAN’s trade focus on Asia’s largest markets is not surprising. Countries tend to establish trade relationships with large, geographically close, and culturally similar markets.
Fostering deep relationships with a few large markets, however, is a double-edged sword. While it has allowed ASEAN to benefit from integration in global value chains, it has also resulted in increased vulnerability to the shocks affecting its network connections.
ASEAN’s participation in global value chains has allowed it to transition from a net regional importer in 1990 to a net regional exporter in 2018. But the region’s deep embeddedness in a small and tightly-coupled network cluster of extra-regional global value chain partners has exposed it to disruption to any and all of its external partners. By contrast, ASEAN’s intra-regional trade network structure is much more loosely-coupled: a consequence of persistent intra-regional trade barriers and thus lower intra-regional trade intensity.
In the pre-COVID-19 period, ASEAN built for itself an economic house held up by just five extra-regional markets, while doing less to expand and diversify its intra-regional trade network. The data shows that ASEAN trade became increasingly concentrated in these few external markets between 2010 and 2018.
This dependence on a handful of markets does not bode well for risk and crisis management. All of the region’s major trading partners have been significantly affected by COVID-19 and this in turn is blowing the ASEAN economic house down.
What are the ways forward? The immediate task at hand is to get a better picture of the region’s position in global value chain networks and to get on top of managing its network risk exposure. Already there are red flags around the region’s food security arising from its position in food value chains. It is critical to look for ways to introduce flexibility into existing supply chains for greater agility in responding to crises.
It is also an opportune time for ASEAN to harness the technology transfer gains of global value chain participation and invest in innovation-driven diversification of products and markets. The region’s embeddedness in global value chain networks certainly places it in a strong position to readily access large export markets not just in Asia but also Europe and the Americas.
Over the longer term, ASEAN is faced with the question of whether it should seriously look…
Markets
Tiger Trade Launches SGX Trading, Meeting Demand from Asian Investors
Access to the Singapore Exchange (SGX) adds to Tiger Brokers’ current menu of stock exchanges, such as the New York Stock Exchange (NYSE) and the Nasdaq Stock Market (NASDAQ), the world’s two largest stock exchanges, as well as the Hong Kong Stock Exchange (HKEX).
SINGAPORE (ACN Newswire) – Tiger Trade, a one-stop mobile and online trading application by Tiger Brokers, has launched access to the Singapore Exchange (SGX).
(more…)Asean
Can Asia maintain growth with an ever ageing population ?
To boost productivity in the future, Asian governments will have to implement well-targeted structural reforms today.
Asia has been the world champion of economic growth for decades, and this year will be no exception. According to the latest International Monetary Fund Regional Economic Outlook(REO), the Asia-Pacific region’s GDP is projected to increase by 5.5% in 2017 and 5.4% in 2018. (more…)
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