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Asean

Japan–India summit boosts bilateral ties

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Author: Purnendra Jain, University of Adelaide

Indian Prime Minister Manmohan Singh’s four-day visit to Tokyo last week produced significant advancement in bilateral ties and was welcomed in both countries.

The consequent, rather long 34-paragraph joint statement contained no surprises or ground-breaking announcements beyond what was reported in the media prior to the trip. Instead, it reaffirmed and reinforced the two countries’ ‘global and strategic partnership’ and set some new initiatives and goals for the near future.

These goals include more aid to Delhi for the purpose of large infrastructure projects, the possibility of concluding a civil nuclear technology agreement and even sales of Japanese arms. These are no small developments given Japan’s past neglect of India and its strident condemnation of India’s nuclear testing in 1998, followed by sanctions including via official aid.

India–Japan relations have come a long way in the last decade. India has emerged as the single largest recipient of Japanese aid; the two have declared themselves as global and strategic partners; they have signed a Joint Declaration on Security Cooperation in 2008; and they now even conduct a two-plus-two dialogue which brings together top military and defence officials in the only such arrangement India has with any country. There is a Japan–India Maritime Exercise (JIMEX) in place. Many other ministerial-level dialogues are held in a range of areas from commerce and industry to maritime security and energy matters. And the list is growing.

While bilateral trade and investment still remain at a relatively low level, their security and defence cooperation ties are strengthening and expanding as their strategic thinking converges. For example, both are concerned about the safety and security of the sea lanes and believe in a peaceful and stable Indo-Pacific. Japan sees India as a great balancer against China’s rising influence and a trustworthy partner in the filling of the strategic vacuum created by declining US military resources, especially in the Indian Ocean area.

The bilateral relationship is increasingly becoming a securitised one in which Japan seeks in India a security and strategic partner — a role India is happy to play. India in turn wants Japan’s high-end technology, private investment and greater access to the Japanese market — concessions which Tokyo is now willing to consider.

The Joint Statement directs officials of both countries to accelerate negotiations on civil nuclear cooperation, stalled in the wake of the 2011 Fukushima nuclear fallout, towards an early conclusion. It might even be finalised as early as within this year if Abe is able to secure a decent majority for his ruling party in the July upper house elections.

Successfully concluding a nuclear agreement with Japan will be Singh’s greatest coup on the nuclear issue. He has already already accomplished significant achievements this area, including Australia’s lifting of its ban on nuclear exports to India. Singh would like to see this Japan outcome achieved sooner rather than later since he is unlikely to continue in his position after India’s 2014 general elections.

The other key development is the possibility of selling Japanese US-2 amphibian aircraft, used by Japan’s Maritime Self Defence Force. The two prime ministers have agreed to establish a Joint Working Group to explore modality for such sales. If the deal goes ahead, it will signify a new era in India–Japan relations, especially since Japan has only recently lifted its five-decades-old ban on arms exports. This will also be Japan’s first sale of a finished military product.

India is at the centre of Prime Minister Abe’s security thinking. He has now articulated a new security diamond consisting of India, Japan, Australia and the United Sates — a reincarnation of his failed first-term quadrilateral security framework. Whether this new architecture comes to fruition is irrelevant — what is amply clear is that Japan sees India as a key security partner bilaterally and multilaterally.

While few commentaries on Singh’s visit appeared in the international media, China has reacted sharply. Comments have ranged from Japan ‘wooing’ India to contain China, to depicting Japanese politicians as ‘petty burglars’. The Global Times even warned that ‘India gets close to Japan at its own peril’, making its point with a cartoon depicting China as being heavier than the combined weight of Japan and India.

China clearly feels unsettled with these new developments, particularly given Japan’s generous economic and security gifts and India’s positive response to Japan’s strategic thinking. Yet China needs to think long and hard about its own actions and behaviour in the region and reflect seriously on what has changed its regional position.

In the 1980s when India sought Japan’s technology, capital and aid for its economic development, Japan was uninterested because it was singularly focused on China. China became Japan’s number-one aid recipient for infrastructure projects, investment from Japan flowed freely, and bilateral trade expanded exponentially — it seemed Japan and China had entered a perpetual period of partnership and friendship.

Is it the case now that China has unintentionally thrown India and Japan in each other’s lap? A Japan–India partnership makes sense as India becomes increasingly concerned about the implications of China’s assertiveness and Japan feels ever more threatened by what it regards as China’s aggression.

Purnendra Jain is Professor in Asian Studies at the University of Adelaide.

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Japan–India summit boosts bilateral ties

Asean

ASEAN weathering the COVID-19 typhoon

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Vietnam's Prime Minister Nguyen Xuan Phuc addresses a special video conference with leaders of the Association of Southeast Asian Nations (ASEAN), on the coronavirus disease (COVID-19), in Hanoi 14 April, 2020 (Photo:Reuters/Manan Vatsyayana).

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…

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Asean

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