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The question of global leadership: anemocracy or finding new collective authority




Author: Editorial Board, ANU

Many now believe that the aggressive strategic competition that has emerged so suddenly between the United States and China is driving the global order towards a new bipolarity. The destructive trade conflict between the world’s largest and second largest trading nations will visit instability and division upon the global economy and shrink the potential for global prosperity and amity.

China's Vice Premier Liu He listens to US President Trump, 4 April 2019 (Photo: Reuters/Jonathan Ernst).

Calculation of the exact trajectory of this course is difficult. But the direction and the broad magnitude of its impact are possible to estimate. These are global order-destroying choices on which the United States is now settling and to which China seems impelled to respond with little regard for what standing up to Washington bilaterally might do to the order under which China and the rest of the world have prospered.

These are not two-bit players slugging it out in a trade brawl of little consequence to the whole system. It may still be difficult to predict which side will be damaged most in this game and how the rest of the world will bear the cost. But deal or no deal between the two big powers, huge costs there will most certainly be. And on the current path the whole world will take an almighty pasting.

It won’t simply be the trade and income losses inflicted by the restrictions on trade upon which the micro modellers focus in their analysis of the effects of higher prices on the scale and structure of production and trade, although those losses will, on a variety of estimates now, be high. It is the fracture of confidence in doing business in the international economy and infection of political suspicion about global economic partners — the core assets of the postwar multilateral economic order — that will impose vastly higher costs on the global economy. Those effects are already visible as investors in global enterprise and prosperity pull back in nervous expectation of continuing and deepening policy unreliability in the two biggest centres of world economic power. And beyond the economic chaos, there’s destruction of what’s commonly called ‘Pax Americana’ — though wrongly since the influence that the United States has exercised around the world for the past three-quarters of a century was never only or largely the product of raw military power. It’s the dream of American liberalism that has wielded greater influence than any other ideology over these decades. And China’s rise today, though it will expand the influence of that country’s traditional values, will do so widely if, and only if, it can accommodate that American legacy.

It may also be possible to explain what will determine the direction of transition from the post-Cold War unipolar order that was led by the United States. But, despite the entrenched power of the incumbent states and where the psychology in the exercise of their power is currently leaning, it’s perhaps not too optimistic to hope that there’s still room for choice.

‘Moral realism explains the transition from a configuration with one dominant state to a configuration with a rising state…

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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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WTO ministerial trading in low expectations and high stakes



The WTO’s 13th Ministerial Conference is set to focus on e-commerce transparency, investment facilitation, and admitting new members. However, progress may be hindered by disputes, especially regarding fisheries subsidies.

The World Trade Organisation’s 13th Ministerial Conference

The World Trade Organisation’s (WTO) 13th Ministerial Conference is set to take place in Abu Dhabi on 26–29 February, with expectations of deals on electronic commerce transparency, investment facilitation for development, and the admission of Timor Leste and the Comoros as WTO members. Despite these positive developments, the expectations are relatively modest compared to promises made at the 12th Ministerial Conference, which included addressing fisheries subsidies and restoring a fully functioning dispute settlement mechanism by 2024.

Challenges in Dispute Settlement and Agricultural Trade Reform

However, challenges remain, especially in the deadlock of dispute settlement since December 2019 due to a US veto on the appointment of Appellate Body judges. Progress in restoring the dispute settlement mechanism has stalled, and discord continues regarding India’s grain stockholding policy as a potential illegal subsidy. Restoring a fully functioning dispute settlement mechanism hinges on addressing US concerns about perceived bias against trade remedies in relation to China’s state subsidies.

Geopolitical Tensions and the Future of Trade Relations

The likelihood of reaching agreements amid geopolitical tensions between Western democracies and China appears slim, with issues surrounding subsidies and global supply chains causing rifts in trade relations. As nations focus on self-reliance within the global value chain, opportunities for trading face obstacles. Advocacy for open markets and addressing protectionist sentiments remains crucial for fostering resilience to external shocks and promoting economic growth.

Source : WTO ministerial trading in low expectations and high stakes

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Getting Vietnam’s economic growth back on track



Vietnam’s economy grew 8% in 2022 but slowed in 2023 due to falling exports and delays in public investments. The economy’s future depends on structural reforms and reducing dependency on foreign investment.

Vietnam’s Economic Roller Coaster

After emerging from COVID-19 with an 8 per cent annual growth rate, Vietnam’s economy took a downturn in the first half of 2023. The drop was attributed to falling exports due to monetary tightening in developed countries and a slow post-pandemic recovery in China.

Trade Performance and Monetary Policy

Exports were down 12 per cent on-year, with the industrial production index showing negative growth early in 2023 but ended with an increase of approximately 1 per cent for the year. Monetary policy was loosened throughout the year, with bank credit growing by 13.5 per cent overall and 1.7 per cent in the last 20 days of 2023.

Challenges and Prospects

Vietnam’s economy suffered from delayed public investments, electricity shortages, and a declining domestic private sector in the last two years. Looking ahead to 2024, economic growth is expected to be in the range of 5.5–6 per cent, but the country faces uncertainties due to geopolitical tensions and global economic conditions.

Source : Getting Vietnam’s economic growth back on track

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