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Trade

Great power rivalries push South Korea and ASEAN closer

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South Korea

Authors: Nurliana Kamaruddin and Aaron Denison Deivasagayam, University of Malaya

South Korea has spent much of its history caught in the middle of external power struggles. China, Japan, Russia and the United States have all played a hand in shaping the country’s current geopolitical reality. South Korea’s ability to rise above these circumstances to achieve its current economic success makes the country’s continued growth quite exceptional.

But South Korea continues to find itself ensconced in the power politics of the region. Currently, South Korea is caught up in ongoing disputes with China and Japan. Historical animosities stem from the issue of Japanese compensation for South Korean forced labourers put to work during Japan’s occupation of South Korea. South Korea’s decision to deploy the Terminal High Altitude Area Defence (THAAD) anti-ballistic missile system also prompted Chinese security concerns. Both Japan and China have implemented retaliatory trade measures against South Korea.

As a result, South Korea is taking serious steps to grow its trade and diplomatic relations with other partners. Under President Moon Jae-in, the South Korean government introduced the New Southern Policy (NSP) as part of its Northeast Asia Plus Community of Responsibility in November 2017. The NSP places the importance of South Korea’s relations with ASEAN on par with its relationships with the United States, China, Japan and Russia.

South Korea’s relationship with ASEAN is small compared with some of ASEAN’s other dialogue partners, especially Japan and China. South Korea did not become a full dialogue partner until 1991 — in contrast, Japan formalised relations in 1977. But under Moon, South Korea is making an effort to increase its presence in the region. During a September 2019 tour of Thailand, Myanmar and Laos, Moon signed a number of high profile deals including a US$1 billion aid offer to Myanmar, a military intelligence pact with Thailand and a business partnership with Laos.

Though engagement with ASEAN is not a new initiative for South Korea, this sustained approach has been the difference. Previous presidents typically placed some emphasis on ASEAN policy early in their tenure — but this did not last long, as issues on the Korean Peninsula and South Korea’s relations with major powers pushed ASEAN-related policies aside. For example, although former president Lee Myung-bak made overtures to balance South Korea’s foreign policy through his own engagement with ASEAN in the ‘New Asia Initiative’, the policy remained focussed on a few countries of geostrategic importance.

Unlike his predecessors, Moon is continuously engaging with ASEAN. The institutionalisation of government agencies such as the Presidential Committee on New Southern Policy demonstrates his commitment to ASEAN engagement. More importantly, South Korea continues to strengthen research networks that help facilitate sustainable policies and initiatives in the region. These include not only the established ASEAN–Korea Centre, but also people-to-people projects such as the ASEAN–Korea Youth Network Workshop, the ASEAN–Korea Academic Conference and the Council of ASEAN Professors in Korea.

ASEAN serves as a lynchpin for greater engagement in East Asia. Its emphasis on non-alignment and non-interference has allowed it to continue engaging with both China and the United States despite the rivalry between the two. And ASEAN countries have served as neutral mediators for dialogue, as demonstrated by Singapore and Vietnam’s role as hosts for the North Korea–US Summits.

For South Korea, better rapport with ASEAN countries also serves to drive up international support for its own approach to resolving the inter-Korean conflict. Until the 1990s, North Korea was more engaged with ASEAN than South Korea. Some ASEAN countries have maintained channels for political dialogue with North Korea, either through party-to-party relations or mutual high-profile interactions such as trade. This is made possible by ASEAN’s emphasis on neutrality and inclusivity.

Improved relations with ASEAN would also benefit South Korea economically. Its disputes with Japan and China have made it clear that its dependency on bigger trading partners is a vulnerability. Southeast Asia’s growing economy presents not only alternative markets, but also a potential source of natural and human resources.

Although South Korea has cultivated strong trade relations with some ASEAN countries like Vietnam, it lags behind in trade and investment when it…

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Trade

Fixing fragmentation in the settlement of international trade disputes

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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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Trade

WTO ministerial trading in low expectations and high stakes

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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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Trade

Getting Vietnam’s economic growth back on track

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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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