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Trade

Strengthening the ASEAN-centric multilateral security architecture

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Vietnam

Author: Sarah Teo, RSIS

For a good part of the post-Cold War period, ASEAN enjoyed relative success as the central multilateral organisation in its region. Its expansion through the late 1990s, as well as its inclusive approach towards non-ASEAN powers, helped it become the main convener of multilateral dialogue and cooperative platforms in the wider Asia Pacific.

But over the last decade, ASEAN’s role in the multilateral architecture has faced challenges from what some analysts call the rise of ‘multilateralism 2.0’ — multilateralism driven by major powers rather than ASEAN — and the proliferation of non-ASEAN-centric minilateral arrangements.

Such developments resulted in concerns about the robustness of the ASEAN-centric multilateral architecture amid a period of structural and strategic transitions. These concerns have been exacerbated by the current US administration’s apparent disdain for multilateralism, including those centred on ASEAN.

The danger is that in light of criticisms of ASEAN’s ineffectiveness, the Association’s so-called centrality in regional multilateralism could rapidly diminish if non-ASEAN powers succeed in creating credible alternatives to ASEAN-centric forums. The Quadrilateral Security Dialogue (Quad) involving Australia, India, Japan and the United States, as well as the Lancang-Mekong Cooperation (LMC) mechanism comprising Cambodia, China, Laos, Myanmar, Thailand and Vietnam are examples that evoke such concerns.

Yet, the ASEAN-centric multilateral security architecture may be more robust than commonly acknowledged. ASEAN currently has a reasonably full suite of mechanisms to address a range of issues, including the leaders-level ASEAN Summit and East Asia Summit, the foreign ministers-led ASEAN Ministerial Meeting and ASEAN Regional Forum, as well as the defence ministers-led ASEAN Defence Ministers’ Meeting (ADMM) and the ADMM-Plus.

For security and strategic issues, avenues already exist for dialogue and practical cooperation — both at the ASEAN and the wider Asia Pacific levels. China may have its Xiangshan Forum and Boao Forum and the United States is typically seen to dominate the Shangri-La Dialogue but ASEAN remains the best equipped for bringing together all the main regional actors across different sectors.

The key is to strengthen this ASEAN-centric multilateral security architecture and ensure that it remains the best option for both ASEAN and non-ASEAN countries when it comes to wider-level regional multilateralism. In this sense, even if the major powers form like-minded coalitions to address specific issues, they would still turn to ASEAN-centric platforms because they offer the highest returns for broader multilateral consultations and collaboration.

One way to strengthen the ASEAN-centric multilateral security architecture would be to enhance ASEAN’s capacity as an independent actor.

Since its establishment, the ASEAN narrative has been one of strength in weakness. Because its member states possess neither sufficient economic nor military resources to be threatening, ASEAN is able to leverage this ‘weakness’ to serve as the convenor of regional multilateralism that includes major powers such as China, Japan and the United States. The competition between China and Japan over leadership of the East Asia Summit in the mid-2000s, for instance, resulted in ASEAN assuming the reins of the new multilateral platform by default. A similar scenario may well repeat itself to ASEAN’s benefit.

But going forwards it is likely that ASEAN will find such opportunities rare as major power rivalry intensifies and the major powers create networks aimed specifically at their own interests. For example, some observers have highlighted the potential for China to extend its influence southwards through the LMC mechanism — this may pose the risk of deepening divisions within ASEAN. Likewise, the Quad, even with the debates surrounding its sustainability, reflects the priority concerns of its four members that may not necessarily dovetail with ASEAN’s.

Whether ASEAN retains its position as the hub of regional multilateralism largely depends on the extent it can come across as a credible independent actor. Declarations that ASEAN does not wish to choose between China and the United States must be backed up with the capacity that actually allows ASEAN the option of not choosing.

A starting point towards acquiring this capacity is to strengthen the cohesion among ASEAN member states. The aim should be to prevent another instance of ASEAN failing to agree on…

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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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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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