Trade
COVID-19 challenges Downing Street’s post-Brexit Asia ambitions
Author: Oliver Turner, University of Edinburgh
What implications does the COVID-19 pandemic signal for the United Kingdom’s role and presence in Asia? The Conservative UK government’s post-Brexit vision for a ‘Global Britain’ identifies the Indo-Pacific as one of three ‘centres of the global economy and political influence’ crucial to national prosperity and security. But the Global Britain vision is criticised for lacking substance and for being grounded in the problematic logic of — and nostalgia for — the British Empire.
Worse still, COVID-19 brings additional complications to UK relationships in Asia.
Because of the Brexit transition period in which the United Kingdom and European Union plan to negotiate their future relationship, little between them will change before at least January 2021. This is when comprehensive frameworks for trade, security, business, travel, and scientific collaboration, among many others, are scheduled to be agreed. Doubts already circulated that this could be achieved in time, but the COVID-19 pandemic has amplified calls for the transition period to be extended.
In the first instance, the ongoing pandemic makes it more likely that the UK’s new relationship with Europe will remain undetermined for longer. This is important because the United Kingdom’s Asian partners want clarity on that relationship. The extent to which arrangements will diverge from EU laws and regulatory standards, for example, is key to the long-term planning of future trading relationships.
The Chairman of the Japan Business Federation has confirmed that trade talks with the United Kingdom ‘depend on how negotiations with the European Union are settled’. The Chinese government is similarly adopting a ‘wait and see approach’ before committing to any process of changing their trading relationship.
More drawn out UK–EU negotiations would be frustrating for the United Kingdom’s Asian partners and a problem for the UK government, whose 2019 election victory rested on the promise to ‘Get Brexit Done’. A prolonged absence of new trade deals or even serious negotiations with China, India, Japan and Australia — partners that UK Prime Minster Boris Johnson told voters were ‘queuing up’ to talk — may initially be blamed on COVID-19. But before long they would become a source of domestic discontent.
Second, a priority for the post-Brexit United Kingdom is to become a knowable international entity. If it is no longer a colonial power, a great power or even a European power (at least one with significant influence in Europe), then what is it? In Asia as much as anywhere, it has the reputation of being willing to uphold international rules and norms. However, the international landscape is evolving and COVID-19 is intensifying questions about future global leadership and where rules of international engagement will be written.
China’s government — which is transitioning from international rule-taker to rule-maker — attracted criticism for hindering early efforts to contain COVID-19, including censoring medical professionals. COVID-19 is harming Beijing’s reputation as a responsible global leader. Even efforts to support Europe during the crisis have backfired. This could make attempts by the United Kingdom to pursue post-Brexit trade deals with China more problematic and controversial than before, internationally and domestically. This is especially true if such deals come with increased involvement in areas of UK infrastructure or the economy which recently proved contentious.
The so-called ‘Golden Era’ of UK–China bilateral relations under former UK prime minister David Cameron achieved little. Spats over freedom of navigation exercises in the South China Sea and the future of Hong Kong further exposed its shallow foundations. After the COVID-19 pandemic, London will assess the relationship more soberly. Indeed, hostility towards China’s government is already emerging from prominent UK politicians, with the Foreign Secretary arguing that it will no longer be ‘business as usual’ in the relationship. The British national intelligence services also now seem to favour a tougher approach.
The United Kingdom’s international presence is traditionally tied to US interests. Broadly speaking, US–UK ties are strong. But in Asia, by joining the Beijing-led Asian Infrastructure Investment Bank the United Kingdom experienced a diplomatic fallout with the United States. Washington also criticised UK accommodation of Huawei, with one Senator arguing that the…
Trade
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
Trade
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
Trade
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.
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