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Trade

The illusion of a middle power moment

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Australia

Author: Andrew Carr, ANU

To be a middle power requires a modest disbelief in power. These states take their medium-sized resources and direct them towards big objectives. This may be reactive, searching for self-preservation in the face of a hostile larger power. It might also be proactive, trying to shape institutions and norms to build a more hospitable environment.

Over the past few decades significant scholarly ink and political rhetoric have been expended on middle powers’ potential contribution to the maintenance and expansion of the international order. Speculation was particularly active in the early 2010s, with a ‘renaissance’ of academic theorising and a new organisation for middle-power states — MIKTA (named for the member states Mexico, Indonesia, South Korea, Turkey and Australia). But as the new decade dawns middle-power potential remains wanting. With structural and domestic trends discouraging activism, middle-power norm entrepreneurs are moving from endangered status towards extinction.

Norm entrepreneurs seek new standards of appropriate behaviour. While anyone can simply call for states to change their behaviour, successful campaigns involve four elements. First, there is a need to frame the new approach desired, establishing for it a persuasive rhetorical jacket. If this description can be tied to existing community notions — expanding liberty or supporting justice, for example — so much the better.

Norm entrepreneurs then need to apply resources, establishing an organisational platform for their actions. This may mean a new bureaucratic organisation or multilateral institution. Third, there needs to be a strategy for socialisation, which targets rhetoric and resources that help convert key actors and spread the norm. Finally, the norm entrepreneur needs to be willing to sustain criticism and endure. Changing standards of behaviour necessarily undermine established positions and norm changes can take many years to achieve.

The prototypical example of this kind of behaviour by a middle power was Australia from the late 1980s to the early 2000s. While involved in numerous campaigns, Canberra’s most notable efforts sought to liberalise trade, secure the non-proliferation of weapons of mass destruction and establish cooperation on irregular migration. In the latter case, Australia embodied the sense of originality implied by the entrepreneur label. In the former two cases, it simply brought new energy to help spread and strengthen existing norms.

By the early 2000s the middle-power label was freed of its Western origins and increasingly applied to countries such as South Korea, Indonesia, Turkey, Mexico and South Africa. South Korea particularly wrapped itself in middle-power icons and language by beginning campaigns on the environment and development. The high point came in 2013 when MIKTA was formed as a G20 offshoot. In a joint op-ed, the five foreign ministers of MIKTA announced their ‘common interest in strengthening multilateralism, supporting global efforts for stability and prosperity, [and] facilitating pragmatic and creative solutions to regional and global challenges’.

On the academic side these years also saw hope for a ‘middle power moment’. The global structural transition was welcomed for opening spaces for these countries to shape international politics. Most of this research came from scholars based in a middle power who wanted their country to adopt a more stereotypically middle-power approach — that is, liberal and cosmopolitan. They also sought to address wider problems, from the US–China relationship to climate change and global poverty.

As we survey the arrival of the 2020s it is clear such hopes were misplaced. The middle-power moment never arrived. Many middle-power states are now shifting to a more reactive search for security. This does not mean they will not occasionally try and promote norms, but the idealistic tone of the 2010s is out of place with the world we are now entering.

There are several reasons for this downturn. Structurally, the global order has become less hospitable to influence from the middle. Australia’s 20th-century norm entrepreneur efforts were indulged by a benign hegemon in the United States which did not see negotiations in stark zero-sum terms. Other great powers, such as China and India, as well as institutions like the United Nations, the European Union or ASEAN, have also proven unwilling or cumbersome sponsors for middle powers to work through. This places most of the resource demands for initiating and…

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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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