Connect with us
//pagead2.googlesyndication.com/pagead/js/adsbygoogle.js (adsbygoogle = window.adsbygoogle || []).push({});

Trade

Japan’s weapon-export industry takes its first steps

Published

on

Philippine Coastguard patrols off the waters of Manila Bay, Manila, 18 November 2015 (Photo: Reuters/Janis Alano).

Author: Purnendra Jain, University of Adelaide

In its first breakthrough since easing restrictions on arms exports in 2014, Japan signed a deal to sell US$100 million worth of advanced air surveillance radars to the Philippines. These radars — fixed and mobile — are built by Japan’s Mitsubishi Electric Corporation (MELCO), one of Japan’s five leading defence production companies.

MELCO has signed a contract with the Philippine defence ministry for the radars, which will reportedly be used for detecting stealth fighter planes and missiles. China is the obvious focus. Tokyo has previously supplied defence-related equipment such as patrol boats to Southeast Asian countries like Vietnam and the Philippines. This was part of Japan’s official development assistance (ODA) under its ‘capacity-building’ program, advancing a Japanese narrative driven by ‘proactive contribution to peace’.

Although donated to the coast guards of the recipient nations, the boats are defence-related products — as one analyst noted, ‘the provision of patrol vessels to the Philippines and Vietnam has a military dimension, even if the official statements declare differently’. Tokyo has also provided TC-90 training planes to the Philippines military and trained Philippine naval pilots to fly the aircraft.

In 2014 Japan introduced a revised set of ‘three principles on transfer of defence equipment and technology’ and in 2015 a new Development Cooperation Charter that gives ODA a ‘strategic edge’. Even before these changes, Tokyo provided ODA loans to Indonesia to purchase patrol vessels for the prevention of ‘piracy, maritime terrorism and proliferation of weapons’. Strictly speaking these vessels do fall under the definition of ‘arms’, but the conditions of sale made them appear to be for purely civilian purposes.

Japan’s earlier attempts to sell military wares abroad either failed or remain under negotiation. Tokyo’s bid to sell its Soryu-class submarines to Australia reached the final stage, but in 2016 the Australian government awarded the multi-billion dollar contract to France. This was a huge disappointment to Japan, as the deal would have been a game changer for its defence industry.

For the last few years, Japan has been in negotiation with India to sell its US-2 amphibian search-and-rescue aircraft made by Shin Maywa and used by Japan’s Maritime Self-Defense Force. The deal progressed almost to completion two years ago, and in a 2018 joint statement the two prime ministers stated that ‘the two sides will continue to make efforts with regard to cooperation on US-2 amphibian aircraft’.

But the proposal has since stalled, reportedly due to reasons of cost and disagreement over technology transfer. The deal seems to be off the table for now, as top leaders of the two nations have not discussed it in recent meetings.

Tokyo was also in discussion with Britain to sell P-1 submarine hunting aircraft made by Japan’s Kawasaki Heavy Industries, the first such proposal outside of the Indo-Pacific region. But this also ended in failure.

Japan’s failures in Australia, India, the United Kingdom and other countries can be ascribed to many factors, from the inexperience of Japanese defence-related companies in the international arms market to the lack of comparative advantage and capacity. Japanese arms are not combat-tested, as most Japanese producers sell their military wares to Japan’s Self-Defense Forces which is not a combat force. Some Japanese companies are also reluctant to aggressively pursue arms sales in the international market because it is not their core business and they don’t want to be labelled as ‘merchants of death’ in the eyes of the Japanese public.

Regional maritime security and safety is one of the major goals of Japan’s free and open Indo-Pacific vision. Southeast Asian nations, many of which face China’s increasing military assertiveness in the South China Sea, are recipients of Japan’s assistance for building surveillance capacity.

Securing its first arms deal in Southeast Asia with the Philippines is a landmark development. The deal shows Japan’s diplomatic acumen in dealing with Philippine President Roderigo Duterte, who is wary of the United States and eager for a close relationship with China. In 2016, the Duterte administration ignored the rulings of the Permanent Court of Arbitration in The Hague that recognised virtually all of the Philippines’ claims in the South China Sea.

The same administration has now been persuaded by Tokyo — a US ally…

Source link

Continue Reading

Trade

Fixing fragmentation in the settlement of international trade disputes

Published

on

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

Continue Reading

Trade

WTO ministerial trading in low expectations and high stakes

Published

on

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

Continue Reading

Trade

Getting Vietnam’s economic growth back on track

Published

on

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

Continue Reading