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China takes centre stage in Middle East diplomacy



Author: Oliver B John, Astrolabe Global Strategy

In a move widely hailed in the Persian Gulf and cautiously welcomed by the United States Administration, senior Chinese, Iranian, and Saudi security officials agreed to re-establish diplomatic relations between Riyadh and Tehran.

Wang Yi attends a meeting with Ali Shamkhani and Arabia Musaad bin Mohammed Al Aiban in Beijing, China, 10 March 2023 (Photo: China Out via Reuters).

Although Saudi Arabia and Iran have been quietly discussing ways to reduce tensions since at least 2021, China’s active role in brokering the agreement is particularly significant. This was likely the first time that China has leveraged its diplomatic ties to the region to resolve a major international political dispute. Given the ongoing geopolitical competition between Washington and Beijing, some observers ask whether China is positioning itself to replace the United States as the major external power in the region.

On 10 March 2023, Saudi Arabia and Iran concluded five days of discussions hosted by China, agreeing to restore diplomatic relations within two months. They also agreed to ground their relations on the principles of respecting sovereignty and non-interference in internal affairs. Delegates from the three countries ‘expressed their keenness to exert all efforts towards enhancing regional and international peace and security’.  The Saudi and Iranian foreign ministers met in Beijing on 6 April to follow-up on the discussions.

Although the agreement represents a potential reduction in tensions, it is vague on the concrete steps Riyadh and Tehran will take, leaving room for speculation. Reports suggested that Iran would curtail its support for Houthi attacks on Saudi territory, a key Saudi goal. A statement by Iran’s mission to the UN, that the agreement would ‘accelerate the ceasefire, help start a national dialogue, and form an inclusive national government in Yemen’ seems to confirm this view.

The Houthis quickly denied that the Iran–Saudi deal would affect their actions since they are not ‘subordinate’ to Iran. On 16 March 2023, the Iranian Foreign Ministry also denied that the agreement covers Yemen, leaving open the question as to what, if any, commitments the Iranians might have made.

China has a clear incentive to push for a diplomatic solution to these tensions. Roughly 50 per cent of its imported oilcomes from the Persian Gulf region — Saudi Arabia was its largest single supplier in 2021. It also imports around 7 per cent of its liquid natural gas from Qatar and recently signed a long-term supply contract. Stability in the region is crucial to China’s energy security, and reducing tensions between Iran and Saudi Arabia and helping them resume formal diplomatic ties could increase that stability.

China was well positioned to mediate the dispute, as it is the largest oil export market for both Saudi Arabia and Iran, and accounted for over a quarter of Saudi crude oil exports in 2021. Since the United States reimposed sanctions on Iran’s oil industry in 2018, the country’s exports have dropped sharply, but this supply likely now goes to China. China’s strong relationships with both sides gave it a diplomatic edge over the United States in brokering the deal.

Although the United States had been encouraging its Gulf partners and allies to reduce tensions since the Biden administration took office, the United States had no real prospect of orchestrating such a high-level meeting.

Amid ongoing US–China competition, many observers questioned whether China’s diplomatic success represented a further decline in US regional influence or a drift in US–Saudi relations. While Chinese officials denied they were trying to fill any regional vacuum, they were happy to let others draw this conclusion. They emphasised their ‘historic role’ in brokering the deal as a ‘reliable mediator’ and stressed the importance of using dialogue to settle regional disputes, in contrast with the United States’ opposition to the Iranian regime.

Riyadh also maintained that China was not seeking to replace the United States in the region and confirmed that they briefed Washington before the negotiations and announcing the agreement. Saudi officials stressed that they view both Washington and Beijing as important partners and that they hoped not to be put in the middle of any ‘conflict between the two powers’.

Although China is still not challenging the United States as the preeminent external security guarantor for the region, it appears to be expanding its regional diplomatic influence. By demonstrating the effectiveness of Chinese diplomacy, Beijing encourages Saudi Arabia and other US regional…

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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

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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

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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.

Source : Getting Vietnam’s economic growth back on track

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