Trade
Albanese must aim beyond bilateral outcomes on Beijing visit
Australian Prime Minister Albanese is visiting China, Australia’s largest trading partner, on the anniversary of the establishment of diplomatic relations between the two countries. The economic relationship is crucial, but they also need to address the challenge of carbon emissions and climate change. The two countries have disagreements but should adhere to the principles that guide their relationship. The relationship is important globally and regionally, and Australia must prioritize these principles in its dealings with China. The multilateral trading system is essential for prosperity and security in the Asia Pacific region.
Prime Minister Albanese’s Visit to Beijing on Anniversary of Australia-China Diplomatic Relations
Authors: Shiro Armstrong and Peter Drysdale, ANU
Prime Minister Albanese is set to visit Beijing this week, marking the anniversary of the historic trip made by then Opposition Leader Gough Whitlam in November 1971. This trip led to the establishment of diplomatic relations between Australia and the People’s Republic of China. The relationship between the two countries has grown significantly over the years, guided by principles of mutual respect, non-interference, and peaceful coexistence.
Strong Economic Relationship between Australia and China
China is Australia’s largest trading partner and the largest trading nation globally. In 2023, Australian exports to China exceeded A$200 billion, making Australia the third-largest import supplier for China. Both countries heavily rely on each other for key raw materials and energy, highlighting the fundamental complementarity of their economic engagement. However, the economic relationship also necessitates addressing the shared challenge of carbon emissions and climate change.
The Importance of Upholding Multilateral Rules and Commitments
While Australia and China may have disagreements due to their different political systems and histories, the six principles underpinning their relationship provide a framework for deep economic and political cooperation. Both countries have a responsibility to conduct their relationship in accordance with multilateral rules-based agreements they have ratified. Protecting the international rules-based order is crucial for the stability and prosperity of the Asia Pacific region, making it a top priority in Australia’s dealings with China and globally. Prime Minister Albanese’s commitment to a global strategic path with these objectives and principles sets a positive tone for his visit to Beijing and the expected summit meeting between President Biden and Xi in San Francisco.
Source : Albanese must aim beyond bilateral outcomes on Beijing visit
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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