8/5/15 8/5/15

2015 at Dawn.com)

The signal for exporting nations is clear: if you count — or want to count — in the new world order, make sure you join a regional free trade agreement.That’s the message that many global trading nations will be taking home if — as expected — the US-led Trans-Pacific Partnership (TPP) free trade deal is finalised this weekend in Hawaii.Certainly, most nations still pay lip service to the multilateral trading system symbolised by the World Trade Organisation (WTO). And yes, there is also a focus on bilateral free trade agreements as well as plurilateral deals.But once, again, loudly and clearly: the trend towards mega-regionals is unstoppable and that’s where savvy nations are headed.As described by one newspaper, FTAs are “the new Great Game at the dawn of the 21st century”.The TPP is about trade and commercial interests, certainly. It’s about creating growth and jobs. But it is about more than that: it’s also about overarching strategy and geopolitics and just which nation will emerge as the primary power in the Asia-Pacific region.So let’s be clear: the TPP is US-led and China — along with India and Indonesia — is excluded. Still, the TPP would create a 12-nation grouping including five countries in the Americas (Canada, the US, Chile, Mexico and Peru); five in Asia (Brunei, Japan, Malaysia, Singapore and Vietnam); and New Zealand. South Korea, the Philippines and Taiwan have voiced interest in joining.Once signed, the TPP will form a free trade area with a population of 800 million, which accounts for 30 per cent of global trade turnover and nearly 40 per cent of global output.That is impressive. And clearly those outside the TPP are worried. And are not sitting still.First, China. Convinced that TPP is meant to “contain” China’s regional and global outreach, Beijing is working on several fronts to counter the US led initiative.Beijing is actively promoting the Regional Comprehensive Economic Partnership (RCEP) which would include members of the Association of Southeast Asian Nations (ASEAN) as well as India.China is also taking up the Free Trade Area of the Asia-Pacific (FTAAP) which would bring together members of the Asia Pacific Economic Cooperation (APEC) forum.Most significantly, China’s President Xi Jinping has come up with the ambitious ‘One Belt, One Road’ initiative to connect an array of Asian and European nations through transport, infrastructure and ICT links — and ultimately through unfettered trade.India’s actions may not be that visible but Delhi is creating stronger trade links with Southeast Asian nations while also seeking to negotiate a free trade agreement with the European Union. The EU-India negotiations are in an impasse at the moment — but both sides are trying to inject much-needed momentum into the talks.Which brings us to the EU. European trade officials did not, at first, take the TPP very seriously. As the deal looks set to be signed, attitudes appear to be changing.The EU is negotiating FTAs with a number of Asian nations — Japan, Vietnam and Malaysia — which are also members of TPP. A free trade deal with New Zealand and Australia has not been ruled out. And Singapore has already signed a free trade pact with the EU.And, significantly, for the EU, China is demanding exploratory talks on the pros and cons of an EU-China FTA. Brussels has so far filibustered by insisting that it first wants to conclude ongoing negotiations on an EU-China Bilateral Investment Treaty (BIT) before considering a free trade deal. But sooner rather than later, the EU will have to acquiesce.The EU has of course responded by trying to hammer out its own Transatlantic Trade and Investment Partnership (TTIP) with Washington. But those negotiations have run afoul of civil society groups which fear that TTIP will lower EU health, food and other standards.In Asia, however, if it is to compete with the US and China, the EU needs to start FTA negotiations with the 10-member Association of Southeast Asian Nations (ASEAN). Europe could be even more ambitious and seek a trade deal which covers ASEAN as well as New Zealand and Australia.More ambitious still would be a trade agreement which would cover all 51 countries which have signed up for ASEM, the Asia Europe partnership.Clearly, therefore, trade agreements these days are about commercial and economic interests but also geopolitical outcomes.US President Barack Obama has no doubts that “if we don’t write the rules for free trade around the world, guess what, China will … and they’ll write those rules in a way that gives Chinese workers and Chinese businesses the upper hand.”Make no mistake: the TPP and other FTAs of its kind are not easy to negotiate. The scope of such deals is enormous — covering questions ranging from copyright law to labour and immigration issues, as well as more standard trade talk of import tariffs and exceptions for sensitive commodities.It is crucial that TPP — and the transatlantic TTIP if it is ever completed — keep the doors open, with no discriminatory terms set for newcomers.Finally, while it is understandable that countries, frustrated by the long-stalled Doha round of global trade talks, have turned their attention to various initiatives to set up regional FTAs, they should try to maintain the WTO’s central role in global trade liberalisation.The TPP process itself is an admission that the consensus-driven WTO is too cumbersome a venue for so-called “high-standard” trade deals. But it would be counterproductive and harmful to give up on the WTO and its ability to create a “level playing field” for all trading nations, big or small, rich or poor.

11/18/14 11/18/14

View from Abroad: EU must engage urgently with China (Originally published 15/11/2014 at dawn.com)

China's President, Xi Jinping, is a busy man. And if the European Union’s new leaders waste time in engaging with him, the EU could find itself gently, but firmly, shut out as Beijing steps up its game, both in the region and on global stage.The Chinese president has had quite a week. Having hosted the Asia Pacific Economic Cooperation (Apec) summit, signed an unexpected agreement with President Barack Obama on cutting greenhouse gas emissions and eased tensions with Japanese Premier Shinzo Abe, Xi attended the East Asia Summit in Myanmar and will then be at the G20 gathering in Brisbane, Australia.Chinese Premier Li Keqiang did attend the Asia Europe Meeting in Milan last month — but the EU was represented at the meeting by the outgoing EU leaders, European Council President Herman Van Rompuy and his colleague at the European Commission Jose Manuel Barroso. Beijing is waiting for the new Commission chief Jean Claude Juncker, Donald Tusk who will head the European Council as of Dec 1, and the new EU foreign policy chief Federica Mogherini to get in touch and answer whether the new men and women in Brussels will want a continuation or a change in in EU-China relationsCertainly, urgent matters at home and in Europe’s troubled neighbourhood command immediate attention. Juncker has also had to field embarrassing questions about allegations that Luxembourg was helping companies to dodge taxes while he was prime minister.But still, reinforcing ties with the world’s second largest — and still fastest growing — economy must be also be an EU priority.The good news is that after a few troubled years, Europe-China ties are encouragingly sound. Although trade frictions are unlikely to completely disappear, major trade quarrels have been settled. Differences over human rights notwithstanding, the EU and China have developed a good working relationship. As such, the new EU team inherits a relatively solid EU-China agenda. It must use this to further shape relations to fit a complex environment, both at home and in China.But as the array of recent events, overtures and agreements illustrate it is busy with consolidating relations with the US and is focused on its immediate neighbourhood. Unless Europe acts quickly, it could lose China’s attention at a time when the two sides need each other.It is worth repeating: Europe and China need each other, not least for economic reasons. Its growth rates may be slowing down, but China’s appetite for European goods and investments continues to be crucial in determining the pace and success of Europe’s economic recovery. China’s economic transformation demands that it has access to European know-how, experience and technology. China’s reform agenda also gives European companies myriad opportunities for enhanced trade and investments.Second, a deeper EU-China relationship is important in order to polish Europe’s foreign policy credentials — in Washington, Moscow and in many Asian capitals. Asian countries, which are locked in territorial quarrels with Beijing in the East and South China Seas, believe Europeans can temper Beijing’s assertiveness on the issue and use its experience in managing cross-border challenges to ensure stability in the region.Third, while Europe’s one-time dream of ensuring that China would one day become a “responsible” international stakeholder now appears hopelessly out-of-date and patronising in view of Beijing’s increasing global outreach and self-confidence in world affairs, there is no doubt that the EU needs to engage with China on a range of urgent foreign and security policy issues, including relations with Russia, Iran’s nuclear plans, policy towards the IS, fighting Ebola and combating climate change.Significant headway has been made in recent years, especially in EU-China economic ties. Trade relations remain buoyant, with bilateral trade in goods valued at about 420 billion euros in 2013. Trade in services, currently estimated at about 50 billion euros annually, is expected to grow as China opens up its services sector and as new reform efforts begin to bear fruit. More is being done to increase bilateral investment flows.There is still much more to discuss and discover. China is in the midst of massive change as the focus shifts to boosting consumer demand and away from an excessive reliance on investments and exports. The emphasis is also on fighting pollution, ensuring sustainable urbanisation and implementing other aspects of last year’s massive national reform agenda agreed at the Third Plenum. More recently, China’s Fourth Plenum shifted the focus to the rule of law, governance and legal reform. President Xi, widely regarded as China’s most powerful leader in recent decades, is stepping up his anti-corruption campaign.Beijing has been true to its word in making 2014 “the year for Europe”, with both President Xi and Premier Li travelling to key European capitals. The EU’s new leaders must reciprocate through visits, convening of an EU-China summit early next year and rapid organisation of the high-level political, economic and people-to-people dialogues.As China and the EU prepare to celebrate the 40th anniversary of their partnership next year, the relationship must be made more resilient, robust — and mutually respectful.

11/12/14 11/12/14

View from Abroad: Asia’s affair with US leaves Europe out in the cold (Originally published 8/11/2014 at dawn.com)

America continues to loom large over the Asia-Pacific region. Whether it’s about trade, politics or security, Asian eyes tend to focus almost solely on Washington. Japan, South Korea, Taiwan and the Philippines feel safer under the US security umbrella. India wants to forge a stronger relationship with Washington. Even China, the region’s most economically vibrant and powerful nation, seeks a special “great power” relationship with America.Hence the focus on the US-led Asia-Pacific Economic Cooperation summit opening in two-day Beijing on Nov 10 and the East Asia Summit from Nov 13-14 in Naypyidaw, Myanmar. A few days later, the spotlight will move to Brisbane, Australia, for the G20 summit.Certainly, the APEC agenda is impressive, with leaders expected to agree to a study on negotiating a Free Trade Area of the Asia-Pacific (FTAAP). But Asia’s enduring affair with America leaves only a small space for an Asia-Europe relationship.Significantly, Europeans will be absent from the jamboree in Beijing. The EU has been pressing for entry into the EAS which now also includes the US and Russia but Asians are in no hurry to open the door.Some European countries and the European Commission will, however, participate in the G20 meeting.And yet, there is more to the Asia-Europe relationship than meets the eye. America’s so-called “pivot” to Asia may have grabbed the headlines, but the EU has spent the last three and a half years upping its own game in Asia.The Asia-Europe Meeting (ASEM) held in Milan last month is a case in point. The summit may not have made headlines worldwide but over 50 European and Asian leaders made an array of pledges on boosting growth, continuing economic and financial reform and building stronger Europe-Asia connectivity.Significantly, the theme of the Milan summit — “Responsible Partnership for Sustainable Growth and Security” — allowed for a discussion not only of ongoing political strains and tensions in Asia and in Europe’s eastern neighbourhood, but also of crucial non-traditional security threats linked to food, water, and energy security.In addition, the meeting brought back much of the informality that marked the first few ASEM summits by including a “retreat” session during which leaders — with only one aide in attendance — were able to have a free-flowing discussion on regional and international issues, including Ebola and the threat posed by the so-called Islamic State.Attendance was exceptionally high, with all key Asian and European leaders — apart from the new Indonesian president and the Indian and Pakistani prime ministers — taking part in the sessions.Even before they meet in Beijing, there was a quick handshake in Milan between estranged neighbours Chinese Prime Minister Li Keqiang and Japan’s Shinzo Abe. Russian President Vladimir Putin was in attendance. Also, the EU finally held a long-awaited first-ever summit with Asean leaders. Kazakhstan and Croatia joined ASEM, bringing the total number of ASEM participants to 53.Leaders agreed on an ambitious programme until 2016, the year when ASEM, under Mongolian chairmanship, will celebrate its 20th anniversary. Countries agreed to work in smaller groups or clusters on 16 “tangible cooperation areas” including disaster management, renewable energy, higher education, connectivity and information technology.The challenge is to keep up the momentum generated in Milan. The good news is that ASEM’s resilience has allowed it to survive many upheavals since its launch in Bangkok in 1996. Initial euphoria over the initiative was followed by a period of inertia and a degree of disinterest. Asians criticised European leaders and ministers for not turning up at important ASEM meetings.Europeans complained that the gatherings were turning into little more than photo ops. The current mood is positive as ASEM seeks a stronger focus on content. However, ASEM’s future hinges on whether governments are ready to pay as much attention to ASEM and devote as much time and energy to their partnership as they did in the early years. Closer engagement between Asian and European business leaders, civil society representatives and enhanced people-to-people contacts is also essential.In the future ASEM needs an even sharper focus on growth and jobs, combating extremism and tackling hard and soft security issues. Women in both Asia and Europe face many societal and economic challenges. Freedom of expression is under attack in both regions. Populist parties and nationalism are becoming a threat to diversity and societal peace in both regions.Finally, ASEM faces the uphill task of securing stronger public understanding, awareness and support for the Asia-Europe partnership. ASEM’s 20th anniversary in 2016 should set the Asia-Europe partnership on a new and more dynamic track — that could perhaps generate the kind of excitement that APEC does.

9/8/14 9/8/14

America’s focus on Asia is a “wake up call” for Europe (Originally published02/12/11)

America’s focus on the Asia-Pacific appears to have acted as a much-needed wake-up call for the European Union. Over the coming months, EU policymakers are expected to take a closer look at Europe’s relations with Asia and hopefully come up with a new blueprint for invigorating flagging Europe-Asia ties.There is much to be done. Having failed to forge real “strategic partnerships” with the region’s rising powers, the 27-nation EU has long-focused on a limited trade-only agenda with most Asian nations. Trade and economic ties do certainly bind and foster inter-dependence. But the economic link has not resulted in stronger Europe-Asia political relations or joint action to tackle key 21st Century challenges.EU-Asia security links are practically non-existent. After a successful peace monitoring mission in Aceh in 2005-2006, the EU has steered clear of any security-related initiatives in Asia. Recently, Asian and European countries have cooperated in anti-piracy operations off the coast of Somalia action in Asia. But this is of course eclipsed by the US military presence in Asia – and President Barack Obama’s recent decision to send more troops to Australia.The US clearly believes this is the “Asia Pacific Century”. During his nine-day sweep through the region, President Obama hosted an Asia Pacific Economic Cooperation (APEC) forum in Hawaii, went to Australia, took up America’s seat at the East Asia Summit in Bali and sent tough signals to China in its backyard. He also dispatched US Secretary of State Hillary Clinton to Burma on a breakthrough mission to assess moves towards democracy in the country.Countries in the region are eager for America’s presence and influence, often as a counter to China. The US President stressed in a speech to the Australian parliament that the troop buildup was not aimed at China. China’s defense ministry has warned, however, that plans to build up a U.S. military presence in Australia are a continuation of “Cold War thinking” that could destabilize the Asia-Pacific region.Certainly, no European leader can create the same buzz in Asia as the US President. The problem is that most Europeans do not even try.True, the EU has long talked of building strong strategic relations with Asia’s emerging powers. But the rhetoric remains just that: EU ties with China, India, Indonesia and the region’s other rising nations remain lackluster and uninspiring. EU and Asian leaders meet for high-level summits, ministerial encounters and issue wordy communiques. But handshakes and photo opportunities are no substitute for policy and strategic thinking.In dealing with ascending Asia, the EU would be well advised to take a page or two from the US strategy towards the region. America’s renewed commitment to the Asia-Pacific offers Europe an opportunity to learn from - and possibly participate in - what is certain to become a vibrant transpacific partnership.Competition with the US for influence and visibility in Asia has long driven EU policy in the region. EU leaders launched ASEM (Asia Europe Meeting) as a platform for dialogue with Asian countries in 1996, largely as a response to APEC. EU policymakers often gauge their success or failure in Asia by comparing European trade or business flows with America’s economic presence in the region.And since the US – and Russia – participated in the latest East Asia Summit, the EU is stepping up pressure on Asian governments to be given entry into the influential club.A new transpacific alliance could therefore provide the spur Europe needs to get its own act together in Asia.Dealing with a changing and rising Asia will require that the EU engages in new courtships and new alliances with countries in the region.However, European policymakers have not been as good at doing their homework on Asia as their American counterparts. Even as Hillary Clinton promises substantially increased investment - diplomatic, economic, strategic, and otherwise - in the Asia-Pacific region in the coming years, Catherine Ashton, the EU’s high representative for foreign and security policy, has yet to set out a convincing blueprint for relations with Asia.In fact, apart from trips to China, Ashton is a rare visitor to the rest of the continent. Her decision to stay away from the ASEAN Regional Forum (ARF) in Bali, Indonesia in July this year, for a second year running, was a serious diplomatic faux pas.Asians saw Ashton’s absence from ARF as a snub and yet another signal that, apart from a focus on China, Europe is not really interested in the region. Many Asian analysts warn that Europe is becoming increasing irrelevant in Asia. And they insist that if Europeans are serious about joining the EAS, they should stop talking and – like the Americans - start proving they are serious about stepping up political engagement with Asia.Turning EU rhetoric into action can begin with four easy steps:For starters, senior EU officials can stop playing hard-to-get and start attending key Asian meetings taking place in the region.The European External Action Service should hammer out a revamped, up-to-date agenda for EU-Asia cooperation which goes beyond trade and business. EU negotiations on free trade agreements with Asian countries are a positive step forward in helping to enhance economic ties. But trade policy, however active, cannot replace foreign policy.EU policymakers need to engage in some serious reflection, based on input from independent researchers, think tanks, academics, business leaders and other non-state actors, from both Europe and Asia, on how to get Europe-Asia ties on a more dynamic track. Like the Americans, Europeans must engage more actively with independent think tanks working on Asia.Again, like the Americans, the EU should become an active partner in the increasingly important security discussions in Asia, including within ARF and other fora.Once it has stepped up engagement with Asian countries, the EU will be in a position to make a credible bid to join a transpacific dialogue. After all, Europe’s cooperation is essential in tackling today’s global challenges.