View from abroad: Free trade and the new world order (Originally published 01/08/2015 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.

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.