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.

3/30/15 3/30/15

View from Abroad: Life in Vietnam, Asia’s reborn tiger economy (Originally published 28/03/2015 at dawn.com)

The death last week of Singapore’s much acclaimed statesman Lee Kuan Yew has spotlighted world attention on tiny Singapore’s transformation from a tropical backwater to an affluent global city in just one generation. Certainly, Singapore stands tall in Asia as a formidable city state which proves that sometimes in geopolitics size does not matter.

But in South-East Asia, it’s not just Singapore that impresses.Travelling in Vietnam this week, it’s striking just how quickly this once war-devastated country has dusted off a bloody past, in favour of a new life and persona as one of this region’s most exciting economies.Ho Chi Minh City, formerly Saigon, buzzes with excitement as cars, motorcycles, buses weave their noisy way around surprisingly green urban centres — and some very narrow streets. Cafes, restaurants and bars are heaving with people. New businesses keep popping up, old ones are still thriving.A Belgian-Vietnamese friend tells me the country’s growing middle class has an appetite for foreign goods, the more luxurious, the better. Certainly, more and more European and Japanese cars on the roads are big and shiny, competing for space — and winning — against the ubiquitous scooters and motorbikes. Everyone has his/her palm pressed firmly on the car horn.This is China as it was twenty years ago, friends tell me. Noisy, crowded, the old and ramshackle giving way to the new and glittering. The skyscrapers going up, the five-star hotels, the glamorous department stores boasting French luxury brands are a foretaste of the big metropolis, a mini Shanghai, that Ho Chi Minh City is poised to become. For the moment, it is still possible to find serene hideaways where time appears to have stood still. But not for long.And certainly not at the university I visit on the outskirts of Ho Chi Minh City where students rush from class to class, stopping occasionally to sit down and play the pianos which are strewn around the campus.At the lecture I give on Europe, Asia and Vietnam, the students are serious and attentive — but impassive. I wonder in despair if I am getting through. But then the questions come fast and furious. I am grilled mercilessly on the impact of globalisation, my view of Vietnam, why Vietnam and the EU are signing a free trade agreement, how do you distinguish between good and bad journalists — and so on.Globalisation means losing our identity, they tell me, oblivious to the fact that in their skinny jeans and sneakers, carrying backpacks and peering into their smartphones, they have bought into globalisation with a vengeance. I point it out, they stare at me incredulously. This is not globalisation, this is life, they argue back. Exactly.Later as we take pictures and exchange addresses, I tell them they are lucky to be living in rising Asia, with jobs, hope — and pollution, one says interrupting me. Yes, pollution, urbanisation and overcrowding. But also jobs and growth — the two things we need in Europe. Puzzlement shows in their eyes.Their self-confidence is justified. Perched along one of the world’s most crucial shipping routes, and with a young and growing population, Vietnam is — once again — being tipped for economic lift-off, after years of disappointment.The news reports I read underline that money pouring into the South-East Asian economy from the likes of manufacturers Samsung Electronics Company and Intel Corporation is giving Vietnam a second run at becoming Asia’s next tiger economy.According to PricewaterhouseCoopers LLP, the country has the potential to become one of the world’s fastest-growing economies over the period to 2050. Not only is the South-East Asian nation gaining ground as a cheaper manufacturing alternative to neighbouring China, Vietnam is also a politically palatable destination for Japanese firms boosting investment in the region amid recurring Sino-Japan spats.“Vietnam is really the big winner from China losing its competitiveness because of rising wages” and a strong currency, say specialists. As labour costs rise in China, foreign investors are knocking on Vietnam’s doors.The list of those wishing to cash in is long, led by China and Japan but also including Singapore, Taiwan, the United States and the European Union.Vietnam and the US are working hard to strengthen ties, including in the security and defence sector, with Hanoi now demanding the full lifting of the arms embargo that was eased last year. Vietnam will be taking part in the Trans-Pacific Partnership trade pact, led by the US.Relations with Beijing are fraught over rival territorial claims in the South China Sea although tensions have eased in recent months and the Chinese and Vietnamese communist parties retain close ties.The EU, meanwhile is hoping to clinch negotiations on a bilateral, free trade agreement with Vietnam before too long.European diplomats tell me the country is an exciting destination for European exporters and investors.At more meetings — this time in Hanoi — the discussion turns to journalism, open societies and freedom of expression. Vietnam’s Communist Party keeps a tight lid on the media, including bloggers. The EU and the US are pressing for change and have an ongoing human rights dialogue with Hanoi. But it’s a question of one step forward, two steps back.As in China, the government appears to have struck a defining big bargain with its citizens: we’ll provide growth and progress in exchange for your loyalty. The trade-off appears to be working. So far.I see the bright lights, the fancy restaurants and the big cars. There is also still poverty and underdevelopment. I am enchanted by the friendliness of the people, young and old. Traditional and modern mix easily in the streets. There is no doubt: Vietnam is on the move. And it’s going to keep going up

10/27/14 10/27/14

View from Abroad: A 21st century Silk Road (Originally published 25/10/2014 at dawn.com)

I have been in China for five days and my brain is on fire. Perceptions, discussions, confrontations crowd my mind, jostling for space, demanding attention. My Chinese colleagues have so much to tell me about their country’s new priorities and they want to know so much about the future of Europe. We discuss. We argue.

The debates go on and on at the round-table meeting in Changsha in Hunan province that we are attending. As day turns into night, the debates not only dominate my waking hours, they enter my dreams.Europe and China have much to talk about. We are so different and yet we have much in common. There is the shared challenge of encouraging sustainable growth, tackling problems in our respective neighbourhoods, dealing with an ageing population, making sure we eliminate inequalities.But much also separates us. Europe believes in democracy, elections and human rights. China wants western countries to stop pontificating and giving Beijing lessons on democracy. The focus should be on governance, not on elections and other the rituals of democracy, one Chinese academic tells us.“We have to treat each other equally ... the West should stop looking down on us,” another Chinese colleague insists at the round-table discussion between European and Chinese think tanks.Indeed, much has changed — and is changing — in Beijing. President Xi Jinping has embarked on an unprecedented national reform drive, demanding an end to corruption, stronger implementation of the rule of law, a rebalancing of the economy from investments and exports to domestic consumption.And for the last year, President Xi and Prime Minister Li Keqiang have been promoting the ambitious idea of a Silk Road which would connect China to Europe, weaving its way across Central Asia and Central and Eastern Europe on the one hand while also building connections through a maritime route which would include the Maldives and Sri Lanka and many South-East Asian states.Full disclosure: I confess that I am completely fascinated, intrigued by the initiative. As a young girl growing up in Pakistan, I spent hours reading of the adventures of the intrepid men and women who plyed the Silk Road, connecting towns, industries and people.Exotic looking Chinese traders, with their bundles of silk, satins and brocades, made their way to Islamabad, persuading my mother and aunts to buy their goods. I watched from the sidelines, amused by the good-natured bargaining, the chuckles resulting in mutually satisfactory transactions.Years later, I went up the Silk Road — or rather the silk track — to Hunza and Gilgit and felt my heart almost break at the exquisite beauty of the landscape. Many hundreds of Chinese and Pakistani workers died while building the road in such a hostile land. Their sacrifice was enormous, their memories preserved in plaques along the route.That was then. The Road was about romance and adventure. Today it’s about commerce. China’s new concept of the Silk Road has little to do with romance — and a lot to do with business.Still it is a visionary idea which is getting much attention in Asia and Europe. And so it should. As they did when they came out with their ‘China Dream’ concept a year or so ago, the ‘Silk Road’ initiative is a work in progress.Beijing has yet to articulate its ambitions in detail. “We are not yet talking about a strategy,” says a Chinese colleague.Clearly, China wants to use the Road to increase its trade relations with countries along the route. Beijing is interested in Central Asia’s energy resources. It wants to counterbalance Russia’s political influence in the region.Also, the Silk Road provides a strong counter move to America’s much-touted ‘pivot’ to Asia and to the Trans Pacific Partnership (TPP) trade agreement that the US wants to negotiate with countries in the region but without China.As I listen to the discussion, I am convinced that this is an idea whose time has come — again. China has the political clout to make it happen. And it has the money to finance many of the projects.Still, it won’t be easy. The 21st century Silk Road will not only allow goods to be trade freely across borders, it could also facilitate the cross-frontier movement of drugs, arms and terrorists.As such, the proposal needs to be developed with care and caution.As I prepare to leave Changsha, my head is still spinning with new information and ideas. I dream of ancient bazaars and long, winding roads through mountains and plains. The Silk Road as envisioned by Beijing may be based on national self interest and, given the challenges, may never see the light of day.But the vision of an interconnected world it articulates is worth preserving — and developing.