Political Geography: Asia / Topic: International Trade and Finance

1. The NewSpace market: Capital, control, and commercialization

Author:: Robert Murray
Publication Date:: 04-2023
Content Type:: Working Paper
Institution:: Atlantic Council
Abstract:: Commercial opportunities in space-based technologies are expanding rapidly. From satellite communications and Earth observation to space tourism and asteroid mining, the potential for businesses to capitalize on these emerging technologies is vast and known as “NewSpace.”1 The NewSpace model is important for governments to understand because the dual-use nature of space, specifically its growing commercialization, will influence the types of space-based technologies that nations may leverage, and consequently, impact their national security paradigms. By capitalizing on the private sector’s agility and combining it with the essential research efforts and customer role played by the public sector, the NewSpace industry can play a critical function in addressing current and future national security challenges through public-private codevelopment. As the NewSpace industry expands, the role of government is evolving from being the primary developer and operator of space assets to facilitating their commercialization, while still prioritizing key advancements. US and allied governments can capitalize on this competitive landscape by strategically investing in areas that align with their national security objectives. However, it is crucial for them to first understand and adapt to their changing roles within this dynamic environment. Indeed, the benefits of the burgeoning NewSpace industry extend beyond the United States. International collaboration and competition in this area can lead to faster technological advancements and economic gains. The global NewSpace landscape is driving down costs, increasing access to space, and fostering innovation that can improve not only economic well-being, but also impact national security models. To that end, this memo will examine the broad state of the space market, discuss the industry drivers, and propose recommendations for US and allied policymakers as they consider future government investments in those enabling space-based activities that support wider national security ambitions.
Topic:: Defense Policy, International Trade and Finance, National Security, Science and Technology, European Union, Space, and Defense Industry
Political Geography:: Russia, China, Eurasia, Canada, Asia, and United States of America

2. Impact of economic sanctions on net commodity-producing and net commodity-consuming countries

Author:: Sergio R. Vale and Eduardo Viola
Publication Date:: 01-2023
Content Type:: Journal Article
Journal:: Revista Brasileira de Política Internacional (RBPI)
Institution:: Instituto Brasileiro de Relações Internacionais (IBRI)
Abstract:: The war in Ukraine has had a marked economic impact. However, since Russia is a net producer of important commodities, the impact of sanctions on its economy was less than expected. But what would happen if there was a war involving a country that was a net importer of commodities? In the case of a possible China-US conflict over Taiwan, the impact on the world economy would be different, with a deeper recession around the world, but the impact on the Brazilian economy would still be positive on account of the possibility that would remain of agricultural exports to China.
Topic:: Agriculture, Economics, International Trade and Finance, Sanctions, Commodities, and Exports
Political Geography:: Russia, China, Europe, Ukraine, Taiwan, Asia, North America, and United States of America

3. Trade Balances and International Competitiveness in Cyber-physical, Digital Task-intensive, ICT Capital-intensive and Traditional Industries

Author:: Alexandra Bykova and Roman Stöllinger
Publication Date:: 05-2023
Content Type:: Special Report
Institution:: The Vienna Institute for International Economic Studies (WIIW)
Abstract:: In this report, we analyse the international competitiveness of the EU in four industry groups over the period 1995-2018. The groups are delineated by specific factor intensities, where these intensities are assessed from digital tasks performed by labour services and ICT capital stocks. The EU’s positions relating to trade balances, revealed comparative advantages and unit value ratios are assessed relative to its main competitors, such as the US, China, Japan and South Korea. The trade specialisation patterns confirm EU advantages in traditional industries, which still represent the largest part of global trade, and in the group of digital task-intensive industries. In the cyber-physical group of industries, which are characterised by both high digital task and ICT capital intensities, the EU records a trade deficit, although this has been receding in recent years. Competitiveness indicators depict heterogeneity among EU countries. The loss of international competitiveness for some technology front-runners is a worrying sign. On the positive side, however, a reduction in trade deficits or an improvement in product quality and market shares is evident for certain EU countries, especially in the Central European region.
Topic:: International Trade and Finance, European Union, Trade, Digitalization, and International Competition
Political Geography:: Japan, China, Europe, Asia, South Korea, and United States of America

4. China as an International Lender of Last Resort

Author:: Sebastian Horn, Bradley C. Parks, Carmen M. Reinhart, and Christoph Trebesch
Publication Date:: 03-2023
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: This paper shows that China has launched a new global system for cross-border rescue lending to countries in debt distress. We build the first comprehensive dataset on China’s overseas bailouts between 2000 and 2021 and provide new insights into China’s growing role in the global financial system. A key finding is that the global swap line network put in place by the People’s Bank of China is increasingly used as a financial rescue mechanism, with more than USD 170 billion in liquidity support extended to crisis countries, including repeated rollovers of swaps coming due. The swaps bolster gross reserves and are mostly drawn by distressed countries with low liquidity ratios. In addition, we show that Chinese state-owned banks and enterprises have given out an additional USD 70 billion in rescue loans for balance of payments support. Taken together, China’s overseas bailouts correspond to more than 20 percent of total IMF lending over the past decade and bailout amounts are growing fast. However, China’s rescue loans differ from those of established international lenders of last resort in that they (i) are opaque, (ii) carry relatively high interest rates, and (iii) are almost exclusively targeted to debtors of China's Belt and Road Initiative. These findings have implications for the international financial and monetary architecture, which is becoming more multipolar, less institutionalized, and less transparent.
Topic:: Debt, Emerging Markets, International Trade and Finance, Financial Crisis, Belt and Road Initiative (BRI), and Sovereign Debt
Political Geography:: Africa, China, and Asia

5. Rewriting the Future of America’s Maritime Industry to Compete with China

Author:: Michael Roberts
Publication Date:: 10-2023
Content Type:: Special Report
Institution:: Hudson Institute
Abstract:: For decades, companies outside the United States have dominated the international commercial shipping and shipbuilding industries. At various times since World War II, Japan, Korea, and certain European countries have been able to leverage their export-driven manufacturing economies and government support to become world leaders in commercial shipbuilding and major players in international shipping. The People’s Republic of China (PRC) has taken that strategy to a new level and now produces more than half the large commercial ships delivered annually, controls scores of seaports in dozens of foreign countries, and owns almost one-fifth of the global commercial fleet. American commercial shipbuilders and US flag shipping companies have long faced fierce headwinds in international markets and have seen support from the US government dwindle. The US reset its maritime policies in the 1990s when America was the sole superpower and the security benefits of a robust commercial maritime industry were in doubt. By the end of 2022, Americans owned only 3 percent of the 55,000 ships in the global commercial fleet, including just 178 large US flag cargo ships, 85 of which are committed to international trade (see tables 1 and 2 below for a breakdown of US and global commercial fleets). The emergence of the PRC as a challenger to America’s global leadership has forced sweeping changes in US policy and spending priorities to boost America’s economic and military security. This report recommends that the US reform its policies governing America’s commercial maritime industries because shipping and shipbuilding are core components of national power. These industries remain especially crucial in the twenty-first century, as international trade is more important to a healthy American economy today than ever before. Yet Americans have almost no control over the maritime logistics systems that feed the US economy. The pandemic-induced supply chain crisis showed how much damage can be done when those systems break down.
Topic:: International Trade and Finance, National Security, Maritime, Industry, Domestic Policy, and Supply Chains
Political Geography:: China, Asia, North America, and United States of America

6. Digitalization of Special Economic Zones in China

Author:: Jie (Jeanne) Huang
Publication Date:: 01-2022
Content Type:: Working Paper
Institution:: China Studies Centre, The University of Sydney
Abstract:: Special Economic Zones (SEZ) have become the forefront in China to test legal and technological reforms for digital trade. This chapter explores three cutting-edge case studies in China’s SEZs: the Beijing blockchain-based Single Window deposit box; newly established big data exchanges in Beijing, Tianjin, and Shanghai SEZs; and pilot projects in financial, medical care and automobile industries to flow data across the border in the Shanghai SEZ. It scrutinizes China's experiments in the context of its applications to join CPTPP and DEPA. It argues that the development of Chinese domestic law for digital trade is shifting away from the traditional paradigm that uses international commitments to push domestic reform or make domestic law according to international law. The development of Chinese domestic law for digital trade relies much more on China’s domestic needs than what FTAs negotiations require. FTAs are increasingly becoming a tool for China to shape international law rather than a benchmark for legislating domestic Chinese law.
Topic:: Development, Economics, International Trade and Finance, Hegemony, and Digitalization
Political Geography:: China and Asia

7. The Evolution of the Global Trading System: How the Rise of Asia and Next Generation Trade Will Shape the Future Economy

Author:: Shay Wester
Publication Date:: 11-2022
Content Type:: Special Report
Institution:: Asia Society
Abstract:: Over the last seventy years, global trade flows have grown to an unprecedented level, facilitated by the lowering of tariffs and the creation of a shared set of rules. The Asia Pacific region has been central to this remarkable growth, with trade volumes nearly quadrupling in the last twenty years. Asian countries view trade as a critical tool to grow their economies, strengthen supply chain resiliency, create jobs, foster development, attract foreign direct investment, and promote innovation. As a result, they have been on the forefront of concluding trade agreements, and in the process tackling emerging issues through innovative approaches. In the meantime, many of the existing institutions, groupings, and approaches that have supported a strong rules-based trading system have not sufficiently stepped up to address emerging challenges. In particular, negotiating efforts at the World Trade Organization (WTO) have largely stalled with WTO members to date unable to forge consensus on pressing trade matters affecting climate, health, and digital, to name just a few. Additionally, as the scope of trade agreements has expanded over time, concluding comprehensive agreements has become more difficult. Finally, increased geopolitical tensions have impacted the multilateral trading system’s ability to function and thus respond effectively to new challenges. A new Asia Society Policy Institute (ASPI) report, The Evolution of the Global Trading System: How the Rise of Asia and Next Generation Challenges Will Shape the Future Economy, by ASPI's Shay Wester, explores next-generation trade challenges where new rules and new approaches will be needed. It concludes with observations on how these changes are reshaping the global trading system and examines how governments will need to adapt going forward.
Topic:: International Trade and Finance, World Trade Organization, Economy, and Tariffs
Political Geography:: Asia

8. Economic Security in Emerging Markets: A Look at India, Vietnam, and Indonesia

Author:: Matthew Goodman, Matthew Reynolds, and Julianne Fittipaldi
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Center for Strategic and International Studies
Abstract:: With the outbreak of the Covid-19 pandemic, supply chain resilience has emerged as a policy priority of the United States and its allies. The issue of supply chains has also raised the profile of emerging economies that offer possible alternatives to China as production platforms for multinational firms. This report surveys economic security policy developments in three major emerging economies: India, Vietnam, and Indonesia. It finds that all are attempting to take advantage of this new focus on supply chain resilience, while (to varying degrees) balancing the economic security risks posed by China’s rise. The United States and its allies have an opportunity to work with these emerging economies to shape their decisions about trade, investment, and technology policies in ways that promote mutual economic security and enhance international economic rules and norms.
Topic:: Security, Economics, Emerging Markets, International Trade and Finance, and Markets
Political Geography:: Indonesia, India, Asia, Vietnam, and Asia-Pacific

9. U.S. Strategy: Rebalancing Global Energy between Europe, Russia, and Asia and U.S. Security Policy in the Middle East and the Gulf

Author:: Anthony H. Cordesman
Publication Date:: 05-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: The war in Ukraine has already shown how dangerous it is for the U.S. to assume that it can rebalance its forces to one region and count on a lasting peace or detente in others. It now is all too clear that U.S. strategy must continue to focus on Europe as well as China. What is less clear is the extent to which the Ukraine War is an equal warning that the U.S. must have a truly global strategy – and one that continues to focus on other critical regions like the Middle East. The sudden escalation of the Ukraine crisis into a major regional conflict and the need for political and diplomatic support in the UN as well as for sanctions are warnings that much of the U.S. success in deterrence and defense lies in creating long-term global diplomatic and political support as well as true and lasting strategic partnerships.
Topic:: Security, Energy Policy, International Trade and Finance, Hegemony, and Strategic Interests
Political Geography:: Russia, Europe, Middle East, Asia, North America, and United States of America

10. Green New Deal for Carbon-neutrality and Open Trade Policy in Korea

Author:: Jukwan Lee, Jongduk Kim, Jinyoung Moon, Jyun-Hyun Eom, Ji Hyeon Kim, and Jungmin Suh
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study focuses on Korea’s Green New Deal policy and global response measures to climate change that affect international trade. A trade policy perspective and approach have been applied while reviewing the carbon-neutral policy pursued by the Green New Deal. We attempted through an empirical analysis to determine whether the expansion of openness helps reduce carbon emissions and simulate the impact of a carbon-neutral policy, such as the EU's carbon border adjustment, on the global economy under global production networks. In addition, the amount of financial support from Korea's Green New Deal needed to offset the negative economic effects of other countries’ independent carbon-neutral policies was derived. This study finally suggests that the effect of the Green New Deal can be expanded through the restoration of openness and global cooperation.
Topic:: Climate Change, International Trade and Finance, Economy, Trade, Carbon Emissions, and Green New Deal
Political Geography:: Asia and South Korea

11. Is South Korea vulnerable to EU and US carbon border restrictions?

Author:: Jeffrey J. Schott and Megan Hogan
Publication Date:: 07-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: South Korean exports, especially carbon-intensive products like steel, are increasingly vulnerable to both the European Union’s proposed carbon border adjustment mechanism (CBAM)—set to begin on January 1, 2023—and the proposed Clean Competition Act (CCA) before the US Congress. Schott and Hogan caution that Korean exporters should not count on Korea’s decade-old EU and US free trade agreements (FTAs), nor on the multilateral trading rules of the World Trade Organization (WTO), to protect them from new carbon-based import barriers in key foreign markets. The WTO and the FTAs have broad and loosely defined exemptions for environmental protection. Nor is Korea likely to be shielded by its own cap-and-trade emissions trading system (the K-ETS), because of extensive use of free allowances and large differences between EU and Korean carbon prices. While the threat the EU CBAM poses to Korean exports is imminent, passage of the CCA faces major legislative obstacles. But US imports of Korean steel and other carbon-intensive goods are still subject to climate-related duties at the US border under US unfair trade statutes. The US Department of Commerce has ruled that free allowances issued under the K-ETS (and EU ETS) are implicit subsidies that can be offset by countervailing duties. These charges are in addition to the harsh tariff-rate quotas on imported Korean steel applied under the “national security” authority of Section 232 of US trade law, which are more restrictive than measures imposed against European and other steel exporters. The authors suggest relaxing these US barriers, as they have been for shipments from Europe, in return for Korean participation in the nascent US-EU talks to establish a “Global Arrangement on Sustainable Steel and Aluminum.”
Topic:: Economics, International Trade and Finance, European Union, Exports, and Carbon Emissions
Political Geography:: Europe, Asia, South Korea, and United States of America

12. Public responses to foreign protectionism: Evidence from the US-China trade war

Author:: David Steinberg and Yeling Tan
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: America's recent turn toward protectionism has raised concerns about the future viability of the liberal international trading system. This study examines how and why public attitudes toward international trade change when one's country is targeted by protectionist measures from abroad. To address this question, the authors fielded three original survey experiments in the country most affected by US protectionism: China. First, they find consistent evidence that US protectionism reduces Chinese citizens' support for trade. This finding is replicated in parallel experiments on technology cooperation, and further validated outside of the China context with a survey experiment in Argentina. Second, they show that responses to US protectionism reflect both a "direct reciprocity" logic—citizens want to retaliate against the United States specifically—and a "generalized reciprocity" logic that reduces support for trade on a broader, systemic basis.
Topic:: Economics, International Trade and Finance, Protectionism, and Competition
Political Geography:: China, Asia, North America, and United States of America

13. Brothers in arms: The value of coalitions in sanctions regimes

Author:: Sonali Chowdhry, Julian Hinz, Katrin Kamin, and Joschka Wanner
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: This paper examines the impact of coalitions on the economic costs of the 2012 Iran and 2014 Russia sanctions. By estimating and simulating a quantitative general equilibrium trade model under different coalition set-ups, we (i) dissect welfare losses for sanction-senders and target; (ii) compare prospective coalition partners and; (iii) provide bounds for the sanctions potential — the maximum welfare change attainable — when sanctions are scaled vertically, i.e. across sectors up to an embargo, or horizontally, i.e. across countries up to a global regime. To gauge the significance of simulation outcomes, we implement a Bayesian bootstrap procedure that generates confidence bands. We find that the implemented measures against Iran and Russia inflicted considerable economic harm, yielding 32 – 37% of the vertical sanctions potential. Our key finding is that coalitions lower the average welfare loss incurred from sanctions relative to unilateral implementation. They also increase the welfare loss imposed on Iran and Russia. Adding China to the coalition further amplifies the welfare loss by 79% for Iran and 22% for Russia. Finally, we quantify transfers that would equalize losses across coalition members. These hypothetical transfers can be seen as a sanctions-equivalent of NATO spending goals and provide a measure of the relative burden borne by coalition countries.
Topic:: Globalization, International Trade and Finance, Markets, Sanctions, Alliance, and Embargo
Political Geography:: Russia, China, Europe, Asia, North America, and United States of America

14. China’s Belt and Road Initiative: Successful economic strategy or failed soft-power tool?

Author:: Jyrki Kallio
Publication Date:: 09-2022
Content Type:: Policy Brief
Institution:: Finnish Institute of International Affairs
Abstract:: The Belt and Road Initiative (BRI) is part of China’s efforts to integrate its neighbouring countries into its economic sphere, thus increasing China’s security in its immediate neighbourhood while facing an increasingly hostile international environment due to its rivalry with the US. In reality, the BRI has evolved into an umbrella term for various infrastructure and development projects with no unified object or strategy. The projects should, in principle, increase goodwill towards China, and correspondingly boost its influence, but in practice they are mainly aimed at economic benefit. The results of the BRI, especially as a soft-power tool, are ambiguous. Its ideational basis is thin, consisting mainly of China’s critique towards the “hegemony of the West”. This reduces the BRI to a hollow slogan with little appeal apart from the pragmatic gains. However, the BRI is here to stay for the duration of Xi Jinping’s rule because China’s foreign policy is often driven by prestige. The BRI is enshrined in the Communist Party’s Constitution in order to both add weight to the initiative and to increase the Party’s prestige with its success, modest as it may be.
Topic:: Economics, International Trade and Finance, Infrastructure, Hegemony, and Belt and Road Initiative (BRI)
Political Geography:: China and Asia

15. New Dynamism in ASEAN and East Asia: The Role of the RCEP as a ‘Living’ Agreement

Author:: Shandre Mugan Thangavelu, Fukunari Kimura, and Dionisius Narjoko
Publication Date:: 12-2022
Content Type:: Policy Brief
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This policy brief highlights the importance of maintaining open regionalism and economic and regional integration for sustainable and inclusive regional and global growth in the Association of Southeast Asian Nations (ASEAN) and East Asia. With rising global uncertainties and global value chain (GVC) disruptions, the region requires a new economic and social agenda beyond trading arrangements, and the alignment of global, regional, and domestic policies and structural issues. The Regional Comprehensive Economic Partnership (RCEP) is expected to provide a new institutional framework under the built-in institutional feature (Chapter 18) of the agreement.
Topic:: International Trade and Finance, Regional Cooperation, Regionalism, and Global Value Chains
Political Geography:: Asia and ASEAN

16. The Indo-Pacific Partnership and Digital Trade Rule Setting: Policy Proposals

Author:: Lurong Cheh
Publication Date:: 12-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The idea of the Indo-Pacific was borne from a global trend that has (re)oriented the centre of the world’s economic gravity to the East. Accelerating digital transformation to harness gains from technology are in countries’ common interests. The launch of the Indo-Pacific Economic Framework for Prosperity tends to supplement economic benefits to the Indo-Pacific. Becoming more deeply involved in the digital economy will require Indo-Pacific members to commit to new international norms on digital trade, of which trade liberalisation of electronic transmissions, free flow of data with trust, cybersecurity, and intellectual property rights protection must be prioritised.
Topic:: Development, International Trade and Finance, Regional Cooperation, and Digital Economy
Political Geography:: Asia and Indo-Pacific

17. Japan and the Regional Comprehensive Economic Partnership (RCEP)

Author:: Mie Oba
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper aims to clarify the role of Japan in the process leading up to the establishment of the Regional Comprehensive Economic Partnership (RCEP). While emphasising that respect for the centrality of the Association of Southeast Asian Nations (ASEAN) was a principle of RCEP, Japan played a leading role in the process of RCEP negotiations. For Japan, RCEP is one of the fruits of its strategy in East Asia/Asia-Pacific that began the mid-1990s to protect and increase the interests and advantages of Japanese business and retain Japan’s political leverage in the region. When substantial negotiations for RCEP began in 2013, its importance for Japan was secondary to other free trade agreements (FTAs) including the Trans-Pacific Partnership, China–Japan–Korea FTA, and Japan–European Union FTA. However, the Government of Japan and the business community had set a lot of economic and strategic goals in promoting RCEP. After the withdrawal of the United States (US) from the Trans-Pacific Partnership, RCEP was seen as an essential framework for establishing a rules-based regional order in the Indo-Pacific region. Although it was after India’s withdrawal from the RCEP negotiations, Japan further emphasised the importance of RCEP as the measure to sustain and foster the rule-based regional order and simultaneously pursued the conclusion of negotiations and the establishment of high-level rules, achieving some success. Ultimately, the havoc brought about by the coronavirus disease (COVID-19) pandemic and the sense of crisis in the traditional liberal international order caused by the intensifying strategic competition between the US and China, drove the conclusion of RCEP. RCEP will be increasingly important for economic order in Japan and Asia in the coming years. Ironically, as the strategic competition between the US and China escalates and leads to a surge in protectionism, the economic and strategic importance of RCEP – an FTA that incorporates China – is becoming more significant as a measure to counter unilateralism and protectionism. In addition, RCEP needs elements that address globalisation’s adverse effects and pitfalls, in areas such as the environment, labour rights, and a reduction in the disparity between the rich and poor.
Topic:: Development, Economics, International Trade and Finance, and Regional Cooperation
Political Geography:: Japan and Asia

18. RCEP Services Liberalisation: Key Features and Implications

Author:: Ramonette B. Serafica and Intan Murnira Ramli
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The Trade in Services Chapter of the RCEP Agreement establishes the rules for the progressive liberalisation of trade in the region and sets out regulatory disciplines to mitigate barriers to competition. Considered the most significant feature of the RCEP agreement compared to other FTAs of ASEAN is the scheduling of market access commitments using the negative list approach. Thus, an immediate challenge for members that initially adopted the positive list is the transition to the negative list scheduling approach. Furthermore, members will need to implement competitive and robust regulations in liberalising services. Developing countries, especially LDCs, might also face capacity constraints to fully take advantage of the market access given by the RCEP partners.
Topic:: International Trade and Finance, Regional Cooperation, Liberalism, and Progressivism
Political Geography:: Asia and ASEAN

19. International Production Network in the Next Generation and the Role of RCEP

Author:: Mitsuyo Ando, Fukunari Kimura, and Kenta Yamanouchi
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper attempts to discuss the potential role of RCEP from the perspective of two kinds of international division of labor, i.e., machinery international production networks (IPNs) and digital-related services trade. To consider the possible contribution of RCEP to the widening and deepening of IPNs, we first provide an overview of machinery IPNs in ASEAN and East Asia by employing international trade data, a value-added based index for global value chain (GVC) activities using international input–output tables, and a gravity equation exercise. Then, we focus on trade in two global innovator services – information and communication technology (ICT) services and other business services exports – to foresee the future of the new international division of labour and highlights some policy issues. RCEP should be an evolving, living one. In terms of liberalisation and facilitation as well as international rule-making, which cover the whole region, RCEP is expected to revise and upgrade the contents to support the dynamic international division of labour in East Asia. At the same time, RCEP may play an important role in reducing policy risks due to ad hoc trade policies based on political intension and defending the rules-based trading regime for the regional economy.
Topic:: Economics, International Trade and Finance, Labor Issues, and Digital Economy
Political Geography:: Asia and ASEAN

20. Potential Impact of RCEP and Structural Transformation on Cambodia

Author:: Shandre Mugan Thangavelu and Vutha Hing
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper examines the potential impact of the Regional Comprehensive Economic Partnership (RCEP) on the Cambodian economy in terms of trade, output growth, and employment. It also provides quantitative (structural gravity model estimation and simulation) and qualitative trade policy evaluation in terms of exports, output, and the structural transformation of the economy in global and regional value chains. The results highlight the importance of RCEP for the pandemic and post-pandemic recovery and the structural transformation of the Cambodian economy. The paper also provides key policy recommendations to fully maximise the benefits of RCEP for Cambodia for inclusive and sustainable growth.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Global Value Chains
Political Geography:: Asia and Cambodia

21. The Implications of the Regional Comprehensive Economic Partnership (RCEP) for Asian Regional Architecture

Author:: Shiro Armstrong and Peter Drysdale
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: East Asia’s Regional Comprehensive Economic Partnership (RCEP) came into force in 2022 as the world’s largest free trade agreement. RCEP was concluded, signed and brought into force in the face of major international uncertainty and is a significant boost to the global trading system. RCEP brings Australia, China, Japan, South Korea and New Zealand into the same agreement with the ten member ASEAN group at its centre. It keeps markets open and updates trade and investment rules in East Asia, a major centre of global economic activity, at a time of rising protectionism when the WTO itself is under threat. The agreement builds on ASEAN’s free trade agreements and strengthens ASEAN centrality. One of the pillars of RCEP is an economic cooperation agenda which has its antecedents in ASEAN’s approach to bringing along its least developed members and builds on the experience of capacity building in APEC and technical cooperation under the ASEAN Australia-New Zealand Free Trade Agreement. There is an opportunity to create a framework that facilitates deeper economic cooperation that involves experience-sharing, extending RCEP’s rules and membership at the same time as strengthening political cooperation. The paper suggests some areas that might be best suited to cooperation — that is confidence and trust building instead of or before negotiation — and discusses how non-members such as India may be engaged and the membership expanded. Options such as multilateralising provisions and becoming a platform for policy convergence and coordinating unilateral reforms are canvassed.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Architecture
Political Geography:: Asia and ASEAN

22. Restrictiveness of RCEP Rules of Origin: Implications for Global Value Chains in East Asia

Author:: Archanun Kohpaiboon and Juthatip Jongwanich
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This chapter aims to examine the restrictiveness of rules of origin (RoO) in the Regional Comprehensive Economic Partnership (RCEP) and other key multilateral free trade agreements (FTAs) in East Asia with a view to facilitating the operations of existing global value chains (GVCs). The analysis begins with dissecting PSRs in the RoO Chapter in these FTAs and quantifying them. The key finding is that product-specific rules in RCEP are the most flexible compared to the other multilateral FTAs and more facilitative to GVC operations. This is driven by RCEP-specific features, such as high intra-member trade and the member coverage. The main policy inference is that a full cumulation clause is needed in RCEP to allow a regional value content alternative to be in full effect. Harmonisation in RoO provision across these multilateral FTAs remains a challenge for ongoing negotiation. Monitoring the dynamics of RoO as well as the FTA utilisation is needed so that these multilateral FTAs could be a true stepping stone for trade liberalisation in the broader World Trade Organization multilateral trading system.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Global Value Chains
Political Geography:: Asia and ASEAN

23. Centrality and Community: ASEAN in the Regional Comprehensive Economic Partnership

Author:: Soo Yeon Kim
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper examines the Association of Southeast Asian Nations’ (ASEAN) role in the formation of the Regional Comprehensive Economic Partnership (RCEP) agreement. The RCEP project proceeded as trade governance has shifted from the multilateral trade regime under the World Trade Organization to free trade agreements and where the geopolitics of Asia has cast a shadow on the progress of regional integration efforts. The analysis in this paper focuses on ASEAN centrality, both as a concept and practice, in influencing the launch and progress of RCEP. Conceptually, ASEAN centrality is about the capacity of the 10-member group to help launch negotiations for the RCEP agreement and to shape its provisions for governing trade. In practice, the RCEP agreement consolidates and significantly unravels the numerous overlapping trade agreements between ASEAN, 38 in all between individual ASEAN members and its five RCEP partners, Australia, China, Japan, the Republic of Korea, and New Zealand. The paper also examines the relationship between the ASEAN Economic Community (AEC) and RCEP. RCEP provides for further tariff liberalisation between ASEAN members and its five RCEP partners and thus expands the zone of preferential treatment for goods exported from ASEAN and other RCEP members. RCEP also consolidates rules of origin requirements under one agreement, providing for diagonal cumulation and common rules of cumulation for agreement partners. The RCEP provisions can greatly facilitate production and trade along regional supply chains, thus accelerating the progress of the AEC as a single market and production base. Moving forwards, RCEP and ASEAN’s place in it, is likely to be shaped by challenges and opportunities from the Comprehensive and Progressive Transpacific Partnership and the Biden administration’s Indo-Pacific Economic Framework (IPEF) initiative. The ASEAN members with overlapping membership in the IPEF and RCEP will be pivotal in determining areas of cooperation. Regional integration will thus continue to be shaped by ASEAN centrality, and its progress will shape the ASEAN community.
Topic:: Diplomacy, Economics, International Trade and Finance, and Regional Cooperation
Political Geography:: Asia and ASEAN

24. Regional Comprehensive Economic Partnership: Economic Backgrounds of ASEAN and Its Dialogue Partners

Author:: Keita Oikawa, Fusanori Iwasaki, and Shujiro Urata
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: We overview the economic backgrounds of the countries participating in the Regional Comprehensive Economic Partnership (RCEP) negotiations and two Association of Southeast Asian Nations (ASEAN) Dialogue Partners – the United States (US) and the European Union (EU) – to understand their economic relationships before the signing of the RCEP and their economic interests in the RCEP. We discover that the 16 countries participating in RCEP negotiations vary in terms of economic size, income level, growth pattern, share of trade in the economy, and foreign direct investment (FDI) flows. Additionally, both lower- and higher-income ASEAN Member States (AMS) have received a large amount of FDI, in contrast to Japan and the Republic of Korea (henceforth, Korea), which have seen more FDI outflows from their countries than inflows. In terms of bilateral FDI inflows and outflows, as a centre for regional FDI, Singapore attracts FDI from developed countries (including the US and the EU) and reinvests it in India and other AMS. As an FDI hub, Singapore promotes liberalised regional markets to attract advanced country investors. By examining bilateral trade relationships, we find that as the centre of manufacturing in the world, ASEAN and China have participated in international production networks that also include Japan and Korea since 2000. Japan and Korea have maintained competitiveness in intermediate goods in the region’s production networks, while China notably exports final products to the US and the EU. Amongst the 16 countries participating in RCEP negotiations, India has not had a significant presence in the production networks. Indeed, India has expanded its bilateral trade deficit with China, which probably caused India to withdraw from RCEP negotiations to protect its manufacturing industry. Simulation results of the impacts of the RCEP, using a computable general equilibrium (CGE) model (Global Trade Analysis Project model), show that the countries participating in RCEP negotiations – particularly the less developed AMS – would gain greatly from lowering services trade costs and investment liberalisation. India would also gain significantly from the RCEP. In contrast, countries not participating in RCEP negotiations (the US and the EU) would experience small negative impacts of the RCEP through trade diversion effects.
Topic:: Diplomacy, Economics, International Trade and Finance, and Regional Cooperation
Political Geography:: Asia and ASEAN

25. Trade Facilitation in RCEP Countries

Author:: Weixiang Wang and Shandre Mugan Thangavelu
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The trade facilitation under the Regional Comprehensive Economic Partnership (RCEP) is critical for regional trade and economic cooperation amongst the 15 member countries. This chapter examines the trade facilitation under RCEP using the available datasets on the trade facilitation index and compares the current trends in trade facilitation across RCEP countries in terms of four dimensions: the World Trade Organization’s Trade Facilitation Agreement, digital trade streamlining, ease of doing business, and trade logistics performance. The study finds that RCEP countries have improved significantly in trade facilitation measures, but they vary across the countries. For example, China should further enhance its performance in cross-border paperless trade, whilst the Association of Southeast Asian Nations countries should improve their performance in the documentary compliance of trade, the infrastructure of trade, and trade logistics performance.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Regionalism
Political Geography:: Asia and ASEAN

26. Comparison of the Regional Comprehensive Economic Partnership (RCEP) and Other Free Trade Agreements (FTAs)

Author:: Innwon Park
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This study evaluates the desirability of RCEP by comparing it with other mega-lateral FTAs. Evaluating the member-specific scale effects of the FTAs, we find that RCEP will generate significantly larger gains compared with the CPTPP. Evaluation of the provision-specific depth effects of RCEP suggests the possibility of positive gains but these gains may not be significant compared with those derived from the CPTPP. The existing CGE model analyses reveal that RCEP will generate greater gains than the CPTPP. RCEP will be more desirable for China, Japan, and the Republic of Korea and the estimated gains for ASEAN will notably increase as the model explicitly specifies the diagonal ROO cumulation scheme. Considering the sequence of implementing FTAs, we find that the CPTPP will generate greater gains for dual members, but the marginal gains enjoyed by RCEP members will not be substantial.
Topic:: Diplomacy, International Trade and Finance, Regional Cooperation, Free Trade, and Economic Cooperation
Political Geography:: Asia and ASEAN

27. Australia’s Interests in East Asia’s Regional Comprehensive Economic Partnership

Author:: Shiro Armstrong
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The Regional Comprehensive Economic Partnership (RCEP) agreement was seen as important for Australia economically and politically from its inception. RCEP economies account for roughly two-thirds of Australia’s total trade and being part of an Association of Southeast Asian Nations (ASEAN)-led initiative that progressed broader East Asian economic integration was consistent with the structure of Australia’s trade interests and with Australia’s support for the multilateral trading system. Australia has a track record of pursuing regional cooperation that supports multilateral trade and for supporting regional integration that is outward oriented. RCEP became more important economically, politically, and strategically throughout its negotiations. It furthered East Asian economic integration that avoided fragmentation but also to entrench the ASEAN Economic Community project. Concluding RCEP took on greater importance and urgency as a ballast against the rising protectionism globally in the latter half of 2010. The ASEAN–Australia–New Zealand Free Trade Area (AANZFTA) included an economic cooperation agenda focused on capacity building that was seen as a success for its members and shaped Australia’s approach and support towards economic cooperation being a pillar of RCEP. Negotiations for RCEP were chaired and led by Indonesia and ASEAN. Australia played a proactive role in pushing for high standards – credible market access commitments and new rules – in negotiations. Australia was one of the RCEP member countries that was also negotiating the Trans-Pacific Partnership (TPP) in parallel. The interest in the TPP was to keep the United States productively engaged in the region and to further rule-making and liberalisation amongst the TPP members. Having overlapping membership between the TPP and RCEP would mean that there was less chance of significant divergence or inconsistencies between them, although the approach differed. The deterioration of Australia’s economic and political relationship with China makes the RCEP framework potentially more important for facilitating the rebuilding of trust and confidence.
Topic:: Diplomacy, International Trade and Finance, Regional Cooperation, and Economic Cooperation
Political Geography:: Asia, Australia, and ASEAN

28. Changes in Trade and Investment Policies in Thailand and the Implications for Medium-term Growth

Author:: Archanun Kohpaiboon and Juthatip Jongwanich
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: his paper addresses the noticeable changes in trade and investment policies in Thailand in the new millennium and assesses their impact. These changes began with trade policy changes from the World Trade Organization to free trade agreement (FTA)-induced liberalisation, followed by changes in investment policies, all of which are to boost firms’ productivity and medium-term growth. Our results suggest that the policy changes are yet to produce the output the government expects. The signed FTAs’ impact on trade has been limited so far and has occurred selectively on certain product lines, as did the FTA-induced direct investment. Similarly, changes in investment policies had the impact of enticing direct investment but this varied across investors’ nationalities. The impact on firm productivity is also limited and found only for investment promotion policies. Our analysis highlights the role of traditional tools, i.e. trade openness, research and development, and skills upgrading, in fostering firm productivity. Whilst FTAs and investment promotion could be used as a catalyst for firms to enhance productivity, other supporting factors are also needed.
Topic:: International Trade and Finance, Regional Cooperation, Investment, Free Trade, and Economic Cooperation
Political Geography:: Asia and ASEAN

29. What Determines Interfirm Trade Credit? Empirical Evidence from the ASEAN

Author:: Sasidaran Gopalan and Ketan Reddy
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper empirically examines the link between the heterogeneity of firms and their probability of obtaining interfirm trade credit in Asia, with a specific focus on the Association of Southeast Asian Nations (ASEAN) bloc of economies. In doing so, the paper investigates the following three issues: to what extent firm size plays a role in obtaining trade credit, to what degree a firm’s integration into global value chains affects its probability of obtaining trade credit, and the impact of agglomeration on firms’ likelihood of obtaining trade credit.
Topic:: International Trade and Finance, Trade, Global Value Chains, and Credit
Political Geography:: Asia and ASEAN

30. The Indo-Pacific Economic Framework and Digital Trade in Southeast Asia

Author:: Andreyka Natalegawa and Gregory B. Poling
Publication Date:: 05-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: In October 2021, the Biden administration announced the development of an Indo-Pacific Economic Framework (IPEF) with partner nations to “define our shared objectives around trade facilitation, standards for the digital economy and technology, supply chain resiliency, decarbonization and clean energy, infrastructure, worker standards, and other areas of shared interest.” Details on the framework are still being worked out, but it now seems that those six areas of focus have been distilled into four negotiating “pillars.” Deputy U.S. Trade Representative Sarah Bianchi said in early February that these would include “fair and resilient trade, supply chain resilience, infrastructure and decarbonization, and tax and anticorruption.” The Office of the U.S. Trade Representative (USTR) will likely lead negotiations on the first, while it appears that the Commerce Department will take the lead on the other three. The details of each pillar will be worked out in the months ahead, but the Biden administration is certain to face challenges and trade-offs across each, given the diversity of economies and political constraints across the region. USTR has said the trade pillar will be “high-ambition” and include binding commitments. But this will be complicated by the fact that the administration plans to roll out the IPEF through executive action rather than as a traditional trade deal requiring congressional approval. This pathway will help the framework sidestep political obstacles that agreements like the Trans-Pacific Partnership faced before Congress, but it also means that the administration cannot offer increased market access or any other concessions that would require changes to U.S. law. Moreover, moving forward with the IPEF through executive action has led to concerns among partners that the framework could be vulnerable to U.S. domestic politics or that a future administration may well roll back or abandon the framework. Given these self-imposed constraints, the administration will face headwinds trying to convince countries to sign on to high-standard provisions on digital trade, labor, and environmental standards that might run counter to their perceived short-term political or economic interests. One possible solution would have been to make the involvement in the other three pillars, where there are likely to be more tangible benefits for other countries, contingent on an agreement in the trade pillar. But that would run counter to the desire to get as many countries on board as possible. So, the administration has instead indicated that countries will be invited to engage in each pillar a la carte. And while like-mindedness in and of itself does not immediately guarantee their support for the IPEF, the likely result is that only Japan, Australia, New Zealand, Singapore, and perhaps South Korea—the most developed economies which already share U.S. standards on digital trade, environment, and labor—will engage with USTR on the trade pillar. But a wider array of economies will likely join the talks with the Commerce Department on the other three.
Topic:: Economics, International Trade and Finance, Digital Economy, and Economic Cooperation
Political Geography:: Asia, Southeast Asia, and Indo-Pacific

31. Securing Asia’s Subsea Network U.S. Interests and Strategic Options

Author:: Matthew Goodman and Matthew Wayland
Publication Date:: 04-2022
Content Type:: Policy Brief
Institution:: Center for Strategic and International Studies
Abstract:: More than 1 million kilometers of submarine cables traversing the ocean floor, each about as wide as a garden hose, transmit up to 99 percent of international data, underpinning global trade and communication. This vital digital infrastructure faces myriad threats, from earthquakes and typhoons to fishing nets and saboteurs. The United States derives significant advantages from its centrality in Asia’s subsea cables, which contribute up to $169 billion to the U.S. economy annually and could benefit more U.S. workers and businesses as demand for digital products and services grows globally. But realizing those benefits will require the United States to step up its policy engagement on Asia’s cable networks, which are changing with China’s rise, the emergence of new regional hubs, and new transpacific routes designed to reduce risks and increase network resiliency.
Topic:: Security, International Trade and Finance, Communications, Maritime, and Commerce
Political Geography:: China and Asia

32. Beyond Geopolitics: A Geoeconomic Perspective of China-Iran Belt and Road Initiative Relations

Author:: Seyedashkan Madani
Publication Date:: 06-2022
Content Type:: Journal Article
Journal:: Uluslararasi Iliskiler
Institution:: International Relations Council of Turkey (UİK-IRCT)
Abstract:: The Belt and Road Initiative (BRI) is the largest regional development project in the history of global development. It is estimated that Chinese companies will invest up to $1.2 trillion in infrastructure development in Asia and elsewhere in the coming years. However, there are many obstacles to the successful implementation of this initiative in the host countries, including geographical factors, local culture, geopolitical contestation, public attitudes, institutional capacity, and governance quality. These challenges can substantially diminish the coherence of the BRI and prevent its effective implementation. This study aims to develop an analytical framework for exploring the risks associated with and challenges of executing BRI projects in Iran. To this end, all risks are categorized into three broad groups: operational, financial, and geopolitical. The results show that Iran generally faces many internal and external challenges in attracting foreign investment. The critical question is: Why is Iran receiving substantial investment from Chinese companies despite its unfavorable business environment? A geoeconomic approach is used to develop a theoretical framework to explain Iran-China BRI relations. In this context, Iran’s geoeconomic significance is the main factor encouraging the flow of Chinese investment into the country. The BRI comprises mostly functional cooperation between China and countries along the Silk Road based on a specific geospatial environment. Iran’s geospatial environment encourages Chinese investments in infrastructure, which is the main content of functional cooperation.
Topic:: Development, International Trade and Finance, Infrastructure, and Belt and Road Initiative (BRI)
Political Geography:: China and Asia

33. Assessing the Effects of Trade Liberalization With Third Countries: The Case of the Eurasian Economic Union

Author:: Simon Sngryan
Publication Date:: 06-2022
Content Type:: Journal Article
Journal:: Journal of Liberty and International Affairs
Institution:: Institute for Research and European Studies (IRES)
Abstract:: The processes of objectively conditioned integration in the economic, political, legal, and institutional spheres of the Eurasian Economic Union (EEU) Member States took place step by step, starting from preferential trade agreements, passing to the customs union, the common market and other stages of integration. This process is accompanied by the gradual deepening of trade liberalization with potential partners. The selection of potential partners should be carried out through a comprehensive and detailed analysis of the structure and volumes of foreign trade of the EEU Member States (Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia) with third parties, their markets structure, existing customs regulation, trade barriers, and possible export potential. The research evaluated the EEU's possible enlargement effects on the Member States' economic indicators. The research aimed to assess the possible consequences of EEU expansion and signing free trade agreements, considering Pakistan, Korea, and Malaysia as potential trade partners. Modeling the effect of an FTA assumes horizontal zeroing of tariffs between partners. Then, using the GTAP model, a new state of general equilibrium was calculated corresponding to the changed parameters of customs and tariff regulation. In this case, most variables, such as change in GDP, production output, and export-import volumes, were estimated, manifesting the economic effect of trade liberalization.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Trade Liberalization
Political Geography:: Europe, Eurasia, and Asia

34. China's Geo-Economic Interest in Africa: A Short Overview

Author:: Jajati K. Pattnaik and Chandan K. Panda
Publication Date:: 06-2022
Content Type:: Journal Article
Journal:: Journal of Liberty and International Affairs
Institution:: Institute for Research and European Studies (IRES)
Abstract:: The article examines China’s geo-economic interest in Africa. China intends to exercise its leverage over both coastal frontiers for trade and defense and its hinterland for rich mineral, metal, and fossil deposits. Furthermore, the debt trap seems to be one of the methods through which China intended to bargain with Africa to bag as much advantage as it could gain. The question that emerges from this critical engagement with China-Africa relations is to look into how the reality of Africa’s narrative of development is projected both from outside and within and the contradiction embodied in that projection. China used the narrative of development to set its feet on African soil. This paper discusses China’s penetration into Africa by offering interest-free loans and its gradual emergence as a neocolonial power through expanding its network. The method used in the study to establish China’s monopoly and interfering streak in African affairs through BRI is the analysis of available data based on which the objectives and the conclusions are drawn.
Topic:: International Trade and Finance, Infrastructure, Hegemony, Belt and Road Initiative (BRI), and Strategic Interests
Political Geography:: China and Asia

35. Cutting through the Value Chain: The Long-Run Effects of Decoupling the East from the West

Author:: Gabriel Felbermayr, Alexander Sandkamp, and Hendrik Mahlkow
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: With ever-increasing political tensions between China and Russia on one side and the EU and the US on the other, it only seems a matter of time until protectionist policies cause a decoupling of global value chains. This paper uses a computable general equilibrium trade model calibrated with the latest version of the GTAP database to simulate the effect of doubling non-tariff barriers - both unilateral and reciprocal - between the two blocks on trade and welfare. Imposing trade barriers almost completely eliminates bilateral imports. In addition, changes in price levels lead to higher imports and lower exports of the imposing country group from and to the rest of the world. The targeted country group increases exports to the rest of the world and reduces imports. Welfare falls in all countries involved, suggesting that governments should strive to cooperate rather than turning away from each other. By imposing a trade war on Russia, the political West could inflict severe damage on the Russian economy because of the latter’s smaller relative size.
Topic:: International Cooperation, International Trade and Finance, European Union, Conflict, Trade Wars, Protectionism, and Rivalry
Political Geography:: Russia, China, Europe, Asia, North America, and United States of America

36. Biden, Israel, and China: Making a Difficult Threesome Work

Author:: Steven R. David
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: Jerusalem Institute for Strategy and Security (JISS)
Abstract:: It is wrong to expect Israel, a middle-level economy, to decouple from China when far wealthier countries (including the United States) show no signs of following suit. Israeli companies should not be subject to restrictions not placed on companies elsewhere, including the United States itself.
Topic:: Diplomacy, International Trade and Finance, Hegemony, and Conflict
Political Geography:: China, Middle East, Israel, Asia, North America, and United States of America

37. Trade and Supply Chain Issues for Taiwan and Australia

Author:: Bryce Wakefield
Publication Date:: 12-2021
Content Type:: Special Report
Institution:: Australian Institute of International Affairs
Abstract:: Covid-19 has disrupted supply chains around the world, while political movements in the United States and Europe that predate the pandemic have raised the prospect that we are once more living in a world where regionalism and nationalism trump global integration of trade. China, meanwhile, has made it clear that it sees trade as a tool in its political statecraft, a factor that has been keenly felt in the region. Nervous actors in the Indo-Pacific are looking to diversify their trade away from China, but do nations in the region have many choices? What does this mean for Taiwan-Australia trade relations? How does Taiwan’s ambiguous position in the international system relate to recent trade agreements? Where do Taiwan and Australia, as mid-level powers, sit within the global trading order?
Topic:: International Trade and Finance, Public Health, Pandemic, and COVID-19
Political Geography:: China, Taiwan, Asia, and Australia

38. China's Belt and Road: Implications for the United States

Author:: Jennifer A. Hillman and David Sacks
Publication Date:: 03-2021
Content Type:: Special Report
Institution:: Council on Foreign Relations
Abstract:: The Belt and Road Initiative (BRI), Chinese President Xi Jinping’s signature foreign policy undertaking and the world’s largest infrastructure program, poses a significant challenge to U.S. economic, political, climate change, security, and global health interests. Since BRI’s launch in 2013, Chinese banks and companies have financed and built everything from power plants, railways, highways, and ports to telecommunications infrastructure, fiber-optic cables, and smart cities around the world. If implemented sustainably and responsibly, BRI has the potential to meet long-standing developing country needs and spur global economic growth. To date, however, the risks for both the United States and recipient countries raised by BRI’s implementation considerably outweigh its benefits. BRI was initially designed to connect China’s modern coastal cities to its underdeveloped interior and to its Southeast, Central, and South Asian neighbors, cementing China’s position at the center of a more connected world. The initiative has since outgrown its original regional corridors, expanding to all corners of the globe. Its scope now includes a Digital Silk Road intended to improve recipients’ telecommunications networks, artificial intelligence capabilities, cloud computing, e-commerce and mobile payment systems, surveillance technology, and other high-tech areas, along with a Health Silk Road designed to operationalize China’s vision of global health governance.1 Hundreds of projects around the world now fall under the BRI umbrella.
Topic:: International Trade and Finance, Infrastructure, Hegemony, Conflict, Belt and Road Initiative (BRI), and Regionalism
Political Geography:: China, Asia, North America, and United States of America

39. ‘Community of Common Destiny’ as Post-Western Regionalism: Rethinking China’s Belt and Road Initiative from a Confucian Perspective

Author:: Raoul Bunskoek and Chih-yu Shih
Publication Date:: 06-2021
Content Type:: Journal Article
Journal:: Uluslararasi Iliskiler
Institution:: International Relations Council of Turkey (UİK-IRCT)
Abstract:: Conventional explanations of China’s Belt and Road Initiative (BRI) focus on how the BRI will be in China’s interest, how it will strengthen China’s geopolitical position, or a combination of the two. We argue that such views are limited because they merely interpret the BRI through ‘Western’ IR lenses. This paper ‘re-worlds’ China by using the BRI as a case study to illustrate how in the discursive field(s) of China’s elite, China as a Westphalian nation state, and China as amorphous Tianxia under Confucianism coexist, struggle for recognition, and are interrelated. Consequently, we argue that China, because of the economic miracle it created domestically over the last few decades, is now convinced of its own ‘moral superiority’, and ready to export its self-perceived ‘benevolence’ abroad. In this light, we read the BRI to be undergirded by a combination of ‘Western’ and Confucian values, suggesting a post-Western/post-Chinese form of regionalism.
Topic:: International Trade and Finance, Infrastructure, Hegemony, Belt and Road Initiative (BRI), and Regionalism
Political Geography:: China and Asia

40. Volume 71 Issue 2

Author:: Gökhan Karabulut
Publication Date:: 01-2021
Content Type:: Journal Article
Journal:: Istanbul Journal of Economics
Institution:: Istanbul University Faculty of Economics
Abstract:: Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:: Economics, Globalization, International Trade and Finance, Oil, Political Economy, Natural Resources, Exchange Rate Policy, and Industry
Political Geography:: Europe, Turkey, and Asia

41. The Clash of Japan’s FOIP and China’s BRI?

Author:: Daisuke Akimoto
Publication Date:: 06-2021
Content Type:: Journal Article
Journal:: The Rest: Journal of Politics and Development
Institution:: Centre for Strategic Research and Analysis (CESRAN)
Abstract:: Since the late 2010s, the concept of the “Indo-Pacific” has been becoming increasingly significant in the international political arena. In August 2016, Japanese Prime Minister Shinzo Abe proposed a policy of “Free and Open Indo- Pacific” (FOIP) as Japan’s new diplomatic vision at the Tokyo International Conference on African Development (TICAD) VI held in Kenya. The FOIP strategy was supported by the Donald Trump administration followed by the renaming of the United States Indo-Pacific Command. However, China has viewed the FOIP as a containment strategy against the Chinese Belt and Road Initiative (BRI). The FOIP vision is unclear for general observers, and it might cause a security dilemma with the Chinese BRI. Is it possible for the FOIP vision to coexist with China’s BRI, or are these two strategic visions destined to clash with each other? In an attempt to answer these questions, the article aims to provide multiple perspectives of the FOIP concept by applying international relations (IR) theory. This article warns that the FOIP and the BRI are likely to bring about diplomatic tension that could be escalated into a military skirmish over the territorial dispute. In order to avoid the possible military clash, it finally seeks to explore possible future pathways of the peaceful coexistence of the two visions in the Indo-Pacific region.
Topic:: International Trade and Finance, Infrastructure, Belt and Road Initiative (BRI), and Rivalry
Political Geography:: Japan, China, and Asia

42. Economic Cracks in the Great Wall of China: Is China's Current Economic Model Sustainable?

Author:: Thomas J. Duesterberg
Publication Date:: 12-2021
Content Type:: Special Report
Institution:: Hudson Institute
Abstract:: Since Deng Xiaoping changed the trajectory of Chinese economic policy in 1978, the People’s Republic of China (PRC) has amassed an impressive record of economic growth. Many economists and political analysts, however, have come to question whether the top-down, mercantilist economic system in the PRC is sustainable in the medium to long term. This report explores the long-term structural and short-term economic problems in contemporary China, and in particular considers whether the Xi Jinping regime can avoid a financial crisis and effectively manage a transition to a stable new equilibrium. Structural issues include a looming downturn in the population and in the workforce; associated problems with an underdeveloped and underfinanced social safety and welfare net; income and regional inequality; environmental degradation; and domestic shortages of raw materials, agricultural production, and energy resources. The acute economic problems analyzed in the paper are a real estate bubble, the accumulation of dangerous levels of debt, dependence on external markets and financing, a difficult transition to a more consumer-oriented and less investment-driven economy, a crackdown on dynamic digital and financial sectors, a return to dominance of low-productivity state-owned enterprises and manufacturing firms, and weak governance from an increasingly authoritarian and unaccountable regime. Many of these acute issues result from Xi’s changes in policy since 2013. Xi’s turn toward greater economic self-reliance while maintaining mercantilist trade relations signals an effective decoupling from the US and allied economies. Some historical examples of bubble economies and financial crises are discussed as possible analogies to the current situation in China. One conclusion is that the Middle Kingdom will see a much slower-growing economy, which makes addressing the structural issues much more difficult. Inability or lack of determination to address the large array of issues may also undermine the political legitimacy of the current regime, which has been buttressed since 1978 by a rapid growth model based on debt, real estate, and investment, including infrastructure. The concluding section of this report offers policy tools that the United States and its allies could deploy to induce China to be a more responsible stakeholder in the world economy and a more reliable contributor to global sustainability. The tools considered in the study include trade policy and export controls, expanded oversight of foreign investment (both direct and portfolio investment), cooperation with allies on China policy, and defense-related sanctions. The paper also suggests that deployment of these tools could be a factor in weakening China’s economy as well as a means to convince its leadership to pursue less mercantilist and authoritarian global strategies, which are harmful to the US economy and to global stability.
Topic:: Foreign Policy, International Trade and Finance, Finance, Economy, and Economic Growth
Political Geography:: China and Asia

43. Revisiting the Us-china Trade War: A Strategic Assessment

Author:: Zaeem Hassan Mehmood
Publication Date:: 01-2021
Content Type:: Journal Article
Journal:: AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:: Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:: The relations among United States of America and People’s Republic of China have historically survived several bouts and rounds however the approach employed by the Trump Administration for a program involving reprisal hefty tariff-trade war against China has given a new face to the bilateral relations between the two states. The paper demonstrates that domestic and international agents played a vital role in initiating and nurturing the trade clash between Washington and Beijing since 2018 to date. The aim of the study is to ascertain that how the political climate and past pursuits of one country conditions policy outcomes in another, and how domestic political pressures on politician’s conditions their relations with foreign counterparts. The paradigm of rational choice theory is adopted to provide a conceptual understanding to the triggering of the trade war between the economic giants.
Topic:: Cold War, International Trade and Finance, Hegemony, Conflict, Trade Wars, and Rivalry
Political Geography:: China, Asia, North America, and United States of America

44. Revitalization of Maritime Silk Road Based on the Security Implications and Cooperation

Author:: Hamsu Abdul Gani
Publication Date:: 07-2021
Content Type:: Journal Article
Journal:: AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:: Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:: The revitalization of the Silk Road as a trade route, cultural exchange, religion, science and civilization based on the “Maritime Silk Road” (MSR) is the focus of strategic studies and international relations. ASEAN countries, including Indonesia in the MSR route and the contestation of the United States and China who are fighting for dominance in the Indo-Pacific region, face challenges and opportunities. The results of this research, which uses a normative approach, show that the revitalization of the MSR may give positive impacts to China’s foreign affairs for the good interaction and communication among people by economic trade.
Topic:: Globalization, International Trade and Finance, Maritime, and Silk Road
Political Geography:: China and Asia

45. The China-Pakistan Economic Corridor

Author:: Ali Haider Saleem and Arhama Siddiqa
Publication Date:: 08-2021
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: The term Silk Road is used by scholars to describe a network of trading posts and markets linking East Asia to the Mediterranean. In terms of geographical context, the editors of Baku Dialogues define the region as the “geographic space looking west past Anatolia to the warm seas beyond; north across the Caspian towards the Great Plain and the Great Steppe; east to the peaks of the Altai and the arid sands of the Taklamakan; and south towards the Hindu Kush and the Indus valley, looping down around in the direction of the Persian Gulf and across the Fertile Crescent.” States falling under this parasol include China, Pakistan, Iran, Turkey, the five Central Asian republics, Azerbaijan, and Russia. China’s Belt and Road Initiative (BRI), which traverses several continents, is a long‑term, strategic investment plan with the objective of facilitating economic integration of countries in line with the historic Silk Road. In April 2015, China’s President, Xi Jinping announced the China‑Pakistan Economic Corridor (CPEC), which amounts to BRI’s flagship project. This enterprise, which encompasses road, rail, and oil pipeline links, will help Beijing advance its influence across South and Central Asia.
Topic:: Economics, International Cooperation, International Trade and Finance, Bilateral Relations, Infrastructure, and Silk Road
Political Geography:: Pakistan, China, and Asia

46. Hydrocarbon Energy Complexes Central Eurasian Keystone Triangles

Author:: Robert M. Cutler
Publication Date:: 04-2021
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: The editorial statement of Baku Dialogues posits a certain geographic definition of what is called the “Silk Road Region,” namely “the geographic space looking west past Anatolia to the warm seas beyond; north across the Caspian towards the Great Plain and the Great Steppe; east to the peaks of the Altai and the arid sands of the Taklamakan; and south towards the Hindu Kush and the Indus valley, looping down around in the direction of the Persian Gulf and across the Fertile Crescent.” When I served on the Executive Board of the Central Eurasian Studies Society 20 years ago, its website provided a lengthy but useful geographic definition of “Central Eurasia.” This definition included “Turkic, Mongolian, Iranian, Caucasian, Tibetan, and other peoples in a broad area that geographically extends from the Black Sea region, the Crimea, and the Caucasus in the west, through the Middle Volga region, Central Asia and Afghanistan, and on to Siberia, Mongolia, and Tibet in the east.” To clarify the term “Black Sea region,” which appears in that definition, I adopt the European Union’s characterization of that region as stretching from Romania and Bulgaria, through northern Turkey and on to Georgia, but including only a thin coastal strip some 20‑60 kilometers wide within the EU itself, including the Danube delta. From that definition, it would follow that the Silk Road Region is largely embedded in Central Eurasia. The name “Central Eurasia” was sometimes used in the 1990s as a shorthand for the 15 former Soviet republics together (Russia included), but this usage has faded away. The collapse of the Soviet Union did not assure the eventual geoeconomic consolidation of Central Eurasia, but the conditions for that consolidation have now been established. This has occurred thanks to the confluence of international financial and industrial interest in the region’s energy resources, the political will of the United States (the only remaining superpower), and the freedom and rapidity of networked information exchanges made possible by the internet.
Topic:: International Cooperation, International Trade and Finance, Regionalism, and Silk Road
Political Geography:: Europe and Asia

47. The Strategic Benefits of the Southern Gas Corridor

Author:: Vitaliy Baylarbayov
Publication Date:: 04-2021
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: At the end of 2020, the Southern Gas Corridor became fully operational. This marked the completion of a journey that began a decade ago when the government of Azerbaijan and the State Oil Company of the Azerbaijan Republic (SOCAR) took a strategic decision to launch a major natural gas export project. The Southern Gas Corridor is one of the largest and the most expensive gas supply projects in the world built to date. In December 2013, SOCAR and its partners signed a Final Investment Decision (FID) to establish a gas pipeline corridor from Azerbaijan through Georgia, Turkey, Greece, and Albania before ending in Italy. A branch pipeline is now under construction to Bulgaria, which is expected to be completed in the second half of 2021. In July 2018, the project supplied its first gas to the Turkish market and went on to change the dynamics of that country’s gas market, whereby Azerbaijan is now one of its top gas suppliers. On December 31st, 2020, inaugural commercial gas supplies arrived from the Caspian into Europe, signaling the commencement of the Southern Gas Corridor’s full operations. For Azerbaijan, the Southern Gas Corridor provides a major source of revenue unlinked to the global oil market; the project also strengthens Baku’s links with its neighbors and Europe. For SOCAR—as operator of components of the project and investor in all its segments—the project’s success represents a major step in the company’s transition from a national to an international energy company. The Southern Gas Corridor provides new gas supplies to Turkey, Georgia, and Europe and is a platform for increased supplies to these markets and also can be extended to reach additional markets in Europe. With the completion of the first stage of the Southern Gas Corridor, Azerbaijan and SOCAR, together with their partners, are examining strategies for the next phase of the corridor’s development.
Topic:: Energy Policy, International Trade and Finance, Natural Resources, and Gas
Political Geography:: Europe, Asia, and Azerbaijan

48. Beijing’s Long Way to the Gulf Region Oil, Security, Geopolitics

Author:: Fuad Shahbazov
Publication Date:: 04-2021
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: Energy cooperation has been a key aspect of growing bilateral cooperation between China and the Arab states of the Gulf region for the past several years. Since 1996, China has become a net importer of crude oil and, as the second‑largest energy consumer in the world after the United States, is now the third‑largest importer of oil after the United States and Japan. Therefore, it should not come as a surprise that China is eying a deep and strategic partnership with the states of a region that sits on top of the world’s largest proven crude oil and natural gas reserves. The deepening political and economic cooperation between China and the member states of the Gulf Cooperation Council (GCC) has received increasing attention from the region’s more established strategic players: foremost the United States, but also the UK as well as the EU and some of its member states. Indeed, the region’s apparent geopolitical challenges— such as the American withdrawal from the Middle East, the escalation of sectarian wars in the region, the outbreak and development of the Syrian conflict followed by the spread of Islamic radicalism and similar threats—have encouraged the Arab states in the Gulf (as well as Iran) to look more to the East for new reliable partners. This has provided China with an opportunity to obtain a foothold in the region, which sits adjacent to the Silk Road region and is therefore of significant and lasting interest to readers of Baku Dialogues. With the rapid growth of its economy and consequent heightened energy demands, China is viewed as a potential investor by the oil rich GCC states, each of which needs to diversify its economy. Ongoing Western sanctions directed against Iran also make China an attractive proposition for Tehran. Although the Chinese interest in, and policy towards, the region is increasingly complex, this new axis between the Gulf region (especially the Arab half) and China has not received much attention from the think tank and academic communities—at least in the West.
Topic:: Security, International Cooperation, International Trade and Finance, Oil, Natural Resources, Hegemony, and Energy
Political Geography:: China, Asia, and Gulf Nations

49. Development or Regression? Eurasia’s Investment Attractiveness

Author:: Stanislav Pritchin
Publication Date:: 04-2021
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: In 2021 the countries of Central Asia and the South Caucasus—some call it Eurasia, other the Silk Road region—will celebrate thirty years of independence. Theoretically, this period should have provided sufficient time for each to have formed a new economic model, set and at least partially attain long‑term development goals, and developed a foreign policy model for optimal interaction with investors, including foreign ones. However, the experience of the post‑Soviet republics under consideration in this essay, which does not aspire to be comprehensive but should rather be considered a preliminary assessment, indicates that independence is neither a prerequisite for successful development nor one that centers of achieving a sustainable increase in popular welfare. Despite the fact that in 1991 standards of living and educational and economic attainment in the Soviet republics that are examined in this essay were approximately similar, after three decades of independent development the countries under consideration have been significantly stratified in terms of national wealth, types of political and social systems, and the specifics of their economic activities.
Topic:: International Cooperation, International Trade and Finance, Regionalism, and Silk Road
Political Geography:: Europe and Asia

50. The COVID-19 Pandemic and the World Trade Network

Author:: Kozo Kiyota
Publication Date:: 03-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Global trade is expected to suffer a significant contraction as a result of the COVID-19 pandemic. Did the relative importance of countries in the world trade network change as a result of the pandemic? The answer to this question is particularly important for Association of Southeast Asian Nations (ASEAN) countries because of their strong trade linkages with China, where the COVID-19 virus originated. This paper examines how the world trade network has changed since the COVID-19 pandemic, with a particular focus on ASEAN countries. Tracking the changes in centrality from January 2000 to June 2020, we find no evidence that centrality changed significantly after the pandemic started for most ASEAN countries. Our results suggest that the relative importance of the ASEAN countries in the world trade network is unchanged and will remain unchanged even after the pandemic.
Topic:: Globalization, International Trade and Finance, Pandemic, and COVID-19
Political Geography:: Asia and Southeast Asia

51. The COVID-19 Pandemic, Air Transport Perturbation, and Sector Impacts in ASEAN Plus Five: A Multiregional Input–Output Inoperability Analysis

Author:: Tamat Sarmidi, Norlin Khalid, Sufian Jusoh, and Muhamad Rias K.V. Zainuddin
Publication Date:: 04-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This study simulates the sector impacts of demand-side perturbations on air transport sectors due to the COVID-19 pandemic, focusing on ASEAN members plus Australia, China, Japan, the Republic of Korea, and New Zealand. This study involves (i) the generation of a multiregional input–output table from the latest Global Trade Analysis Project data, (ii) a network analysis to determine the importance of the air transport industry in each country, (iii) multiplier and linkages analyses, (iv) determinations of sector impacts from demand-side perturbations on air transport sectors due to the COVID-19 pandemic, and (v) simulation of the effect of fiscal and monetary measures to mitigate the pandemic’s impact. This study demonstrates that the aviation industry is a key sector in domestic and regional economic activities, and the reduction in air transport consumer demand due to the pandemic is estimated to cause gross domestic product (GDP) reductions from 0.4% to 2.1%. Government intervention, through fiscal and monetary policies, has, however, mitigated severe impact, moderating GDP and value-added losses. Thus, a viable policy prescription for the aviation industry is of utmost importance.
Topic:: Globalization, International Trade and Finance, Pandemic, COVID-19, and Travel
Political Geography:: Asia and Southeast Asia

52. Facilitating Trade in Pharmaceuticals: A Response to the COVID-19 Pandemic

Author:: Ben Shepherd
Publication Date:: 04-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper reviews trade in pharmaceutical products, focusing on ASEAN countries. Trade in this sector is of singular policy importance as a result of the COVID-19 pandemic. First, the paper shows that pharmaceuticals are traded within Global Value Chains, which in turn means that international linkages are complex. Second, the paper shows that policy reforms can help boost trade in the sector, which has important human development implications during the pandemic period.
Topic:: Globalization, International Trade and Finance, Pandemic, Global Value Chains, COVID-19, and Pharmaceuticals
Political Geography:: Asia and Southeast Asia

53. East Asian Production Networks Amidst the COVID-19 Shock

Author:: Ayako Obashi
Publication Date:: 06-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: In the East Asian context, previous studies showed that trade occurring through production networks remained relatively steady amidst an economic shock and recovered faster and stronger once the shock was over. Using finely disaggregated product-level monthly bilateral trade data, we examine whether network trade in the East Asian region has been robust and resilient in face of the COVID-19 crisis, as well as in normal times, by conducting a series of survival analyses. We find a new set of empirical evidence suggesting the robustness of East Asian network trade in normal times and its resilience even amidst the COVID-19 shock.
Topic:: International Trade and Finance, Public Health, Pandemic, COVID-19, and Production
Political Geography:: East Asia, Asia, and Southeast Asia

54. The Effect of Non-Tariff Measures on Global Value Chain Participation

Author:: Upalat Korwatanasakul
Publication Date:: 06-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This study examines the impact of non-tariff measures (NTMs) on global value chain (GVC) participation and the underlying mechanisms. Our study employs a novel approach using an additional compliance requirement indicator as a relative proxy for NTMs to measure their impact on GVC participation. We conduct a cross-sectional analysis at the industry level, spanning 19 industrial sectors in 30 countries in 2015. We combine our additional compliance requirement indicator dataset calculated from NTM data in the Trade Analysis Information System, with our dataset on trade in value added estimated from the Organisation for Economic Co-operation and Development Inter-Country Input–Output Table. Our analysis finds that, while NTMs and tariffs both negatively impact backward GVC participation, the impact of NTMs is greater than that of tariff measures. Moreover, the estimated results show that inward foreign direct investment is positively associated with backward GVC participation. Therefore, policies that reduce trade costs from policy barriers, especially NTMs, and attract more foreign direct investment can help promote GVC participation.
Topic:: Globalization, International Trade and Finance, Industry, Global Value Chains, and Non-Tariff Measures
Political Geography:: Asia and Southeast Asia

55. The Effects of SPSs and TBTs on Innovation: Evidence from Exporting Firms in Viet Nam

Author:: Duc Anh Dang and Vuong Anh Dang
Publication Date:: 06-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBTs) in destination markets may affect firms’ performance. In this paper, we examine how meeting foreign standards affects exporting firms’ innovation, reflected in the product quality, production processes, skills, and technological acquisition. The analysis relies on official regulations on non-tariff measures released by the United Nations Conference on Trade and Development (UNCTAD) and panel data for manufacturing firms in Viet Nam during 2013–2015. To correct for the potential endogeneity of SPS measures and TBTs and measurement errors, we use the number of SPS measures and TBTs imposed on other Association of Southeast Asian Nations (ASEAN) Member States as an instrument variable. Our results indicate that a higher number of SPS measures and TBTs applied by destination countries increases the probability of Vietnamese exporting firms’ skill acquisition. SPS measures also have higher positive impacts on product quality improvement and skill acquisition in the food processing sector. The SPS measures and TBTs have larger impacts on small firms than large firms. Foreign firms tend to acquire more technology and skills than domestic firms when facing SPS measures and TBTs by importing countries. Higher SPS measures and TBTs have more effects on the probability of acquiring skills by state-owned firms. However, the propensity of product quality and technological acquisition of non-state firms is much higher than that of state-owned firms when facing a greater level of SPS measures and TBTs.
Topic:: International Trade and Finance, Science and Technology, Governance, Innovation, and Trade
Political Geography:: Asia and Southeast Asia

56. Potential for India’s Entry into Factory Asia: Some Casual Findings from International Trade Data

Author:: Mitsuyo Ando, Kenta Yamanouchi, and Fukunari Kimura
Publication Date:: 06-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Despite its impressive economic growth in the past few decades, India is slow in adopting a task-by-task international division of labour or international production networks (IPNs). Using international trade data for international comparison from multiple angles, this paper visualises the position of India – particularly in machinery IPNs and information and communication technology (ICT) services. Although machinery industries are at the centre of IPNs in East Asia, the paper clearly visualises that India has not yet participated in Factory Asia. Rather, trade data indicate that India is still engaged in import-substituting industrialisation. The paper also argues that ICT services are a strength for the Indian economy, and its competitiveness could be utilised effectively by combining new technologies with traditional industries such as manufacturing. India still has huge potential for utilising the mechanics of a new international division of labour to accelerate economic growth, innovation, and poverty alleviation.
Topic:: Globalization, International Trade and Finance, Labor Issues, Manufacturing, Industry, and Global Value Chains
Political Geography:: India and Asia

57. Is the COVID-19 Pandemic Recasting Global Value Chains in East Asia?

Author:: Nobuaki Yamashita and K. Fukasaku
Publication Date:: 07-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper assesses how the current COVID-19 pandemic is shaping global value chains in East Asia after the formidable disruptions inflicted by the health crisis. Some have expressed the view that global value chains would readjust and production processes would move home, i.e. reshoring, facilitated by the recent movement of protectionism measures in the post-pandemic world. We evaluate such concerns and examine the role of policy with a focus on non-tariff measures in East Asia.
Topic:: Globalization, International Trade and Finance, Pandemic, Global Value Chains, and COVID-19
Political Geography:: East Asia and Asia

58. East Asian Integration and Its Main Challenge: NTMs in Australia, China, India, Japan, Republic of Korea, and New Zealand

Author:: Yan Lili Ing and Grace Hadiwidjaja
Publication Date:: 07-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: While East Asia has been moving forward with its regional integration agenda, one main challenge remains and is growing – non-tariff measures (NTMs). Animal, vegetable, and food products tend to be more regulated than other products, largely due to quality and safety standards. NTMs affect 66%–98% of total trade in those sectors. Our paper presents the frequency index, coverage ratio, and prevalence score to measure NTMs in the region. They are highest amongst food, vegetable, and animal products; and vary amongst other products, depending on the economy. We find that the high frequency index of NTMs does not necessarily translate to a high value of coverage ratio for trade. One explanation could be that countries tend to regulate imported goods which compete with the domestic products more than imported goods which they need.
Topic:: Globalization, International Trade and Finance, Regional Cooperation, Tariffs, Non-Tariff Measures, and Economic Integration
Political Geography:: Japan, China, India, Asia, South Korea, Australia, Southeast Asia, and New Zealand

59. Feeling the Pulse of Global Value Chains: Air Cargo and COVID-19

Author:: Christopher Findlay, Hein Roelfsema, and Niall Van De Wouw
Publication Date:: 07-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper focuses on air cargo market development, with special attention to the connections between countries in Asia, the European Union, and the United States. Before the coronavirus disease (COVID-19) crisis, we show that participation in global value chains played a crucial role in how countries in Asia increased their exposure to the European Union market, which was hit hardest by the COVID-19 crisis. Analysing the effects of the crisis in 2020- using a fuzzy set complexity approach and recent high-frequency data on air cargo transport - we show that such demand effects, together with domestic contraction conditions, explain a large share of variation in air cargo dynamics across countries in Asia. However, we also show that implementing best practices in pandemic control positively impacts air cargo recovery for countries that cannot rely on export market rebounds. After reviewing the convergence in air cargo business models since 2010, the paper continues to assess recovery options. The main conclusion is that business models will converge on long haul point-to-point models that combine passengers and cargo, moving away from the current hub and spoke system.
Topic:: Globalization, International Trade and Finance, Pandemic, Global Value Chains, and COVID-19
Political Geography:: Asia and Southeast Asia

60. Exploring Digital Economic Agreements to Promote Digital Connectivity in ASEAN

Author:: Sarah Y. Tong, Yao Li, and Tuan Yuen Kong
Publication Date:: 07-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper explores modules and articles on cooperation concerning the digital economy that are applicable for Association of Southeast Asian Nations (ASEAN) countries under certain circumstances. It investigates the progress of and obstacles to ASEAN’s digital connectivity, as well as features of existing Digital Economic Agreements and digital economy-related articles in other agreements. We propose the use of a differentiated strategy and steps to promote integration for ASEAN countries covered in this research.
Topic:: Economics, Globalization, International Trade and Finance, Digital Economy, and Digitalization
Political Geography:: Asia and Southeast Asia

61. Technical Barriers to Trade and the Performance of Indian Exporters

Author:: Pavel Chakraborthy and Rahul Singh
Publication Date:: 08-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: We study the effects of technical barriers to trade (TBTs) imposed by destination markets on prices, marginal costs, and markups of Indian manufacturing exporters. Using detailed firm-product-level data on prices and production from PROWESS, we first identify the underlying component of prices (i.e. marginal costs and markups), and use those as our outcomes of interest in the second stage. We find that (i) introduction of TBTs by importing countries increases marginal costs by 5% and prices by 4%, (ii) there is considerable heterogeneity based on exporters’ initial productivity, (iii) productive exporters (those belonging to the lower deciles) experienced an increase in marginal costs and decrease in markups compared to low productivity exporters, and (iv) overall effects are driven by private firms (both domestic and foreign) belonging to intermediate input industries.
Topic:: Globalization, International Cooperation, International Trade and Finance, and Exports
Political Geography:: India and Asia

62. Effective Rates of Protection in a World With Non-Tariff Measures and Supply Chains: Evidence from ASEAN

Author:: Ben Shepherd
Publication Date:: 08-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The concept of effective rate of protection expresses protection on a sector’s final output relative to protection affecting its inputs. As such, it is well adapted to analysing the effects of trade policy from a supply chain standpoint. This paper makes two contributions to the literature on effective rates of protection. First, it draws on the literature on trade in value added to highlight an alternative to the traditional measure that better accounts for supply chain trade by considering both direct and indirect input use. Second, it includes data on ad valorem equivalents of non-tariff measures, which are increasingly important as trade policy instruments. In an analysis covering 17 aggregate goods sectors, I find that average tariff only effective rates of protection in ASEAN averaged 6.9% and ranged from zero to 23.4% in 2018. By contrast, effective rates including non-tariff measures averaged 14.0% and ranged from –6.2% to 44.0%. While patterns of escalation and even effective taxation differ substantially across sectors, most countries practice a tariff and NTM trade policy that is broadly neutral between input and output sectors, but which causes low to moderate isolation from world markets. Given the complexity of tariffs and NTMs from a supply chain perspective, there would likely be reductions in economic waste accompanying substantial simplification.
Topic:: Economics, Globalization, International Cooperation, International Trade and Finance, Protectionism, Non-Tariff Measures, and Supply Chains
Political Geography:: Asia and Southeast Asia

63. Reconciling Tax and Trade Rules in the Digitalised Economy: Challenges for ASEAN and East Asia

Author:: Jane Kelsey
Publication Date:: 08-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: As the digital economy expands in scale, scope, and form it poses major challenges for public revenue and tax policy and administration in Asia and other parts of the global South. When attempts led by developed countries at the OECD-led Inclusive Framework on Base Erosion and Profit Shifting (BEPS) to agree on new norms for taxing digital giants like Facebook, Google, and Amazon stalled, individual countries, including a number of developing countries in Asia, began developing their own responses, notably the adoption of digital services taxes. High-level compromises have recently been announced at the OECD, but the details are yet to come and are not expected to address the needs of developing countries to effectively tax the activities of digital giants operating from offshore. As countries seek effective and workable means to tax the digitalised economy, existing and proposed international rules on digital trade in free trade agreements, and plurilateral moves to develop electronic commerce rules in the World Trade Organization, may fetter their ability to do so. To date, very little attention has been paid in trade negotiations to the consequences of these developments for countries’ tax regimes. Nor have the adequacy, effectiveness, and workability of the tax exceptions in trade and investment agreements been properly re-assessed. Many governments are only becoming aware that trade rules may constrains their ability to regulate the (poorly understood and fast moving) digital domain after they have signed up to them. A series of investigations by the US government under Section 301 of the US Trade Act 1974 into digital services taxes, including those adopted by India and proposed by Indonesia, provides a real-world basis on which to assess how binding and enforceable digital trade rules might be used to challenge digital tax measures at the unilateral, bilateral, and multilateral levels. In highlighting these risks, the paper aims to provide a framework for the tax and trade divisions of governments in ASEAN and East Asia to reflect together on the potential for proposed digital trade rules to impact negatively on their public revenue.
Topic:: International Cooperation, International Trade and Finance, Digital Economy, Tax Systems, Commerce, and Digitalization
Political Geography:: Asia and Southeast Asia

64. The EU–China Comprehensive Agreement on Investment: Lessons Learnt for Indonesia

Author:: Yan Lili Ing and Junianto James Losarili
Publication Date:: 08-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The European Union (EU) and China have recently reached an agreement: the EU–China Comprehensive Agreement on Investment (CAI). As one of the most recent investment agreements concluded by the EU, the paper aims to assess specific concessions made in the agreement, and provides lessons learnt for Indonesia on the ongoing negotiations of the Indonesia–EU free trade agreement, the Comprehensive Economic Partnership Agreement (IEU CEPA). The paper will present an overview of the main areas covered under the CAI, assess the potential impacts of the CAI on EU investment into Indonesia, and set out lessons that can be learnt from the CAI.
Topic:: Economics, International Cooperation, International Trade and Finance, European Union, and Investment
Political Geography:: China, Europe, Indonesia, and Asia

65. COVID-19, Air Transportation, and International Trade in the ASEAN+5 Region

Author:: Anming Zhang, Xiaoqian Sun, Sebastian Wandelt, Yahua Zhang, Shiteng Su, and Ronghua Shen
Publication Date:: 09-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper provides an in-depth description of the coronavirus disease (COVID-19) pandemic and its interactions with air transportation in the Association of Southeast Asian Nations (ASEAN)+5 region, and then links the changes in air connectivity to trade using a gravity regression model. We find that almost all the countries probably reacted too late in their decision to reduce flights in the early stage of the pandemic. As the pandemic evolved, most countries have significantly cut the number of flight connections, especially international flights. The reduced connectivity is found to have a significantly negative impact on trade for time-sensitive merchandise that is essential to consumers and businesses. This points to the importance of the region seeking alternative arrangements to restore air connectivity. We offer a way to construct optimal travel bubbles by using risk indexes introduced here. Other policy issues such as uniform standards and regulations, and regional ‘open skies’, are also discussed.
Topic:: International Trade and Finance, Pandemic, COVID-19, and Travel
Political Geography:: Asia and Southeast Asia

66. The Trade Restrictiveness Index and Its Impact on Trade Performance in Selected East Asian Countries

Author:: Norlin Khalid, Muhamad Rias K.V. Zainuddin, Tamat Sarmidi, Sufian Jusoh, Faliq Razak, and Mohd Helmi Ali
Publication Date:: 09-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper aims to investigate the effect of non-tariff measures (NTMs) on trade in selected East Asian countries. In doing so, we first estimate the ad valorem equivalent (AVE) of NTMs and construct an augmented trade restrictiveness index (ATRI) by measuring the overall external regulations imposed by importing countries. Second, we analyse the effect of the AVE and trade restrictiveness index (TRI) of importing nations on the exports of various sub-sector products for each country in selected East Asian countries. Based on a standard gravity model framework, we perform a Poisson pseudo maximum likelihood (PPML) regression at the sectoral level (Harmonized System 2-digit) for total exports and major sub-sectors (agri-food, health, logistics, and manufacturing). The findings show that the ATRI has a negative and significant relationship towards bilateral exports for total exports, manufacturing, and logistics sub-sectors. The negative impacts of the ATRI also highlight that trade barriers play a significant role in bilateral exports. NTM restrictions (proxied by the calculated AVE of NTMs) imposed by importing countries have mixed results for technical and non-technical measures. Where technical measures have negative and significant impacts on bilateral exports for total exports, manufacturing, and health sub-sectors. This implies that implementation of technical NTMs such as sanitary and phytosanitary (SPS) and technical barrier to trade (TBT) measures in importing nations adversely affect bilateral exports for these sub-sectors. This is in line with our hypothesis, as exporters may face difficulties in meeting the current NTM specifications, leading to lower bilateral exports. In addition, the results show that most trade agreements have a positive and significant relationship with ASEAN and East Asia countries’ bilateral exports, suggesting that free trade agreements enhance trade between countries.
Topic:: Economics, Globalization, International Trade and Finance, and Non-Tariff Measures
Political Geography:: East Asia and Asia

67. Regulatory Distance, Margins of Trade, and Regional Integration: The Case of the ASEAN+5

Author:: Chandran Govindaraju, Neil Foster-McGregor, and Evelyn Shyamala Devadason
Publication Date:: 09-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper measures regulatory distance in non-tariff measures (NTMs) to examine the regulatory distance patterns and how the margins of trade respond to regulatory distance for the ASEAN+5 economies (the 10 Association of Southeast Asian Nations Member States plus Australia, China, India, Japan and New Zealand). It decomposes the margins of trade and regulatory distance by sector (agriculture and manufacturing) and NTM type (technical, non-technical, sanitary and phytosanitary (SPS), technical barriers to trade (TBTs), and pre-shipment inspections and other measures) for the 15 countries. At the country level, the results indicate a varying regulatory distance amongst the ASEAN+5 countries. Regulatory implementation also varies by sector and by the type of measure. Within sectors, SPS regulatory distance is higher in the agriculture sector, while for manufacturing, the regulatory distance in TBTs is higher. Notably, few countries recorded a higher regulatory distance for non-technical measures and pre-shipment inspections. Interestingly, for the ASEAN region, there seems to be no evidence supporting a reduction in regulatory distance from 2015 to 2018, despite efforts to harmonise NTMs since 2015. The results indicate that regulatory distance largely has a trade-reducing effect along the trade margins within ASEAN+5 bilateral trade. Technical measures have a greater trade-reducing effect than other measures along extensive and intensive trade margins – specifically SPS in the agriculture sector and TBTs in the manufacturing sector. Notably, there is also evidence of non-technical measures and pre-shipments and other formalities impacting trade along extensive margins, despite efforts to establish trade facilitation. The paper also describes some policy implications.
Topic:: Economics, International Cooperation, International Trade and Finance, Regulation, and Regional Integration
Political Geography:: Asia and Southeast Asia

68. Robustness and Resilience of Supply Chains During the COVID-19 Pandemic: Findings from a Questionnaire Survey on the Supply Chain Links of Firms in ASEAN and India

Author:: Yasuyuki Todo, Keita Oikawa, Masahito Ambashi, Fukunari Kimura, and Shujiro Urata
Publication Date:: 09-2021
Content Type:: Research Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Using a unique firm-level data set from the Association of Southeast Asian Nations (ASEAN) and India collected from November 2020 to February 2021, this paper examines how the robustness and resilience of supply chain links – i.e. maintaining links and substituting another for a disrupted partner, respectively – were determined when firms faced economic shocks due to the spread of the coronavirus disease (COVID-19). Focusing on the role of the characteristics of firms’ supply chains, we find that homophily, i.e. the tendency to form a group with similar agents, was often associated with the robustness of supply chain links, most likely because of the strength of homophilous ties. In particular, when a foreign-owned firm had a supply chain link with a firm located in the same country as its home country, the link was quite robust. We also find that the geographic diversity of customers and suppliers creates resilience of supply chains. When the demand or supply from a partner of a firm was disrupted because of COVID-19, the firm likely mitigated the damage from the disruption through substitution of partners if its supply chains were well diversified across countries. In addition, larger or younger firms tended to be resilient and robust. The robustness and resilience of supply chains are found to have led to higher performance.
Topic:: Globalization, International Trade and Finance, Pandemic, Resilience, COVID-19, and Supply Chains
Political Geography:: India, Asia, and Southeast Asia

69. China's Ties with Southeast Asia : From Green Shoots to Sustained Recovery

Author:: Kensuke Tanaka
Publication Date:: 01-2021
Content Type:: Policy Brief
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: China's rebound happened relatively quickly owing to a large extent to timely macroeconomic policy responses to the crisis. Lagging somewhat behind China, most Southeast Asian countries have now entered the transition from recession to recovery. Some export-dependent Southeast Asian countries shifted their export destination to China to benefit from its early recovery. This switch of export destination to China illustrates China's important role in leading the recovery of the region. Enhancing regional macroeconomic co-operation would help reduce vulnerability of the region and ensure a sustained recovery. Regional macroeconomic co-operation remains at an early stage in Southeast Asia, but possibilities for further co-operation should be explored.
Topic:: Development, Economics, International Cooperation, International Trade and Finance, and Economic Recovery
Political Geography:: China, Asia, and Southeast Asia

70. What Is Drawing Xi’s China and Lukashenko’s Belarus Closer?

Author:: Solomiya Kharchuk
Publication Date:: 01-2021
Content Type:: Journal Article
Journal:: Polish Political Science Yearbook
Institution:: Polish Political Science Association (PPSA)
Abstract:: What are the primary drivers of the relationship between Xi’s China and Lukashenko’s Belarus? The present research paper uses the historical process-tracing method to provide an answer to this question. Furthermore, it uses quantitative data analysis regarding the economic intercourse between Belarus and China. It examines whether China’s opposition regarding the unipolar American-led world order and Belarus’s security concerns are the primary drivers of the relationship between Minsk and Beijing. The present article concludes that the congruence of beliefs and Minsk’s desire to ensure survival are drawing the two countries closer together. China’s new strategy encompasses Beijing’s increasing participation in world affairs. China opposes the world order led by a single hegemon, the United States of America. In the interim, Belarus, a relatively weak state insignificant in the global balance of power, shares Beijing’s beliefs about the desired nature of the contemporary world order. However, the Belarusian economy’s condition, which relies heavily on external funding, does not allow the economic cooperation between Minsk and Beijing to thrive. China gradually increases its engagement with Belarus, yet it obscures its ambitions, for Minsk lies in Moscow’s sphere of influence.
Topic:: International Cooperation, International Trade and Finance, Infrastructure, Hegemony, and Belt and Road Initiative (BRI)
Political Geography:: China and Asia

71. Gains Associated with Linking the EU and Chinese ETS under Different Assumptions on Restrictions, Allowance Endowments, and international Trade

Author:: Malte Winkler, Sonja Peterson, and Sneha Thube
Publication Date:: 05-2021
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Linking the EU and Chinese Emission Trading Systems (ETS) increases the cost-efficiency of reaching greenhouse gas mitigation targets, but both partners will benefit – if at all – to different degrees. Using the global computable-general equilibrium (CGE) model DART Kiel, we evaluate the effects of linking ETS in combination with 1) restricted allowances trading, 2) adjusted allowance endowments to compensate China, and 3) altered Armington elasticities when Nationally Determined Contribution (NDC) targets are met. We find that generally, both partners benefit from linking their respective trading systems. Yet, while the EU prefers full linking, China favors restricted allowance trading. Transfer payments through adjusted allowance endowments cannot sufficiently compensate China so as to make full linking as attractive as restricted trading. Gains associated with linking increase with higher Armington elasticities for China, but decrease for the EU. Overall, the EU and China favor differing options of linking ETS. Moreover, heterogeneous impacts across EU countries could cause dissent among EU regions, potentially increasing the difficulty of finding a linking solution favorable for all trading partners.
Topic:: Climate Change, Environment, International Trade and Finance, Regional Cooperation, and European Union
Political Geography:: China, Europe, and Asia

72. EU-China Investment Agreement: the EU’s Balancing Act between Values and Economic Interests

Author:: Saila Turtiainen
Publication Date:: 03-2021
Content Type:: Commentary and Analysis
Institution:: Finnish Institute of International Affairs
Abstract:: The ratification process for the EU’s new investment agreement with China is expected to be very difficult. Although the aim is to improve EU-China relations, the process of getting the agreement approved in the EU will end up causing further tensions with China as the EU tries to strike a balance between promoting its values and economic interests.
Topic:: International Cooperation, International Trade and Finance, European Union, Conflict, and Economic Cooperation
Political Geography:: China, Europe, and Asia

73. China and Geoeconomic Dynamics in Central Asia: Balancing Global Strategies, Local Interests and Multiple Partners

Author:: Aliya Tskhay
Publication Date:: 10-2021
Content Type:: Working Paper
Institution:: Finnish Institute of International Affairs
Abstract:: Central Asia is at the core of China’s ambitious Belt and Road Initiative (BRI), which promises to bring connectivity, trade, and improved infrastructure, as well as overall economic development to the states of the region. Yet beyond the official rhetoric, China is promoting its power through geoeconomic means. This paper looks at areas of cooperation (energy, infrastructure, trade, and finance) and identifies the ways in which China is involved with the region. Through a combination of loans, investments, and infrastructure projects, the research shows how China ‘binds’ the region closer to itself and ‘wedges’ out alternative partners. It also shows how Central Asian states utilise the funding within the BRI framework for national development programmes, whilst navigating avenues for mitigating the establishment of a dependent relationship with China. The paper concludes with some policy implications for China, Central Asia, and the wider region.
Topic:: Development, International Trade and Finance, Infrastructure, Hegemony, Belt and Road Initiative (BRI), and Strategic Interests
Political Geography:: China and Asia

74. Institutional Quality, Trade Openness and Economic Growth in South Asian Economies: Some New Insights from a Panel Data Analysis

Author:: Hafiz Muhammad Qasim, Abdul Majid, and Atif Jadoon
Publication Date:: 01-2021
Content Type:: Journal Article
Journal:: South Asian Studies
Institution:: Department of Political Science, University of the Punjab
Abstract:: The main aim of the present study is to empirically investigate into the question whether the Institutional Quality (IQ) and Trade Openness (TO) are competitors or complements in Economic Growth (EG) in case of sample South Asia Economies; “India, Bangladesh, Pakistan, and Sri Lanka”. The panel data for the period of 1984-2018 has been utilized. The Fixed Effects Model (FEM) estimation technique has been applied for empirical investigation. The empirical results of FEM confirm the positive and statically significant impact of IQ and Interaction Term on Economic Growth in sample countries. The positive significant results strongly supported the hypothesis of this study, the IQ and TO are complements in EG in the case of sample SAE. The IQ measure has also established positive and significant effects on EG while the TO has a negative impact. Based on empirical findings, this study recommends that the policymakers of sample countries should make policies that strengthen the IQ, in order to improve trade and, consequently, the EG.
Topic:: International Trade and Finance, Economic Growth, Institutions, and Economic Theory
Political Geography:: South Asia and Asia

75. The Economic Effects of Multinational Corporation Withdrawal and Policy Implications

Author:: Minsoo Han, Hyuk-Hwang Kim, Hyelin Choi, Danbee Park, and Jisu Kim
Publication Date:: 03-2020
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The shutdown of the GM Koreas Gunsan plant in May 2018 heightened social interest in the withdrawal of mutlinational corporations (MNCs). Against this backdrop, the forthcoming research The economic effects of multinational corporation withdrawal and policy responses studies the previous cases of MNC withdrawal, estimates the effects on labor market., and provides policy directions to address to the withdrawal. This note summarizes some of its important results.
Topic:: International Trade and Finance, Economy, Multinational Corporations, and Economic Policy
Political Geography:: Asia and Korea

76. Potential Implications of Regional Comprehensive Economic Partnership to India-South Korea Bilateral Trade Ties

Author:: Surendar Singh
Publication Date:: 01-2020
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: India and South Korea enjoy strong economic and trade relations, shaped by a significant convergence of interest, mutual good will and high-level diplomatic exchange. Bilateral trade between the two countries has also increased after signing the Comprehensive Economic Partnership (CEPA). However, the overall trade balance is in favor of South Korea due to superior comparative advantage of Korea in manufacturing as compared to India. South Korean exports are high technology-intensive while India’s exports are low-value raw material and intermediate products. Both countries are members to a mega regional trade pact – the Regional Comprehensive Economic Partnership. Though India has decided to not join the RCEP at this stage it will continue the discussion to explore possible ways to join it. Assuming that India will join the RCEP sooner or later, it is important to analyze the potential impact of the RCEP to India-South Korea bilateral trade ties. This short policy paper compares the proposed provisions of the RCEP and CEPA. It shows that the RCEP is much more comprehensive an agreement compared to the CEPA, both in terms of coverage and scope. It also provides some insights on the likely implications of the RCEP, especially from the perspective of trade with China factored against the bilateral trade ties between India and South Korea.
Topic:: International Trade and Finance, Bilateral Relations, Partnerships, and Economic Cooperation
Political Geography:: South Asia, India, Asia, and South Korea

77. Estimating the Arms Sales of Chinese Companies

Author:: Nan Tian and Fei Su
Publication Date:: 01-2020
Content Type:: Working Paper
Institution:: Stockholm International Peace Research Institute
Abstract:: Quantitative research on the finances of the Chinese arms industry has been limited by the scarcity of available data. A scoping study to estimate the financial value of the arms sales of companies in the Chinese arms industry—using a new methodology—found information on four companies: the Aviation Industry Corporation of China (AVIC), the China Electronics Technology Group Corporation (CETC), the China South Industries Group Corporation (CSGC) and the China North Industries Group Corporation (NORINCO). These four companies cover three main sectors of conventional arms production: aircraft, electronics and land systems. The estimates suggest that China is the second-largest arms producer in the world, behind the United States and ahead of Russia. All four of the profiled companies would be ranked among the 20 largest arms-producing and military services companies globally in 2017, with three—AVIC, NORINCO and CETC—in the top 10. The new methodology improves the understanding of the structure, size and evolution of the global arms industry.
Topic:: International Trade and Finance, Weapons, Arms Trade, and Military Spending
Political Geography:: China and Asia

78. Input Allocation Behaviour on Tariff Changes: The Case of Indonesia’s Manufacturing Industries

Author:: Samuel Nursamsu, Dionisius Narjoko, and Titik Anas
Publication Date:: 02-2020
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Can firms reallocate their imported inputs to domestic sources when faced with import tariffs? To answer this question, we analyse the input allocation behaviour of Indonesian medium and large-sized manufacturing firms in responding to the movement of import tariffs from 2000 to 2013 by utilising plant-level input data of Indonesian manufacturing. We find that an increase in tariffs only creates a weak substitution effect. Our findings indicate that firms reallocate their inputs towards domestic sources, although this is accompanied by a decrease in the firms’ value added. This implies that domestic inputs are worse substitutes for imported inputs and that firms’ capacity to switch over to domestic products is limited, suggesting that firms will immediately switch back to importing when the tariff is removed. We find no evidence that firms make any adjustment towards more domestic-oriented input composition over time; and heterogeneity exists within the result, as industries with a strong basis in the domestic market are more capable of adjusting.
Topic:: Industrial Policy, International Trade and Finance, Tariffs, and Manufacturing
Political Geography:: Indonesia and Asia

79. Learning-to-Export Effect as a Response to Export Opportunities: Micro-Evidence from Korean Manufacturing

Author:: Chin Hee Hahn and Yong-Seok Choi
Publication Date:: 02-2020
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper aims to investigate whether empirical evidence supports the learning-to-export hypothesis, which has received little attention in the previous literature. By taking full advantage of plant–product level data from the Republic of Korea during 1990–1998, we find some evidence for the learning-to-export effect, especially for innovated product varieties with delayed exporters: their productivity, together with research and development and investment activity, was superior to their matched sample. On the other hand, this learning-to-export effect was not significantly pronounced for the industries protected by import tariffs. Thus, our empirical findings suggest that it would be desirable to implement some policy tools to promote the learning-to-export effect, while tariff protection cannot be justifiable for that purpose.
Topic:: Industrial Policy, International Trade and Finance, Tariffs, Manufacturing, and Productivity
Political Geography:: Asia and South Korea

80. Labour Market Impacts of Import Penetration from China and Regional Trade Agreement Partners: The Case of Japan

Author:: Kazunobu Hayakawa, Tadashi Ito, and Shujiro Urata
Publication Date:: 04-2020
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The impacts of imports on the domestic labour market have been hotly debated recently. The purpose of this paper is to empirically examine the effects of not only imports from China but also those under regional trade agreements (RTAs) on employment in Japan. As in previous studies in the literature, we found that the rise in import penetration from China significantly decreases employment in Japan. However, import penetration under RTA regimes is found to have insignificant effects on employment. The finding suggests that the increase in imports under RTA regimes might not be harmful to the domestic labour market. In addition, we did not find significant effects of import penetration via input–output linkages. This insignificant result may be because imports by Japanese manufacturing firms are mostly conducted in the form of intra-firm trade, enabling them to avoid negative impacts on employment.
Topic:: International Trade and Finance, Regional Cooperation, Labor Issues, Employment, and Manufacturing
Political Geography:: Japan, China, and Asia

81. Trade Reform and the Evolution of Agglomeration in Vietnamese Manufacturing

Author:: Đoàn Thi Thanh Ha and Hông Quỳnh Nguyen
Publication Date:: 04-2020
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: It is well-documented that agglomeration contributes to productivity growth. However, concentrations of workers could also lead to increasing regional income disparities. Therefore, understanding the evolution of agglomeration is relevant for the formulation of industrial policy and inclusive growth. This study documents the extent, pattern, and determinants of agglomeration in Vietnamese manufacturing during 2002–2016, a period when substantial economic reform took place. Our major findings are three-fold. First, agglomeration, as measured by the Ellison–Glaeser index, has declined since the mid-2000s. Second, there exists significant sectoral heterogeneity in the level and trend of agglomeration. Third, we do not find a significant impact of trade and foreign direct investment on agglomeration per se. However, foreign direct investment in port districts does contribute to disagglomeration.
Topic:: International Trade and Finance, Reform, Manufacturing, and Productivity
Political Geography:: Asia and Vietnam

82. The Economic Impact of Globalisation in Indonesia

Author:: Kiki Verico and Mari Pangestu
Publication Date:: 08-2020
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper analyses the economic impact of globalisation in Indonesia from the end of the 1960s to date. The analysis found that globalisation generated a positive impact on Indonesia’s economic growth through the trade and investment channel; reduced wage inequality and child labour participation; and increased labour absorption, including women's participation in the labour market. Through the trade channel, globalisation also contributed to Indonesia’s productivity and structural economic transformation, benefited small and medium-sized enterprises (SMEs), contributed to poverty alleviation and reduced inequality, and increased trade in services such as tourism. Through the investment channel, there is evidence of the spillover effect of technology transfer, technology progress, improvement of the role of SMEs, and contribution to poverty alleviation. The waves of open and more restrictive trade and investment policies, which Indonesia has gone through in the last few decades, reflect the political economy reality – that is, the impact of globalisation is dynamic and only felt in the medium term, whereas the cost and potential negative impact is often felt more immediately throughout trade creation. The trade creation increases imports from countries with which free trade agreements have been negotiated, decreasing the domestic producer surplus. Since globalisation will create net benefits in the long run, Indonesia should continue its process of globalisation and integration with the world economy to ensure the net benefits and to move forward in its structural transformation, while managing the costs of globalisation and its transition process.
Topic:: Globalization, International Cooperation, International Trade and Finance, and Economic Growth
Political Geography:: Indonesia, Asia, and Indo-Pacific

83. Toward a Robust Architecture for the Regulation of Data and Digital Trade

Author:: Dan Ciuriak and Maria Piashkina
Publication Date:: 04-2020
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation
Abstract:: The rapid digital transformation occurring worldwide poses significant challenges for policy makers working within a governance framework that evolved over centuries. Domestic policy space needs to be redefined for the digital age, and the interface with international trade governance recalibrated. In this paper, Dan Ciuriak and Maria Ptashkina organize the issues facing policy makers under the broad pillars of “economic value capture,” “sovereignty” in public choice and “national security,” and outline a conceptual framework with which policy makers can start to think about a coherent integration of the many reform efforts now under way, considering how policies adopted in these areas can be reconciled with commitments under a multilateral framework adapted for the digital age.
Topic:: International Trade and Finance, Reform, Digital Economy, Multilateralism, and Digitization
Political Geography:: United States, China, Europe, Asia, and North America

84. The Importance of the Western Balkans in China’s Foreign Policy

Author:: Marcin Przychodniak
Publication Date:: 06-2020
Content Type:: Special Report
Institution:: The Polish Institute of International Affairs
Abstract:: China’s cooperation with the Western Balkans through the “17+1” format and Belt and Road Initiative (BRI), among others, is primarily political. In the economic sphere, Chinese investments are to a large extent only declarations, and trade is marginal in comparison to cooperation with the EU or others. China’s goals are to gain political influence in future EU countries and limit their cooperation with the U.S. Competition with China in the region requires more intense EU-U.S. cooperation, made more difficult by the pandemic.
Topic:: Foreign Policy, International Trade and Finance, Belt and Road Initiative (BRI), Investment, and Strategic Competition
Political Geography:: China, Europe, Asia, and Balkans

85. Tariffs and Monetary Policy: A Toxic Mix

Author:: Michael D Bordo and Mickey D. Levy
Publication Date:: 01-2020
Content Type:: Journal Article
Journal:: The Cato Journal
Institution:: The Cato Institute
Abstract:: The ratcheting up of tariffs and the Fed’s discretionary conduct of monetary policy are a toxic mix for economic performance. Escalating tariffs and President Trump’s erratic and unpredictable trade policy and threats are harming global economic performance, distorting monetary policy, and undermining the Fed’s credibility and independence. President Trump’s objectives to force China to open access to its markets for international trade, reduce capital controls, modify unfair treatment of intellectual property, and address cybersecurity issues and other U.S. national security issues are laudable goals with sizable benefits. However, the costs of escalating tariffs are mounting, and the tactic of relying exclusively on barriers to trade and protectionism is misguided and potentially dangerous. The economic costs to the United States so far have been relatively modest, dampening exports, industrial production, and business investment. However, the tariffs and policy uncertainties have had a significantly larger impact on China, accentuating its structural economic slowdown, and are disrupting and distorting global supply chains. This is harming other nations that have significant exposure to international trade and investment overseas, particularly Japan, South Korea, and Germany. As a result, global trade volumes and industrial production are falling. Weaker global growth is reflected in a combination of a reduction in aggregate demand and constraints on aggregate supply.
Topic:: International Trade and Finance, Monetary Policy, Economic Growth, Tariffs, and Industry
Political Geography:: Japan, China, Europe, Asia, South Korea, Germany, North America, and United States of America

86. The U.S.-China Trade War: Is There an End in Sight?

Author:: Simon Lester and Huan Zhu
Publication Date:: 01-2020
Content Type:: Journal Article
Journal:: The Cato Journal
Institution:: The Cato Institute
Abstract:: Donald Trump was a trade “hawk” long before he became president. In the late 1980s, he went on the Oprah Winfrey show and complained about Japan “beating the hell out of this country” on trade (Real Clear Politics 2019). As president, he has continued with the same rhetoric, using it against a wide range of U.S. trading partners, and he has followed it up with action (often in the form of tariffs). While many countries have found themselves threatened by Trump’s aggressive trade policy, his main focus has been China. As a result, the United States and China have been engaged in an escalating tariff, trade, and national security conflict since July 2018, when the first set of U.S. tariffs on China went into effect and China retaliated with tariffs of its own. In this article, we explore the U.S.-China economic conflict, from its origins to the trade war as it stands today. We then offer our thoughts on where this conflict is heading and when it might end.
Topic:: Economics, International Trade and Finance, Tariffs, Trade Wars, and Donald Trump
Political Geography:: China, Asia, North America, and United States of America

87. The Impact Of Covid-19 On Sino-African Trade Activities

Author:: Egoh Aziz
Publication Date:: 06-2020
Content Type:: Special Report
Institution:: The Nkafu Policy Institute
Abstract:: The recent outbreak of COVID-19 has caused waves of horror and anxiety across many nations in the world. Considering the intense unravelling of the pandemic, no exact figure as per the number of confirmed and death cases worldwide is definite because the situation changes almost every hour. However, on April 14, 2020 3:40 GMT, Worldometer reported 210 countries and territories across the globe having a total of 1,925,179 confirmed cases, and a dead toll of 119,699 deaths. The impact of the pandemic is disastrous globally affecting a variety of sectors including the service and supply chain, as well as trade, manufacturing, and tourism. This article aims to provide a synoptic assessment of the impact of COVID-19 on Sino-African trade activities. It stresses that, if African policymakers revamp their efforts to quickly address COVID-19, the human casualty will be less and African economic growth may experience lesser shock as previewed by the IMF. On the other hand, if they relent their efforts, the human casualty will soar while the growth rate may decline. The effect of COVID-19’s outbreak in China has caused a slowdown on exports and services directed towards China.According to statistics from the General Administration of Customs of China, in 2018, China’s total import and export volume with Africa was US$204.19 billion, a yearly increase of 19.7%, surpassing the total growth rate of foreign trade in the same period by 7.1 percentage points. Among these, China’s exports to Africa were US$104.91 billion, up 10.8% and China’s imports from Africa were US$99.28 billion, up 30.8%; the surplus was US$5.63 billion, down 70.0% every year. The growth rate of Sino African trade was the highest in the world in 2018. This shows that Sino-African trade has a significant contribution to the growth of African economies.
Topic:: Economics, Health, International Cooperation, International Trade and Finance, Trade, Coronavirus, Pandemic, and COVID-19
Political Geography:: Africa, China, Asia, and Cameroon

88. Curbing State-Driven Trade Policies: How to Craft New & Effective Approaches to Counter Distortive Practices

Author:: Wendy Cutler
Publication Date:: 07-2020
Content Type:: Policy Brief
Institution:: Asia Society
Abstract:: Much attention has been focused on China’s unfair intellectual property practices and the imbalance in the U.S.-China trade relationship, but equally troubling are large-scale Chinese industrial subsidies, the behavior of state-owned enterprises (SOEs), and in general, the oversized and opaque role of the Chinese state in the economy. While the U.S-China phase one trade deal tackled some important sources of bilateral tension and aimed to boost Chinese purchases of U.S. goods and services, it was silent on industrial subsidies and related matters, leaving them for the next phase of negotiations, the fate of which is now in question. U.S. concerns on these matters are shared by other trading partners including the European Union (EU) and Japan. Yet despite widespread disapproval of such practices, building new global rules to combat subsidies has proven challenging. This is due to several factors, ranging from gridlock at the WTO, differences of views among like-minded countries on the required level of ambition, and uncertainty as to how best to approach the enormous complexities in China’s subsidies and related policies. The Organization for Economic Cooperation and Development (OECD) has sought to unpack this complexity, conducting recent studies of Chinese subsidies in two key sectors: aluminum and semiconductors. Both studies illustrate how Chinese subsidies are not simple cash handouts from the state to protected firms so that they can sell at favorable and distorting prices. The OECD finds subsidies can take various forms, including downstream or upstream help that trickles up or down to the firm that’s intended to benefit. They can take the form of favorable equity or debt purchases or bonds provided at below-market rates. And with interconnected global value chains, subsidies can effectively be granted covertly, intended to benefit one firm that might be several links away along the chain. In China, the problem is compounded by an opaque “party-state” structure that obscures not only the recipients of subsidies, but also the source. According to Mark Wu, a Harvard Law School professor who previously served as the Director for Intellectual Property in the Office of the U.S. Trade Representative, subsidies not only flow directly from government bodies in Beijing, but also indirectly through informal responses to directives — sometimes even left unsaid, but understood — from the Chinese Communist Party. Against this backdrop, the Asia Society Policy Institute (ASPI) convened two roundtables in the fall of 2019 and the spring of 2020 to discuss how best to build a new rules-based infrastructure that might combat such subsidies and prevent trade-distorting results such as unfair competition, market access barriers, and, above all, overcapacity in global markets. Experts from the private sector, think tanks, governments, and academia weighed in with possible solutions, which included: Negotiating new rules in the WTO; Using the WTO dispute settlement system, despite its often-discussed flaws; Forming ad hoc rules-based approaches, where possible, like the U.S-EU-Japan trilateral initiative; Plurilateral negotiations conducted on a sector-by-sector basis; Forming coalitions of like-minded trading partners to establish an alternative model, much in the way that the Trans-Pacific Partnership (TPP) was framed. During the roundtables, most experts agreed that there is no silver bullet that solves the subsidy and related issues on its own. And most agree that, left unaddressed, the problem is likely to deepen. The COVID-19 pandemic might even exacerbate it by leading to more state involvement in economies around the world and making it hard to discipline Beijing’s practices. Recognizing all of these real challenges that the international trade community faces, the roundtables reached the following key conclusions: Transparency on the scope, level, and nature of industrial subsidies is vital; Efforts to publicize the ongoing work in these areas, particularly that being done by the OECD, should accelerate; Turning research into tangible new policies is a key step; and Persuading China to agree to updated rules will be necessary, given that China is a singular contributor to overcapacity.
Topic:: International Trade and Finance, Treaties and Agreements, Trade, Industry, and WTO
Political Geography:: China, Asia, North America, and United States of America

89. The cross-border impacts of China’s official rate shocks on stock returns of Chinese concepts shares listed on U.S. market

Author:: Dong Weijia
Publication Date:: 02-2020
Content Type:: Working Paper
Abstract:: This paper examines a new cross-border effect of an emerging country’s interest rate changes on the stock returns of its domestic firms listed overseas. First, we discover that the increase in China’s official interest rate greatly affects the NYSE-listed Chinese stocks, thereby suggesting that similar to Chinese domestic investors, the institutional investors in a mature market sometimes exhibit irrational sentiment driven by an emerging economy’s unexpected monetary policy shocks. Second, we highlight some novel asymmetric impacts of China’s official rate changes on Chinese concepts stock prices and reveal that these effects differ from the conventional nonlinear effects of monetary policies. For instance, a bull and bear regime has no statistically significant asymmetric effect on NYSE, whereas interest rate rise has different cross-border impact on Nasdaq and NYSE markets. These interesting findings are mainly driven by the smart investors in the U.S. stock market who are knowledgeable about the differences between NYSE- and Nasdaq-listed stocks and carefully analyze the different impacts of China’s official interest rate changes on the fundamentals of different types of Chinese concepts stocks.
Topic:: International Trade and Finance, Bilateral Relations, and Investment
Political Geography:: China, Asia, North America, and United States of America

90. Cooperation in Trade in Services

Author:: Akshay Mathur and Purvaja Modak
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation
Abstract:: Over the past decade, there has been a shift in global trade from trade in goods to trade in services. Unlike goods, services are intangible and consumed by the user directly, without intermediate supervision. Thus, the only way to ensure the quality of a service is to enforce standards on the service provider. This is the responsibility of domestic sector-specific regulatory institutions established by the government. This paper examines the current state of services trade in India and Canada, considers India’s services trade with Canada and outlines a number of measures the countries could take to support services trade.
Topic:: International Cooperation, International Trade and Finance, Services, and Trade Policy
Political Geography:: Canada, India, Asia, and North America

91. Fostering Growth in Digital Trade through Bilateral Cooperation in the Development of Trade Rules

Author:: Don Stephenson
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation
Abstract:: Like foreign policy, trade policy is the outward expression of domestic policy — both economic and social — and trade negotiations are to advance the national interest. Both India and Canada have important commercial interests in digital trade and both have counterbalancing social policy concerns, but they have important differences as well. Their equitable participation in digital trade must overcome an imbalanced competitive landscape through measures to facilitate access to technology and infrastructure, financing, and training in digital technology literacy and data-based business models. As yet, there is no international consensus on how trade rules should be adapted to foster digital trade. Consistent with the Track 1.5 Dialogue objectives, this paper calls on Canada and India to partner and lead in advancing the digital trade agenda. It recommends creating a bilateral process to identify common causes and areas for collaboration; convening a business-to-business conversation supported with research and analysis; and focusing on the impact of digital technology, looking at not only electronic commerce but also trade in traditional service sectors.
Topic:: International Cooperation, International Trade and Finance, Digital Economy, and Trade Policy
Political Geography:: Canada, India, Asia, and North America

92. India-Canada Energy Cooperation

Author:: Amit Bhandari
Publication Date:: 07-2020
Content Type:: Working Paper
Institution:: Centre for International Governance Innovation
Abstract:: The energy sectors of India and Canada complement each other: India is a large and growing oil importer, while Canada is a large and growing exporter of oil and gas. However, as they invested in oil fields across the world, Indian oil companies have missed out on the Canada story. Investing in Canada’s oil sector can help India guard against the risk of spikes in oil prices and provide Canada with long-term demand security. In this paper, first presented as a backgrounder at Track 1.5 meetings in Mumbai, India, in November 2019, Gateway House outlines its findings on the feasibility of Indian investment in Canada’s petroleum sector, suggesting a path forward and best prospects for investment.
Topic:: Energy Policy, International Trade and Finance, Oil, Gas, and Investment
Political Geography:: Canada, India, Asia, and North America

93. The (Re)emergence of the BRICS and the Reorganization of Power in Contemporary Geopolitics

Author:: Charles Pennaforte and Ricardo Luigi
Publication Date:: 07-2020
Content Type:: Journal Article
Journal:: AUSTRAL: Brazilian Journal of Strategy International Relations
Institution:: Postgraduate Program in International Strategic Studies, Universidade Federal do Rio Grande do Sul
Abstract:: The two first decades of the 21 st Century were marked by the recrudescence of two powerhouses, Russia and China. Given their important role on global geopolitics, these two countries took advantage of the gaps resulted from yet another crisis on the structure of global capitalism, which influenced the relative decline of the United States capacity to impose its will on the international system as they had been able to do so since the end of World War II. This article’s objective is to analyze the global geopolitical rearrangement due to a weakened United States which opened the possibility for the BRICS nations to emerge as possible sources of power. To reinforce this analysis, the world-systems perspective, (here on referred to as WSP) elaborated mainly by Immanuel Wallerstein and Giovanni Arrighi is used, as well as a geopolitical approach to provide a link to international relations theories. Therefore, this paper is divided on to four sections. The first one interrelates the geopolitical theories and those of the WSP. The second section is guided towards understanding the origins and fundamentals of the WSP. On the third section, an approach is made towards the motivations and the effects of the rearrangement of power on the world’s geopolitics. Finally, on the last section, the roles and opportunities that have arisen from the emergence of the BRICS nations on the international system are presented.
Topic:: Development, International Trade and Finance, Geopolitics, and Capitalism
Political Geography:: Africa, Russia, China, Europe, India, Asia, South Africa, Brazil, and South America

94. Implications of the Proposed China-Iran deal for India

Author:: Sruthi V.S.
Publication Date:: 08-2020
Content Type:: Working Paper
Institution:: Council on International Policy (CIP)
Abstract:: The ambitious $400 billion deal between China and Iran has garnered worldwide attention. The 18-page draft proposal says that China will facilitate the infusion of about $280 billion to Iran. This major economic and security partnership between China and Iran has raised India’s concerns against the backdrop of its ongoing border conflict with China. According to the New York Times report, the proposed China-Iran deal talks about expanding China’s presence in Iran’s “banking, telecommunications, ports, railways and dozens of other projects”, and in return China will receive a steady supply of oil from Iran for the next 25 years at a discounted price. There are more than 100 projects listed in the draft that will see Chinese investments; these include building Free Trade Zones and several very significant ports. The Chinese will also help Iran build infrastructure for 5G networks and come up with an internet filter like the Great Firewall in China. The stronghold of China in Iran could also result in undermining US policy in the Middle East.
Topic:: International Relations, Diplomacy, International Trade and Finance, and Conflict
Political Geography:: China, Iran, Middle East, India, and Asia

95. 11th U.S.-China High-Level Political Party Leaders Dialogue

Author:: Joshua Cavanaugh
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: EastWest Institute
Abstract:: A select delegation of leaders from the U.S. Democratic and Republican Parties and the global business community traveled to Beijing, China to meet with senior officials from the Communist Party of China (CPC) on November 18-21, 2019. The discussions were part of the 11th U.S.-China High-Level Political Party Leaders Dialogue organized by the EastWest Institute (EWI) in partnership with the International Department of the Central Committee of the Communist Party of China (IDCPC). Launched in 2010, the U.S.-China High-Level Political Party Leaders Dialogue seeks to build understanding and trust between political elites from the U.S. and China through candid exchanges of views on topics ranging from local governance to foreign policy concerns. The dialogue process consistently involves sitting officers from the CPC and the U.S. Democratic and Republican National Committees. In the 11th iteration of the dialogue, the CPC delegation was led by Song Tao, minister of IDCPC. Gary Locke, former secretary of the United States Department of Commerce, former governor for the state of Washington and former United States Ambassador of China; and Alphonso Jackson, former secretary of the United States Department of Housing and Urban Development; lead the U.S. Democratic and Republican delegations, respectively. Throughout the dialogue, members of both delegations spoke freely on relevant topics including foriegn policy trends, trade disputes and emerging areas of economic cooperation. EWI facilitated a series of meetings for the U.S. delegation, which included a productive meeting with Wang Qishan, vice president of the People’s Republic of China at the Great Hall of the People. The delegates also met with Yang Jiechi, director of the Office of the Central Commission for Foreign Affairs; Dai Bingguo, former state councilor of the People’s Republic of China; and Lu Kang, director of the Department of North American and Oceanian Affairs at the Ministry of Foreign Affairs. The U.S. delegates visited the Asian Infrastructure Investment Bank and met with their president, Jin Liqun, as well as the Schwarzman College at Tsinghua University to engage prominent scholars on the future of the U.S.-China relationship.
Topic:: Foreign Policy, Diplomacy, International Trade and Finance, and Economic Cooperation
Political Geography:: United States, China, Asia, and North America

96. Russia’s Struggle to Gain Influence in Southeast Asia

Author:: Bennett Murray
Publication Date:: 08-2020
Content Type:: Commentary and Analysis
Institution:: Foreign Policy Research Institute
Abstract:: As the United States and People’s Republic of China jostle for influence among member-states of the Association of Southeast Asian Nations (ASEAN), the Russian Federation has also declared the bloc a priority. Southeast Asian nations, in turn, would like third powers to counterbalance Beijing and Washington in the region. However, Russia has not made a huge impression in the bloc since its first summit with ASEAN in 2005. Economic success has been mostly limited to bilateral trade centered around arms sales, while security partnerships have not been forthcoming. Part of the problem is that Russia lacks historic ties in its former Cold War rivals, which are also ASEAN’s largest economic powerhouses, to lean on. More crucially, Southeast Asian nations perceive Moscow as deferential to Beijing’s geopolitical ambitions in the region.
Topic:: International Trade and Finance, Geopolitics, Soft Power, and Economic Diplomacy
Political Geography:: Russia, Eurasia, Asia, and Southeast Asia

97. The Swiss Model vs. Swedish Model in Dealing with China

Author:: Joseph de Weck
Publication Date:: 05-2020
Content Type:: Commentary and Analysis
Institution:: Foreign Policy Research Institute
Abstract:: Do you want to know how Beijing would like Europe to act? Take a look at Switzerland. Switzerland and China have been close for decades. It was the first Western nation to establish diplomatic relations with the People’s Republic of China (PRC) in January 1950. Bern wanted to protect investments in the new People’s Republic from nationalization and hoped Swiss industry could lend a hand in rebuilding China’s infrastructure after the civil war. Being friendly to China paid off, but only 30 years later, once reformer Deng Xiaoping took the reins of the Chinese Communist Party (CCP). In 1980, Swiss elevator producer Schindler was the first foreign company to do a joint venture in China. Today, Switzerland is the only continental European country to have a free trade agreement (FTA) with China.
Topic:: International Relations, Foreign Policy, International Trade and Finance, Treaties and Agreements, and Bilateral Relations
Political Geography:: China, Europe, Asia, Switzerland, and Sweden

98. China’s Monopoly on Rare Earth Elements—and Why We Should Care

Author:: June Teufel Dreyer
Publication Date:: 10-2020
Content Type:: Commentary and Analysis
Institution:: Foreign Policy Research Institute
Abstract:: According to geologists, rare earths are not rare, but they are precious. The answer to what appears to be a riddle lies in accessibility. Comprising 17 elements that are used extensively in both consumer electronics and national defense equipment, rare earth elements (REEs) were first discovered and put into use in the United States. However, production gradually shifted to China, where lower labor costs, less concern for environmental impacts, and generous state subsidies enabled the People’s Republic of China (PRC) to account for 97 percent of global production. In 1997, Magniquench, then-America’s leading rare earths company, was sold to an investment consortium headed by Archibald Cox, Jr., son of the same-named Watergate prosecutor, with two Chinese state-owned metals firms, San Huan New Materials and China National Nonferrous Metals Import and Export Company. The chairman of San Huan, son-in-law of paramount leader Deng Xiaoping, became chairman of the company. Magniquench was shut down in the United States, moved to China, and reopened in 2003, where it fit in well with Deng’s Super 863 Program to acquire cutting-edge technologies for military applications, including “exotic materials.” This left Molycorp as the last remaining major rare earths producer in the United States until its collapse in 2015.
Topic:: International Trade and Finance, Natural Resources, Exports, and Supply Chains
Political Geography:: China and Asia

99. Shifts in Global Sanctions Policy, and What They Mean for the Future

Author:: Richard Nephew
Publication Date:: 11-2020
Content Type:: Working Paper
Institution:: Center on Global Energy Policy (CGEP), Columbia University
Abstract:: The last four years have borne witness to a range of new sanctions, policies, and approaches around the world. Some of these were predicted in November 2016, as Donald Trump took to sanctions far more than his predecessors, using them to tackle virtually every foreign policy problem he encountered. In fact, Trump’s use of sanctions transcended their typical usage in both form and content, as he employed tariffs and other more traditional “trade” tools to try to manage a bevy of nontrade problems. The long-term effects of this decision have yet to be felt or properly understood. It may be that Trump was ahead of the curve in seeing the fracturing of the global liberal economic order and employed the US economy for strategic advantage while it was still ahead. It may also be that Trump undermined the US position in the global economy through his policies, if not actually hastened the demise of this system of managing global economics. Time and the evolution of policy in other global power centers will eventually tell. The shifting approach to sanctions policy by a variety of other states is a manifestation of the potential effects of Trump’s policy choices in using US economic power. From the EU to Russia to China, other countries have changed long-standing policy approaches as they relate to sanctions, either to respond to or perhaps to take advantage of the new paths forged by the United States. The actions that they have taken are not “unprecedented” per se, as each of these countries or organizations has—at times—embraced policies that are consistent with some of these current actions. But, in aggregate, they describe an overall shift in how the world treats sanctions and trade policy, particularly that as practiced by the United States.
Topic:: Diplomacy, International Cooperation, International Trade and Finance, and Sanctions
Political Geography:: China, Europe, Asia, North America, and United States of America

100. COVID-19: In Search of Solutions for Maritime Supply Chains

Author:: Chin Yim Leng
Publication Date:: 06-2020
Content Type:: Working Paper
Institution:: Maritime Institute of Malaysia
Abstract:: The outbreak of the COVID-19 pandemic has had a remarkable impact on maritime supply chains. Since its first case in the capital of China’s Hubei province, Wuhan, Chinese seaborne trading activities were greatly affected – reports of weakening manufacturing confidence, decreasing demand for non-essential goods worldwide, and reduced workforce has surfaced since the massive transmission of COVID-19 in January 2020. Many European and Asian countries, including the United States, have responded to the pandemic in March 2020 by imposing strict containment measures. The implementation of national lockdowns or movement restrictions in pandemic-affected countries has led to rapid contractions in maritime supply chains. The wide-ranging impacts of COVID-19 on manufacturing and trading demands have created the need for different importing speeds based on essentiality, thus deteriorating the maritime supply chains. Governments and relevant authorities, as well as private entities, should take initiatives to ensure that maritime supply chains remain fully functional for national and commercial interests as the COVID-19 pandemic progresses. It could be ideal to adopt digitalisation and blockchains as these digital processes are easy to access and control in optimising the efficiency of maritime supply chains amidst the unprecedented COVID-19 pandemic.
Topic:: International Trade and Finance, Maritime, Pandemic, COVID-19, and Supply Chains
Political Geography:: China and Asia

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COLUMBIA UNIVERSITY PRESS