HO CHI MINH CITY INTERNATIONAL CONFERENCE - OCTOBER 2023
ORGANIZED BY
HO CHI MINH CITY UNIVERSITY OF LAW - UNIVERSITY OF TOURS
WITH THE SUPPORT OF THE FRENCH EMBASSY IN VIETNAM
« THE PIVOT OF TRADE TO ASIA-PACIFIC AND ITS IMPACTS ON INTERNAL AND EXTERNAL ECONOMIC POLICIES OF THE REGION IN THE FIELDS OF TRADE, INVESTMENT AND ENVIRONMENT»
For several decades, pivot of trade to the Asia-Pacific region has been the new trend. Emerging economies, led by China and ASEAN countries, are flourishing in the area. In this context, the major economic powers are confronted with two major challenges:
- On one hand, to protect themselves from global competition in the regionals most promising markets;
- On the other hand, to elaborate new rules of international trade with strategic partners.
This new economic situation obviously has consequences for the internal and external economic policies of the Asia-Pacific region.
I – The pivot of trade to the Asia-Pacific and its impacts on economic policies of States in the region
According to the Bangkok Declaration on the Establishment of the ASEAN, the Association’s objective is not purely political. It also aims at promoting « economic growth, social progress, cultural development » as well as « peace and stability » and « mutual assistance ».
It should also be noted that despite the withdrawal of the United States from the Trans-Pacific Partnership (TPP), the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP) came into force on 30 December 2018. This latter appears to be fairly close to the initial TPP agreement and conserves its strategic role in the Pacific area. Its elaboration is also in line with the trajectory of new trade agreements: beyond the elimination of customs duties, it integrates many important elements such as transparency, anti-corruption measures, labour rights and environmental protection, etc.
In contrast, the Regional Comprehensive Economic Partnership (RCEP), which came into force on 1 January 2022, is not as comprehensive as the CPTPP. For example, it does not address labour rights as well as environmental protection and government subsidies. Instead, it focuses on the reduction of customs duties and the abolition of quotas. Even if India withdrew from the project, this agreement was finally concluded between fifteen countries and became the largest free trade area in the world.
It should also be noted that this region is experiencing considerable growth in foreign direct investment (FDI). The ASEAN as a whole is currently the largest investment host among developing countries. This has resulted in the conclusion of international investment agreements as well as issues related to investor-State dispute settlement mechanisms.
II – The pivot of trade to the Asia-Pacific and its impacts on the economic policies of States from outside the region
The Asia-Pacific region has become a ground for an unprecedented war of influence between the major powers: the United States, the European Union, Canada, Russia and Latin America countries. The latter has indeed increased its exports to China tenfold between 2004 and 2019. Each of these territories is pursuing a double objective: to establish new networks of influence and to counter the rise in power of their competitors.
At the same time, China and Japan are developing a strategy of conquering markets on other continents.
The American strategy of re-balancing and pivoting to Asia, launched by the Obama administration in 2011, comes in reaction to the important structural change represented by the economic and military rise of China. The arrival of Joe Biden in office, however, has reshuffled the cards as he seeks to rebuild relationships with his Pacific allies.
On 23 May 2022 in Tokyo, the US President announced the launch of a new Asia-Pacific economic partnership with 13 initial participants, including the US and Japan but without China. This is not a free trade agreement. It mainly provides for greater integration in four areas: digital economy, supply chains, green energy and the fight against corruption.
As for the European Commission, it has taken into serious consideration the “pivot to Asia-Pacific” strategy. On 22 June 2015, it highlighted that the European Union has a genuine strategic interest in strengthening its relations with the ASEAN. Following this, the European Commission has expanded its cooperation while concluding new free trade agreements: the Euro-South Korea Agreement (entered into force on 13 December 2015), the Euro-Japanese Agreement (entered into force on 01 February 2019), the Euro-Singapore Agreement (entered into force on 21 November 2019) and the Euro-Vietnamese Agreement (entered into force on 01 August 2020). It is possible to record, in addition, the signature of the Chinese-European agreement on 30 December 2020, of which the ratification is currently suspended.
Although one may note a convergence on the notions of “international investment” and “investor” in these agreements, divergences in the choice of investor-State dispute settlement mechanisms remain. The implementation of provisions relating to sustainable development and environmental protection is also proving to be delicate.
Finally, the European Union unveiled its «Global Gateway» investment strategy on 1 December 2021 with a budget of 300 billion euros to be financed during 6 years in the fields of digital technology, health, transport, climate, energy and education.
For its part, in recent years, Russia has strengthened its connection with several Asian countries. Presidential Order No. 400, issued on 2 July 2021, insists that cooperation with the Asia-Pacific region, particularly with India and China, is one of the priority objectives of Russian foreign policy.
China has developed a dynamic strategy of “implantation” in many territories with, in particular, its “Belt and Road” (New Silk Road) initiative. As a reaction, a European mechanism for monitoring investment from third countries has been set up since 11 October 2020. It aims to better prevent the acquisition of European flagships by foreign companies. It should also be noted that China is the main creditor of many countries. According to a recent study, China has provided $843 billion in loans to 163 low- and middle-income countries over the past two decades.
