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201. Looking for a Platform in North America: Taiwan, Mexico, and Cross-Strait Relations

Author:
Fabricio A. Fonseca
Publication Date:
01-2018
Content Type:
Journal Article
Journal:
Revista UNISCI/UNISCI Journal
Institution:
Unidad de investigación sobre seguridad y cooperación (UNISCI)
Abstract:
This article compares the approach followed by Mainland China and Taiwan in their economic relations with Mexico. Both sides of the Taiwan Strait have developed an interest in Mexico as an export platform to North America and the Western Hemisphere. The Mexican influence over Central America is also valued by both Beijing and Taipei. However, due to their disparities in economic and political development, the authorities and businessmen in the mainland and Taiwan have chosen different paths to conduct their interactions with Mexico. On the other hand, the deep economic integration between China and Taiwan, particularly the important investments made by Taiwanese firms in the mainland during the past three decades, have had a considerable impact on their trade with Mexico. The latter’s trade deficit with the PRC cannot be explained without the role played by enterprises from Taiwan, who continuously seek to remain competitive internationally.
Topic:
Business, NAFTA, Investment, and Trade
Political Geography:
China, Taiwan, Central America, and Mexico

202. Chinese Investment and Its Implications for Nigeria’s Economic Security

Author:
Shiitu Adewole Raji and Adenike Ogunrinu
Publication Date:
12-2018
Content Type:
Journal Article
Journal:
Brazilian Journal of African Studies
Institution:
Brazilian Journal of African Studies
Abstract:
The international system consists of different nations which pursue their national interests within the global arena having put into consideration the benefits they stand to gain from such relationships (Ampiah and Sanusha 2015, 8). The explosive growth of China’s economic interests in Africa, which is part of the sustained global interactions discussed above, is an important trend in the continent’s foreign relations arena. China’s rapidly expanding ties with Africa has superseded the United States’ since 2010 as Africa’s top trading partner because of its massive investments in the continent , which is largely aided by China Investible Export loan assistance of $150 billion to its multinational corporations (Brautigam 2009, 22). Between 2001 and 2011, Chinese exports to Africa were raised from $4.4 billion to $56.3 billion. Though China is still regarded as a third world country, the country is the second biggest economy in the world. [..] Although there is a vast body of literature on the bilateral relations between Nigeria and China, little is known about the implications of China’s increasing FDI for the economic security of Nigeria, a gap this paper intends to fill. The study is anchored on descriptive research methodology, consisting of qualitative data, which relied primarily on the existing literature.
Topic:
Bilateral Relations, Investment, Trade, and Economic Security
Political Geography:
Africa, China, and Nigeria

203. The Security Dimension of a China Free Trade Agreement: Balancing Benefits and Risk

Author:
Gordon Houlden
Publication Date:
08-2018
Content Type:
Working Paper
Institution:
Canadian Global Affairs Institute (CGAI)
Abstract:
In 2017, Canada engaged in several rounds of exploratory discussions for a potential free trade agreement (FTA) with the People’s Republic of China. It seemed probable that this exploratory phase would be followed by the opening of formal rounds of negotiations, to be announced during Prime Minister Justin Trudeau’s visit to China in December 2017. An FTA appeared to be a priority for Trudeau since his government came into office in 2015 (Global Affairs Canada, 2017a; Lu, 2017; PMO, 2017); however, such negotiations were put on hold indefinitely, ostensibly due to irreconcilable differences on gender and labour issues. Despite this setback, it is likely that the Canadian government will continue to explore this option in the coming years, particularly with the North American Free Trade Agreement (NAFTA) in jeopardy. While there are many potential benefits of a Canada-China free trade agreement (CCFTA), there are also significant national security implications that will deserve particular attention. The security dimension will be the focus of this paper. Prospective CCFTA negotiations with China would be both complex and time consuming, in part due to the wide divergences between the Canadian and Chinese economies, as well as differences between Canadian and Chinese administrative and legal systems. Negotiations could therefore take several years to conclude, and might not be finished until well after the 2019 federal election. It took a full decade to sign and ratify the China-Australia Free Trade Agreement (ChAFTA), although it appears that the most difficult portion of the negotiations was wrapped up in the final two years. It is unlikely that a CCFTA will move as slowly as the Australian FTA did, in part because of the established Australian precedent and because of China’s increasing familiarity with FTA negotiations that involve advanced economies. For this reason, Canada would benefit from approaching a CCFTA after Australia, but before many other Western countries. Chinese and Canadian negotiators will be consumed with elaborating the principles of each side’s responsive FTA approaches, as well as the myriad of details involving thousands of products and services that a CCFTA’s provisions would affect. Canadian negotiators will seek a high-quality FTA that covers a large percentage of our export and import products with China, as well as an agreement that covers all key sectors and industries. There is also likely to be a Canadian focus on addressing China’s use of non-tariff barriers to trade which currently inhibit Canadian firms from taking full advantage of the massive China market. Such measures include the Chinese Ministry of Health’s 2013 changes to food safety standards which required all imported food products to list detailed nutritional components in Chinese. Procedural barriers such as this represent a significant hurdle for Canadian firms, and cause uncertainty among international exporters that want to break into the Chinese domestic market. In theory, the centralized Chinese economy lacks the regional complexity of the Canadian federal state, characterized by sub-national units, but in reality, China’s provinces and municipalities can, and often do, impose barriers to foreign imports, often to protect market share for local substantive industries. To date, China has FTAs with only a handful of developed countries. Australia, Korea, Switzerland, Iceland, Singapore and New Zealand currently have bilateral FTAs with China, and several others, such as Norway and Israel, are in FTA negotiations. China is also floating ideas for FTAs with developing countries, including India. China is far more trade-dependent than the United States, although by comparison China is not nearly as trade-dependent as Canada is.1 The balance of trade is currently in China’s favour: China exports US$46 billion to Canada, versus the US$16 billion that it imports from Canada (MIT, 2016a). However, it is important to note that China’s exports to Canada account for only 2.2 per cent of China’s total merchandise exports (MIT, 2016b).
Topic:
Security, Intellectual Property/Copyright, Free Trade, and Trade
Political Geography:
China, Canada, Asia, and United States of America

204. Energy, Trade and Geopolitics In Asia: The Implications for Canada

Author:
Jeff Kucharski
Publication Date:
07-2018
Content Type:
Working Paper
Institution:
Canadian Global Affairs Institute (CGAI)
Abstract:
Canada’s growing interest in trade with countries in the Indo-Pacific region corresponds with an ominous growth in geopolitical instability and insecurity in that part of the globe. With Indo-Pacific hunger for oil expected to soar – especially in China, where demand will translate to 80 per cent of imports in 10 years – Canada needs to develop policies to deal with the region’s turbulent realities. The Indo-Pacific comprises countries in South Asia and Southeast Asia, and includes such unstable and unpredictable players as North Korea and Pakistan, both of which have nuclear weapons and long-simmering border tensions. India is an emerging economic and military rival to China. In the next 20 years, China and India are expected to lead the global demand for gas as coal consumption continues to decline, and Canada has a stake in this prosperous future. Along with territorial squabbles in the region, Canada will have to deal with complex issues such as terrorism, human trafficking, transnational crime, piracy and cyber-crime, as well as the struggle for global dominance between China and the U.S. One key area for potential conflict is China’s recent construction and militarization of artificial islands in the South China Sea. The Canadian government’s new military strategy, Strong, Secure, Engaged does little more than make a plea for peace and the rule of law in the South China Sea. However, more trade crosses the Pacific Ocean from Canada than crosses the Atlantic. And with Canada signing on to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the region’s troubles will need to be resolved by more than good intentions on paper. Canada must shift more diplomatic, security and military resources to the Indo- Pacific; otherwise, its efforts will be spread too thinly to be effective in the region. Trade, especially through a major route like the Strait of Malacca, could easily be disrupted by any one of a number of disputes, such as a conflict between China and Taiwan or if historic resentments boil over among competing territorial claimants in the region. Thus, Canada needs to step up and reaffirm its security commitments to the Association of Southeast Asian Nations (ASEAN) as a partner in the region. Participating in maritime exercises and Freedom of Navigation (FON) operations would also help to reinforce to countries in the region the importance of abiding by international law. Meanwhile, Canada should set aside for now any intentions to negotiate a free trade agreement with China. China does not share some of Canada’s key trade and security goals and its aggressive behaviour in the South and East China Seas clearly signal that now is not the time to talk about a trade pact. China must demonstrate that it is willing to take a more cooperative approach to resolving trade and security issues in the Indo-Pacific and to support and respect the rule of law in the region. Canada has the potential to become a reliable, stable source of energy for Indo-Pacific countries. There is also an opportunity for provinces such as Alberta to strike their own strategic deals to provide energy resources to countries in that region, in return for trade and investment benefits. However, while investing at home in the necessary infrastructure and export capability to expand its role, Canada must also strive to bring its own unique approach to enhancing regional and energy security in the Indo-Pacific.
Topic:
Security, Energy Policy, Geopolitics, and Trade
Political Geography:
China, Canada, Asia, and North America

205. Canada’s Progressive Trade Agenda and a Free Trade Agreement with China: Are They Incompatible?

Author:
Hugh Stephens
Publication Date:
10-2018
Content Type:
Working Paper
Institution:
Canadian Global Affairs Institute (CGAI)
Abstract:
The “non-market” clause in the just-concluded update of NAFTA, now known as the U.S.-Mexico-Canada Agreement (USMCA) would appear to limit Canada’s options in terms of negotiating a free trade agreement with China at the present time (given the de facto U.S. veto over a Canada-China agreement that it provides), yet Prime Minister Trudeau has already reaffirmed Canada’s intention to pursue closer economic ties with China despite this apparent limitation. If negotiations proceed, negotiating a free trade agreement (FTA) with China will be very different from negotiating one with a country that shares Canada’s Western values. However, a trade agreement with China makes good economic sense, and while there are some unique obstacles to reaching such an agreement owing to differing views of progressive trade, these are not insurmountable. In fact, Canada can use the same models in negotiating with China that it has used with Western countries. Such an approach combines trade goals with respecting Chinese cultural and political differences, particularly those that fall into the category of progressivism. This category includes labour rights, Indigenous and gender issues, and governance. Prime Minister Justin Trudeau’s government has been focused on progressive elements in trade deals, while China has made it clear it is not interested in including them in any such pact. Concluding an agreement would mean that China and Canada must both recognize the political requirements and dynamics on the opposite side of the negotiating table, while seeking common ground diplomatically. Side agreements such as those that exist in the original NAFTA and in the Comprehensive Economic and Trade Agreement (CETA) are one way to work with the two countries’ differences. Many of the provisions in a side agreement are not binding and thus not subject to the agreement’s dispute settlement mechanism or trade sanctions. Instead, they are more aspirational and sometimes lay out a process for civil society groups to raise issues and help the thinking on those issues evolve, rather than simply holding the parties accountable for breaches. Canada is rightly concerned about Chinese stances on human rights, labour, environmental and gender issues. However, instead of including these issues in the main document on trade, they can be dealt with as shared interests between the two countries. Establishing separate but parallel mechanisms to deal with these issues would be a practical way to make progress. Focusing on micro, small and medium-sized businesses as one Chapter of the Trans-Pacific Partnership (TPP) did, could be another successful approach. Women own many of these businesses in developing countries, so such a focus would make a substantial contribution to their welfare. None of this means Canada should kowtow to China or look the other way on important values and issues. Side agreements and special focuses have formed parts of agreements with other countries that already share Canada’s Western values. This type of give-and-take is present even when Canada negotiates with countries that are not polar opposites. No country’s interests are exactly the same as those of any other and it’s unrealistic to expect unanimity on every issue. Language and firm commitments on progressive issues are still evolving in many of Canada’s free trade agreements, including the USMCA. It would be unreasonable to hope that everything can be achieved in an agreement with China on the first go-around. Rather, viewing a trade agreement with China as a work-in-progress means controversial elements can be brought into the negotiations and language used that reflects the understanding that these issues are evolving. It will require creative thinking, flexibility and joint commitment to find a solution, but—assuming that the USMCA does not rule out Canada-China negotiations toward a trade agreement— it should be possible to find sufficient common ground without having to resort to obfuscation and “creative ambiguity”.
Topic:
Treaties and Agreements, Bilateral Relations, Sanctions, NAFTA, Free Trade, and Trade
Political Geography:
China, Canada, Asia, and North America

206. Enhancing EU–India Connectivity: Towards New Spice Routes

Author:
Patryk Kugiel
Publication Date:
10-2018
Content Type:
Special Report
Institution:
The Polish Institute of International Affairs
Abstract:
The approaches of the EU and India to the connectivity between Asia and Europe largely converge. Both the Union and the country emphasize the importance of maintaining the highest international standards in infrastructure projects, share similar concerns regarding China’s Belt and Road Initiative (BRI), and implement their own ambitious transregional transport projects in their respective neighbourhood. Comprehensive cooperation on connectivity may become a key element of their strategic partnership, help promote regulatory standards, and boost economic cooperation. Better connectivity between Europe and India is also in Poland’s interest.
Topic:
Bilateral Relations, Belt and Road Initiative (BRI), Trade, and Economic Cooperation
Political Geography:
China, Europe, South Asia, India, Poland, and European Union

207. North Korea’s Economic Strategy, 2018

Author:
William B. Brown
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This chapter takes the perspective of North Korea’s leadership as it confronts difficult economic problems in the remaining months of 2018. The major current and potential issues are listed and prioritized. Short and longer-term remedies are presented, each with trade-offs that affect other economic and policy issues. Given the absence of direct reporting from North Korea, the issues and debates presented are speculative, designed to give the reader a more comprehensive understanding of North Korea’s current problems than is ordinarily presented in western media. Kim Jong-un’s recent diplomatic offensive, reaching out to South Korea, China, and the United States is, in this view, suggestive of these internal economic troubles in addition to the nuclear security issues. The troubles are both short-term—the collapse in trade with China in just the past few months—and long-term, the slow-motion collapse of the communist country’s “command” economy. And much more than in the past, the problems relate to the regime’s unusual and dangerous monetary system, money being a normal issue for most governments but a relatively new one for this still partially rationed, or planned, oriented system. The leadership may have little choice but to let the domestic economy move further from the plan—allowing decentralized market and private activities more sway—than ever before. This would help cushion the central government from losses due to the sanctions and open the door to a much more prosperous future. Without major moves in this direction, inflation and unemployment may cascade into social crisis. It should be noted, that the recent Assembly Meetings, which annually focus on the economy, gave little official indication of policy changes, only a sense of digging in further to protect the regime from outside forces. But just a week later, Kim may have telegraphed an upcoming sea change when, in his address to the Party Central Committee plenum, that he is instituting a new Party Line, socialist economic construction, as the total focus of the Party and the country. Major changes, if they are to occur, will likely come after the upcoming important summits with South Korea and the U.S.1 There is little doubt that the economy in 2018 is in very poor condition, delivering one of the worst productivity rates—productivity in terms of labor and of capital—in the world, but it is important to recognize that this is due not to natural circumstances but to decisions the government has made over the years, and trade-offs it has already made. This suggests that astute government policy can create solutions and restore growth. Remedies of the sort expressed here, for example in liquidating, that is selling or leasing state assets to private buyers, raising fixed prices for state delivered electricity and for water and other utilities, and giving large pay raises to the millions of state workers who now rely on rations, while culling their numbers, would require difficult economic and social trade-offs; one might say there is no free lunch for Kim and his regime although no doubt they are looking for one, even in these summits. The chapter discusses just what kinds of decisions might be made and the likely consequences. Negotiations being set with South Korea and with the United States, and likely more discussions with China, may weigh heavily in how far Pyongyang will be willing to go in these respects. In my view the regime will be looking for: outright aid, payments for pushing back the nuclear weapons program, and premature relief from sanctions, which would only give the regime time to avoid the hard choices needed to permanently fix the broken economic system.
Topic:
Diplomacy, Economics, Sanctions, Services, and Trade
Political Geography:
China, Asia, North Korea, and Korea

208. Is the Belt and Road Initiative a Chinese-style Regionalism?

Author:
Tu Xinquan
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
In the last two decades, bilateral and regional trade agreements (RTAs) have been considered a primary force to advance the world trading system because the Doha Development Agenda of the WTO has stagnated since its launch in 2001. The continuous expansion of the European Union and the American-led NAFTA and TPP as well as bilateral FTAs between the United States and EU and their partners best exemplified this phenomenon. However, such an approach is facing serious challenges from rising anti-globalization sentiment originating in the EU and United States in recent years. In June 2016, the United Kingdom decided to exit the EU as a result of a referendum. This is the first time a EU member chose to leave. On January 23, 2017, at the start of his presidency, Donald Trump signed as his first executive order the withdrawal from TPP, which his predecessor spent years concluding with 11 partners. These two consecutive dramatic actions of the previous and current world leaders shocked the globe. Next to the WTO, regionalism is seen as the second-best choice in promoting globalization. Now, two regional initiatives led by developed countries are facing a serious backlash. The world is concerned that this means the end and a reversal of globalization. Since its WTO accession in 2001, China has also been actively negotiating FTAs with its neighbors as well as some remote partners such as Iceland and New Zealand. While its WTO accession package was praised for its ambition and courage, it is difficult to defend Chinese FTAs as comparable to those of developed countries in terms of market access and institutional changes. One explanation for that is China has made very high-level multilateral commitments. Another one is China is not in such a comfortable strategic and economic position as the United States in negotiating FTAs with either developed or developing countries. The former want to obtain more market access concessions and institutional reforms from China, while the latter are afraid to expose their domestic industries to China’s overwhelming competitiveness in manufacturing. In addition, the Chinese government seems more confident in its own institutions and unwilling to change them due to outside pressure, especially after the 2008 global financial crisis. President Xi Jinping proposed the Belt and Road Initiative (BRI) during his state visits to Kazakhstan and Indonesia in September and October 2013, which soon was made a top national priority and even included in the Constitution of the Communist Party of China at the 19th Party Congress in 2017. Nadege Rolland labels this China’s Grand Strategy1 and the organizing foreign policy concept in the Xi Jinping era.2 One key feature of BRI in comparison with RTAs is that BRI focuses more on improving physical connectivity rather than reducing institutional barriers. The logic of physical connectivity is undoubtedly powerful, especially for developing countries with poor infrastructure. The impact of more and better international links on the regional landscape could be huge, not only by boosting trade and commerce but also by easing flows of energy and other resources, stimulating technological innovation, influencing culture and politics, and shaping strategic choices. Given the fact that RTAs are facing serious difficulties, the BRI looks like an attractive and feasible alternative to promote regional economic integration and globalization. However, there are also plenty of uncertainties and ambiguities surrounding the BRI, particularly due to China’s centrality as well as its direction of economic and strategic development. Hence, this chapter explores BRI characteristics in promoting regional economic integration and whether it could become an alternative approach to regionalism and globalization for China as well as the world.
Topic:
Treaties and Agreements, Belt and Road Initiative (BRI), Economic Policy, Trade, and Integration
Political Geography:
China and Asia

209. Advancing the Regional Trade Order in East Asia with a Less Engaged United States

Author:
Korea Economic Institute of America
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
In the aftermath of Donald Trump’s election and immediate pullout from the TPP, a scramble ensued over how to proceed with constructing a regional trade order centered on East Asia. For China this brought closer scrutiny of its pursuit of the Belt and Road Initiative (BRI). In the case of Japan, questions followed about what to do with the residue of TPP. Others, notably countries in Southeast Asia, were left contemplating the balance between eastern exclusive regionalism and the western presence in regionalism. In the background were efforts in South Asia aimed at advancing economic integration with East Asia. A kind of free-for-all was in progress without the moorings that had been lost after the paradigm of competition between a U.S.-led TPP and a China hub-and-spokes BRI no longer was guiding the strategic calculations of Asian countries. Then, in March 2018 came Trump’s disruptive tariffs, threatening to set a trade war in motion. Four chapters explore the challenge of advancing a regional trade order in East Asia in the new circumstances of 2017-18. Tu Xinquan in Chapter 10 questions whether BRI is a path toward regionalism, delving deeply into the Chinese strategy for BRI. T.J. Pempel follows in Chapter 11 by exploring Japan’s thinking about TPP and the process of refocusing on TPP- 11 following the U.S. withdrawal. Chapter 12 by Sanchita Basu Das offers a hopeful ASEAN perspective on economic regionalism. Finally, in Chapter 13 Pradumna Bickram Rana traces thinking about re-energizing economic integration between South Asia and East Asia. With no finality to the RCEP talks and the recently concluded TPP-11 pact still taking shape and Trump’s “America First” trade policy casting a dark shadow, we aim to capture signs of a new trade order at a time of flux.
Topic:
Economics, Regional Integration, and Trade
Political Geography:
Japan, China, East Asia, Asia, and Korea

210. BALANCING AGAINST CHINA WITH THE ASIA-AFRICA GROWTH CORRIDOR: AN INDIAN-JAPANESE INITIATIVE TOWARDS THE INDO-PACIFIC

Author:
Carlos Eduardo Carvalho and João Paulo Nicolini Gabriel
Publication Date:
10-2018
Content Type:
Journal Article
Journal:
Conjuntura Austral: Journal of the Global South
Institution:
Conjuntura Austral: Journal of the Global South
Abstract:
The launch of a vision document for Asia-Africa Growth Corridor (AAGC) at the African Development Bank meeting in Gujarat in 2017 reveals an important aspect to grasp the awkening of a strategy to face China’s rise. This conference of the African Development Bank (AfDB) is a landmark for this initiative. This bank is a mechanism for economic and social development with the participation of non-African members (e.g. China, India, Brazil, the United States, and Japan). The main contributors to the African Development Fund -linked to this bank -are the United Kingdom, the USA and Japan. Beijing does not figure among the most influent members of this organization. Thus, it was an opportunity for think tanks, supported by India and Japan, to introduce the idea of a corridor aimed to link Asia to Africa in order to increase co-operation in agriculture, social development and technology sharing.
Topic:
Development, International Political Economy, International Trade and Finance, Economic Growth, Banks, Trade, Economic Development, Trade Policy, and Economic Cooperation
Political Geography:
Africa, Japan, China, and Asia