Asia's bumpy trade routes are by no means dead-end streets

FILE PHOTO: FILE PHOTO: European Union and Vietnamese flags are seen at the signing ceremony of EU-Vietnam Free Trade Agreement at the government office in Hanoi, Vietnam June 30, 2019. REUTERS/Kham/File Photo

The continent's globalisation drive is facing many headwinds. Yet, there is light at the end of the tunnel

Until recently, globalisation looked unstoppable and was generally thought to have worked best for the East. A 2016 paper produced by the Brookings Institution, the American think tank, was titled simply: Globalisation: What the West can learn from Asia. As it put it, "worldwide investment flows, knowledge exchanges, and rapid economic growth" have led to the emergence of large middle classes and brought hundreds of millions on the continent out of poverty. The formula has been a success. Who wouldn't want to continue down the same route.

Today, however, trade and connectivity in Asia appear to many to be fracturing and faltering. The US-China trade war has been damaging for everyone, and America has a President who cannot be trusted not to escalate it on a whim. Country after country has, overtly or covertly, decided that they are far too reliant on China, either for their supply chains, production lines or essential products, such as medicines. That, coupled with the resurgent nationalists who emphasise self-reliance as a good in itself that overrides any concerns about efficiencies or competitive advantages, is bound to lead to a further reduction in international commerce.

The much-vaunted Trans-Pacific Partnership (TPP) that would have represented 40 per cent of global GDP and one third of world trade may not have actually collapsed, even though Donald Trump withdrew the US from the agreement in one of the first acts of his Presidency. But it has now been reduced to the – rather wordy – Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP); it covers less than 14 per cent of the global economy; and out of 11 signatories, only seven have ratified it so far.

epa08472907 Gift shop salesperson sets cardboards depicting US President Donald Trump (L) and Chinese President Xi Jinping on the street after reopening the shop in Moscow, Russia, 08 June 2020. Moscow authorities have eased coronavirus restrictions. Moscow Mayor Sergei Sobyanin allowed the opening of parks and announced a resumption of work of industrial and construction enterprises.  EPA/YURI KOCHETKOV

The other great regional trade pact, the Regional Comprehensive Economic Partnership (RCEP), includes China – unlike the TPP, which some thought was designed specifically to exclude it. It has been on the verge of being signed for at least two years. It is still expected to be agreed later this year, but the parties have managed to lose India along the way, which means that instead of accounting for around 50 per cent of the world's population and 40 per cent of global GDP, it will cover about 30 per cent of each.

A notable infrastructure project the high-speed rail link between Singapore and Kuala Lumpur  has been put on hold by the Malaysian government, while The Economist – never a friend to China's leadership – was mean-spirited in its reporting this week on the state of President Xi Jinping's signature global infrastructure and development Belt and Road Initiative. "BRI projects are stalling as countries struggle to repay related debts," the magazine declared. "China's own economy is faltering, too. Silk roads are getting bumpier."

Added together, the above may appear to compose a rather gloomy picture. It is, however, more complex than that.

FILE PHOTO: India's Prime Minister Narendra Modi speaks to the media inside the parliament premises on the first day of the winter session in New Delhi, India, November 18, 2019. REUTERS/Altaf Hussain/File Photo

The 15 countries in RCEP – the 10-member Association of South-East Asian Nations, plus China, Japan, South Korea, Australia and New Zealand – have been aggressively courting India to return to negotiations.

The Democratic presidential candidate, Joe Biden, urged support for the TPP when he was Barack Obama’s vice president, and would – subject to conditions – like the US to join the CPTPP. British Conservative politicians have long expressed interest in doing so (Britain “counts” as a Pacific country because a UK Overseas Territory, the Pitcairn Islands, is located there). Thailand is currently considering whether to become a member. The Chinese Premier Li Keqiang recently said that his country “has a positive and open attitude toward joining the CPTPP”. This was a formulation that regional media interpreted as a statement of serious intent, raising the possibility of a remarkable reversal, or at least easing, of the current animosity between Washington and Beijing should both eventually become parties to the agreement.

In this June 2, 2020, photo, trucks line up to transport containers at the container port in Qingdao in eastern China's Shandong province. China's exports and imports both fell in May as the coronavirus and trade tensions with the U.S. weighed on demand both at home and abroad. (Chinatopix via AP)
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The issue is what kind of world Asian countries want to return to post-Covid-19. It cannot, and should not, be the same at least in terms of our attitude towards the environment

As for the BRI, The Economist concedes that "fortunately for China's propagandists, the BRI is a shape-shifting concept that allows them to adapt it to changing circumstances", including prioritising health and digital assistance, pausing certain projects and placing more emphasis on renewables. The snark is unnecessary. You do not have to be a "propagandist" to see that its elasticity is one of its strengths – why should it be absolutely rigid? – and is entirely appropriate to its global ambition given that more than 125 countries have signed co-operation documents with the initiative.

Meanwhile on Monday, Vietnam ratified a free trade agreement with the European Union that will cut or eliminate 99 per cent of tariffs on goods traded between the south-east Asian country and the world's largest trading bloc.

Najib Razak, Malaysia's former prime minister, center, offers prayers with his supporters as he arrives at the Kuala Lumpur Courts Complex in Kuala Lumpur, Malaysia, on Tuesday, Dec. 3, 2019. Najib is set to give his testimony to defend himself against charges of corruption involving a former 1MDB unit. Photographer: Samsul Said/Bloomberg

Lastly, the Singapore-Kuala Lumpur rail project fell out of favour after the government of the then Malaysian prime minister Najib Razak lost the 2018 general election. Almost anything or anyone associated with him became politically toxic. Now that Mr Najib's party is once again part of the ruling coalition, it will be looked on more kindly.

More broadly, the issue is what kind of world Asian countries want to return to post-Covid-19. It cannot, and should not, be the same at least in terms of our attitude towards the environment, if only because we will want to reduce the risk of other viruses making the jump from animals to humans. Most countries will aim to increase by some degree their economic self-sufficiency and will be wary of returning to cross-border just-in-time supply chains.

epa08468181 US Democratic presidential candidate, former Vice President Joe Biden (C, front), reacts as he addresses supporters during his Nevada post-caucus rally in Las Vegas, Nevada, USA, 22 February 2020 (reissued 06 June 2020). According to media reports on 06 June 2020, Biden officially secured the Democratic Party presidential nomination after receiving the required number of delegates via state primaries. Biden has campaigned mainly from his home due to the ongoing coronavirus pandemic.  EPA/EUGENE GARCIA

But will it be a world in which one could aim to have breakfast in Kuala Lumpur, lunch in Singapore and be back in the Malaysian capital in time for dinner, as Mr Najib used to say when extolling the rail project? If the alternative is extreme economic nationalism – bolstering onshore production, putting up barriers to foreign investment and shortening supply chains to the point that they avoid crossing borders – then "that's the North Korean model of eliminating risk in international economic engagement", as Australia National University's Shiro Armstrong wrote in East Asia Forum Quarterly recently.

It is surely obvious which model most would prefer. We see disintegration and hear confrontational talk at the moment. But as I have outlined above, there are reasons for hoping for a time when the British novelist EM Forster’s exhortation becomes our watchword once again: “Only connect”.

Sholto Byrnes is a commentator and consultant in Kuala Lumpur and a corresponding fellow of the Erasmus Forum

Sholto Byrnes

Sholto Byrnes

Sholto Byrnes is an East Asian affairs columnist for The National