Author: Frank Jotzo, ANU

Climate change policy is alive again in Australia. Prime Minister Gillard has committed to introduce a carbon price during the current term of government. A Multi-Party Committee on Climate Change is at work, and an update to the Garnaut Review takes a fresh look at some of the tough issues facing the world and Australia in getting good climate policy off the ground.

Getting carbon pricing off the ground may seem a tall order after the attempt of the previous government under Kevin Rudd  to introduce emissions trading failed among a collapsed deal with the opposition (whose leader Malcolm Turnbull was deposed over the issue), considering that the current government’s needs rely on votes by Independents and the Greens to get any legislation through Parliament, and in the context of setbacks in US climate policy and widespread (if largely misplaced) disappointment with the international climate negotiations. Read more…

Author: Arvind Subramanian, PIIE

When the presidents of China and the United States met last week in Washington, neither was likely be aware that, measured in terms of purchasing power, it is Hu Jintao, and not Barack Obama, who represented the world’s largest economy.

Some time in 2010, the Chinese economy overtook that of the United States. Read more…

Author: Ernest Z. Bower, CSIS

Last week in the snowy Swiss enclave of Davos, President Susilo Bambang Yudhoyono of Indonesia threw down the rhetorical gauntlet and announced Indonesia’s plans to be a global player. Addressing a well-heeled World Economic Forum audience, he asserted Indonesia’s intent to influence global trends: ‘Asia is of course more than China, Japan and India,’ he said.

Mr Yudhoyono has a good case to make. Indonesia is the world’s fourth-largest country and third-largest democracy. By most criteria, Indonesia has a stronger claim on BRIC membership — the group including Brazil, Russia, India and China — than Russia. Read more…

Author: Justin Li, ICE

The investment and trading relationships between China and Mongolia seems like a marriage made in heaven. Landlocked and poverty-stricken, Mongolia has an abundance of coal, copper and iron ore that China craves to feed its rapid industrialisation. Mongolia’s proximity to China, its largest customer, also offers it considerable cost advantages against other major commodities suppliers such as Australia and Brazil.

The trade and investment figures between these two countries certainly bear witness to a strong and complementary relationship. China has been the largest investor in Mongolia since 1998 and its largest trading partner since 1999, and it has retained these positions ever since. Read more…

Author: Hinrich Voss and L. Jeremy Clegg, Leeds University

Since China embarked on its ambitious opening and reform process, its commercial relationship with the European Union has flourished. Although bilateral trade growth has been an important part of this, European multinational enterprises (MNEs) have been swift to target China for foreign direct investment (FDI). With the path blazed by large MNEs, increasingly smaller firms are following in the footsteps of the European majors such as the carmaker Volkswagen, or the chemical firm BASF, to use FDI to get a foothold in the Chinese market.

Now the roles are shifting as Chinese investors descend on Europe. Reportedly, Chinese firms have been willing to acquire any ailing European firm, and are lining up to make major new large-scale investments. Read more…

Author: Richard Baldwin, The Graduate Institute and CEPR

Incredible but true — the Doha Round is likely to conclude this year. The WTO’s current episode of global trade negotiations (a.k.a. the Doha Round) have careened between retrenchments, setbacks, and failures since their launch in November 2001. The reasons for the long delay are complex, but they never included irreconcilable differences. Pareto-improving packages have always been possible; the hard part was deciding among them.

But all that is history. The negotiations are proceeding full speed. The plan is to have the basic political compromise in place by spring and the full package before summer. Read more…

Author: Masahiro Kawai, ADB Institute, Tokyo, and Ganeshan Wignaraja, ADB, Manila

Slow progress in global trade talks has led to a surge in free trade agreements (FTAs) across Asia. With the World Trade Organization (WTO) Doha Round trade talks stalled, Asian countries see FTAs as a means to liberalise trade and investment and sustain economic recovery in the region.

The surge in the number of FTAs — from three to about 50 in the last decade, with another 80 or so in the pipeline — has, however, sparked concerns about the Asian noodle bowl due to overlapping rules of origin (ROOs) requirements, which may be costly to business, especially small- and medium-sized enterprises (SMEs). Critics worry that this wave of agreements will undermine the multilateral liberalisation process. Read more…