Author: Suman Bery, NCAER

In his Budget speech on February 26, India’s finance minister articulated the three important challenges confronting him in preparing this year’s Budget.

These were to restore growth (to 9 per cent, ideally higher); to use this growth to make development more inclusive, particularly by strengthening rural infrastructure; and to address bottlenecks in public delivery mechanisms and institutions. Read the rest of this entry »

Guest Author: Renu Kohli

India’s Budget for 2010 is a demonstration of the discipline that global integration imposes upon countries. The modest contraction in the fiscal stance displays a responsible coordination of macroeconomic policies. Its overall message—serious effort at consolidating public finances—manages fiscal expectations positively. Both were necessary to contain rating hawks and reassure markets and investors—the new watchdogs of open India.

This remarkable development is significantly due to the pressures of growing economic openness. Read the rest of this entry »

Author: Peter Drysdale

The global financial crisis has brought with it big changes in the international economic system. The response to the crisis has seen the emergence of the G20 as the main locus of international economic governance and a cession of authority from America and the old industrial powers (the G7 economies) to the emerging powers in Asia and elsewhere. The role of the US dollar as the world’s primary international currency is also under question, as the growth of US deficits that are necessary to sustain that role has begun to corrode confidence in the value of the dollar.

As the big new kid on the block, China plays into everyone’s thinking about what to do next. Read the rest of this entry »

Author: Ken Heydon, LSE

As the Doha Round flounders, preferential trade agreements (PTAs) have become the centrepiece of trade diplomacy. The annual average number of PTA notifications since the WTO was established has been 20, compared with an annual average of less than three, during the four and a half decades of the GATT.

Such agreements, which now account for over half of world trade, share a number of characteristics. Read the rest of this entry »

Author: Shandre Thangavelu, NUS

The ACFTA (ASEAN China Free Trade Area) is one the world’s largest free trade agreements. As of January 2010, it encompassed 1.9 billion people, had a combined GDP of US$6.6 trillion and total trade amounted to US$4.3 trillion. Its Framework Agreement was signed in November 2002 and the Trade in Goods Agreement entered into force July 2005, followed by the Trade in Services Agreement in July 2007. In 2010, the full implementation of zero tariffs for most goods in the FTA is expected for China and the ASEAN6 (Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand), while the CLMV (Cambodia, Laos, Myanmar and Vietnam) will do the same later in 2015.

The key motivations of ASEAN for ACFTA is to access the growing Chinese market in services and manufacturing and to create one of the world’s largest trading areas. Read the rest of this entry »

Author: Claude Barfield and Philip I. Levy, AEI

After prolonged ambivalence about trade, President Obama finally found an agreement he could embrace – the Trans-Pacific Partnership (TPP). But what is the object of the President’s new found passion? Why has the South Pacific caught his fancy when pending agreements in Latin America and Northeast Asia could not? And will this amount to anything more than the Administration’s rather empty promises to wrap up the Doha Round of WTO global trade talks?

In fact, the TPP is potentially a significant addition to U.S. trade policy. It could be a model for trade liberalisation and a means to address long-standing U.S. interests in Asia. Read the rest of this entry »

Author: Shankaran Nambiar, MIER

The ASEAN-India Free Trade Agreement (AIFTA), which has been concluded after protracted discussions, is a strategic event that holds promise for both parties. The agreement is noteworthy as it completes ASEAN’s links with Asia’s two major emerging powers and two of the fast growing economies in the world, China and India. The FTA signals India’s readiness to contribute to the development of the region, and seek benefits from the process. There is no doubt that ASEAN welcomes India’s involvement in the region. A quick scan of recent trade figures, precisely because they lack lustre, suggests that India is looking beyond the present in concluding this agreement. This gives cause for optimism.

India’s trade with ASEAN has not been spectacular. India has been running a deficit with ASEAN in the last decade, and the deficit has been growing. Read the rest of this entry »

Author: Suman Bery, NCAER

As The Economist magazine recently observed, one of the most important and surprising outcomes of the current economic crisis is that the economies of the large emerging market countries have been much more resilient than those of the advanced countries, and are returning to growth faster and more vigorously.

These countries, particularly China, India and Brazil, accordingly are expected to continue to provide the bulk of world growth in the near future. This continues the trend of the past half decade, even if the rhetoric of ‘decoupling’ was somewhat overdone. In turn, this trend parallels and reinforces another important structural trend in the global economy – the steady shift in the locus of economic activity toward Asia since the 1960s. Read the rest of this entry »

Author: Shiro Armstrong, ANU

The Democratic Party of Japan’s (DPJ) secretary general and power broker Ozawa Ichiro recently took 645 DPJ members and other leaders to China in an unprecedented move for both countries. This is a big step in following up on the DJP’s promise to mend relations with China. There is talk now of making progress on the difficult history issue and of moving beyond it. Other rumours have Prime Minister Hatoyama visiting Nanjing this year — the site of Japanese imperial war atrocities — in exchange for a visit by President Hu to Hiroshima.

The Sino-Japanese relationship has come a long way since a decade ago. Read the rest of this entry »

Author: Razeen Sally, ECIPE

It is perhaps time to revive the idea of a transatlantic free trade area (TAFTA). This is the gist of two papers, one by ECIPE’s Fredrik Erixon and Gernot Pehnelt, the other by GEM-Sciences Po’s Patrick Messerlin and Erik van der Marel. A TAFTA initiative was floated in the 1990s, only to sink; and the Transatlantic Economic Council (TEC), established at the initiative of Chancellor Merkel to tackle regulatory barriers, has become bogged down in micro-detail and hardly made progress. Sure, political obstacles are great, but it is worth stepping back to coolly assess costs and benefits, and then decide whether to go ahead with a new initiative.

First, consider the context of US and EU trade policy, especially in light of the global economic crisis. Read the rest of this entry »

Author: Suiwah Leung, Crawford School, ANU

Vietnam weathered the global financial crisis surprisingly well. Real GDP growth of 4.6 per cent year-on-year for the period January-September 2009 is below that of China, but well above growth rates in most East Asian economies.

One factor behind this unexpected result is the still early stages of integration into the global economy. This has cushioned Vietnam from the immediate impact of the US financial crisis and from the more devastating effect of reduced manufacturing exports. The turnaround in monetary policy (from monetary tightening in mid-2008 to halving the official interest rate from 14 to 7 per cent per annum by November the same year) and the large program of fiscal stimulus (announced at around US$8 billion) also contributed to maintaining growth. Read the rest of this entry »

Author: Andrew Elek on behalf of the Australian Committee for Pacific Economic Cooperation (AUSPECC)

On December 4-5, 2009, the Australian Government convened a ‘one-and-a-half track conference’ of prominent government officials, academics and opinion makers. In this week’s digest, Peter Drysdale reports on the meeting which discussed the form an Asia Pacific community might take and the role of existing forums (including APEC) within evolving regional institutional architecture.

Drysdale and Hadi Soesastro have made a useful recommendation for how Prime Minister Rudd’s proposal, could be advanced by a council of the leaders of the G20 members of APEC, together with India. Read the rest of this entry »

Author: Pradumna B. Rana, National University of Singapore

Much has been written on the economic rise of China and India and the deepening of integration between these two Asian giants and the rest of Asia more generally. Asia’s emergence and integration is, no doubt, of contemporary interest. However, Asian integration is not without historical precedent and it would be more appropriate to refer to Asia’s ‘re-emergence’ and ‘re-integration’.

During the first eighteen centuries after the birth of Christ, Asia (mainly China and India) accounted for the largest share of world output. Read the rest of this entry »

Author: Henry Gao

Since its inception in 2005, the Trans-Pacific Strategic Economic Partnership Agreement (the ‘P4 Agreement’) has been hailed as a ‘high standard’ free trade agreement (FTA). However, there has never been any official explanation as to how the assessment of the Agreement is conducted. Now it’s exam time again, let’s see how the Agreement performs in ‘Free Trade 101’.

To be deemed as ‘high-standard’, an agreement must satisfy two requirements. Read the rest of this entry »

Author: Wendy Dobson, University of Toronto

APEC leaders’ agenda at their Singapore meeting on November 14-15 should include expanding membership to India when the ten-year moratorium expires in 2010.

A positive decision would have at least two significant implications. The APEC region is home to the world’s four largest economies (China, India, Japan and the United States) and it makes no strategic sense to exclude one of the four – especially when India is already a member of the East Asia Summit and the G20. Read the rest of this entry »