Q1.Archita: This is about the “ASEAN’s collective wisdom as a regional grouping.”
Dr. David: “Economic integration of ASEAN would mean more power as a group regarding negotiation.”
However, the countries in the region are falling under the debt trap individually or bilaterally. Can the integration as a grouping counterbalance the political leverage that China has gained at the negotiating table through debt traps?
Dr Dharish David dissected the question and articulated the answers simply yet effectively.
Instead of focusing on deadlocks that the ASEAN might face, the grouping's opportunities and net benefits were examined. The smaller, economically weaker countries – compared to China – being in a group such as the ASEAN would improve the chances of negotiation. In other words, the probability of a smaller nation being able to negotiate in a group is much higher than doing it individually.
A hypothetical scenario was outlined in which Indonesia, as an ASEAN member, enhances its negotiating power with China, whether voicing its concerns individually or through collective action within the group. The mere presence of Indonesia in the group could significantly influence the outcomes. Further, it was stated that China will look for opportunities that ASEAN can provide and will take its chance at considering the individual nations’ concerns. The collective weight will be great as a group, and as ASEAN member nations know it, they will try not to lose it.
There was an interesting assertion about the debt traps – that the debt trap as a concept has not been proven; that is, there is not enough evidence to substantiate the argument that the debt trap is a real, let alone effective, phenomenon.
Dr David agreed with ASEAN’s interest in counterbalancing China as the group collaborates with the US in economics and defence. Moreover, India is investing more in ASEAN to counterbalance China.
There is always a consensus within ASEAN, and they can and will push it forward. And if there are differences of opinion within the member nations, they can resolve it bilaterally or multilaterally to find a solution.
Dr David mentioned some methods in which ASEAN could explore its potential and enhance integration and cooperation, such as increasing investments through inter-ASEAN trade and increasing human-to-human connection through free movement, communication, and cultural exchanges, as in the case of the EU with its Schengen visa. Interestingly, this was said before Thailand announced its plans for a Schengen-style visa in April 2024.
Hence, he believes that ASEAN nations have only to gain staying in the group, despite the possibility of deadlocks.
Q2. Khusbu: IPEF is not an FTA - which means that the terms of the arrangement are less rigid, accommodative, and inclusive than RCEP. How far does this fact give leverage to IPEF over RCEP, considering India is trying to grow as an exporter?
Dr. David: It's important to recognize that although both the RCEP (Regional Comprehensive Economic Partnership) and the IPEF (Indo-Pacific Economic Framework) seek to promote economic cooperation, they do so via different mechanisms and degrees of commitment. As a specialist in international relations, comprehending the differences between these two agreements is essential to understanding how each will affect India's export expansion plan.
As you rightly noted, the IPEF's flexibility offers certain advantages over the more rigid and comprehensive RCEP. This adaptability empowers participating nations to align their involvement with their unique economic priorities and developmental stages. For India, which is keen on enhancing its export capabilities, this could provide a strategic advantage, allowing it to pursue its export-oriented growth agenda more autonomously.
Dr. David also indicates that it's crucial to acknowledge that leverage in international trade agreements is complex and context-dependent. While the flexibility of IPEF may offer advantages in certain areas, it may also have limitations, particularly in terms of integration depth and market access opportunities when compared to RCEP. Moreover, the level of commitment and consensus-building within each framework can significantly influence its ability to foster trade and economic cooperation.
Dr. David acknowledges that while the IPEF's flexibility may provide some leverage for India in pursuing its export objectives, it should be viewed as one of many factors influencing the country's trade policy. Finally, India's success as an exporter will be determined not only by the agreements in which it participates but also by its overall economic policies, competitiveness, and ability to navigate the complexities of the global trading system.
Q3. Soham: How far is the trend of friend-shoring likely to disable the conditions favourable for complex interdependence? Wouldn’t that bring problems more to the surface with a lesser incentive for resolution?
Dr David pointed out that the trade war between the US and China shows they are are willing to bear the tolls of indiscriminate friend-shoring, turning off complex interdependence. The conspicuous and competitive raising of tariffs indicates that the parties have resolved to reduce their dependence on each other by lowering their incentive and areas to cooperate, severing ties, and welcoming other long-term consequences.
On the contrary, the US is looking at India – the neighbour with whom China has a long-standing antagonistic relationship – as an integral partner for trade and the ‘China PlusOne’ strategy for friend-shoring, potentially increasing the chances of supply chain bottlenecks than having a neutral partner for the role.
Tactful and optimistic while addressing both these concerns, Dr David cited how former US President Donald Trump explicitly disliked China’s terms of trade amid the increasing speculations about reshoring and friend-shoring.
Dr David again analyzed the US trade history to substantiate the argument further. He spoke about how the US had friend-shored several times, citing the production facilities movement to Japan during the Cold War. Japan became the second-largest economy following that decision. Before, the US viewed China as a cheaper alternative and built ties with the latter. After that, China replaced Japan as the second largest.
Considering that a direct war did not occur between Japan and China, Dr David concluded that India should be a part of the trend of the developing world, having a chance at capacity building. Hence, India should welcome this opportunity.
However, amid China’s rise, Dr David hopes that the US views India as a trade partner and that India should take its chance to see the US similarly. Both countries should capitalise on this opportunity – for their respective strategic and economic interests –by broadening the avenues of cooperation and not being very selective.
Focusing on the economic silver lining in the complex geopolitical phenomenon, he reaffirmed, "Everybody expects us to be the next China; economy, population-wise, we are ready.”
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