ASIABUSINESSOPINION

Towards a new economic order

The global economy is at a critical juncture, several nation states are resorting to protectionism, at this time Japan is well positioned to promote and spearhead a pax Nippon economic order.

By Pranay Shome

Protectionism- the buzzword

Following the conclusion of the Marrakesh round negotiations which laid the foundation stone of the World Trade Organization (WTO) in 1994, the world seemed poised for a new period in global economic order which was largely bipolar in nature during the cold war and immediate years following the collapse of the Soviet Union, the free run of liberal capitalistic order which advocated global and free movement of goods, services and even minds of human beings seemed to be the new norm in international economic politics.

Two decades on the line and the current economic order is clearly coming under stress, from 2014 onwards, when there was a rise of right wing populist leaders across the world be it Narendra Modi of India, Jair Bolsonaro of Brazil, Donald Trump of USA to name a few have clearly demonstrated that multilateralism can wait. Different actions like the US pulling out of the Transpacific Partnership (TPP) in 2017, the bruising Sino-US trade war which has lingered on for almost three years (the phase 1 of the deal is still nascent and take some time to show its effect), India opting out of the Regional Comprehensive Economic Partnership (RCEP) due to domestic electoral concerns have clearly demonstrated that the global rules based, inclusive global economic order is coming under increasingly under pressure.

Protectionism is clearly ruling the roost, the million dollar question is-will multilateralism wither away?

Japan – new torchbearer of multilateral economic order

In such trying times, economists and top policy experts have been speculating which country could hold the batten for spearhead a new multilateral trade order, could it be China, possibly but it is not because though China is through its famed Belt and Road Initiative (BRI) to export its monetary and geopolitical influence across the globe has come under increasing scrutiny, further the Chinese do not allow much market access to its fellow trade partners, although its policies are changing but much remains to be done. Not India as well, but the nation state which could lead such a global order is Japan.

Japan is being credited with playing the leading role in preserving the main body of what many experts call a state-of-the-art multilateral trade agreement—indeed perhaps the future of the global trading system—at a time when Trump, who proudly calls himself “Tariff Man,” appears to be trying to turn back the clock nearly three centuries to the antiquated mercantilist thinking that preceded Adam Smith.

Japan is the world’s third-largest economy and one of America’s most important allies. It shares one of the world’s largest bilateral economic relationships with its neighbor China. That puts Japan in a unique position to navigate the defining challenges of economic issues the global community faces today. The strong evidence is Japan played in negotiating the TPP once the US withdrew from it. It is rare for Japan to lead in multilateral negotiations, but as the past years have demonstrated, the absence of the United States from the TPP had given Japan more “space” to exercise leadership in securing mega-regional trade deals. Japan took the opportunity to lay down “rules of the road” in concert with the remaining TPP partners instead of being on the receiving end of external pressure from the United States.

Osaka presented a strategic opportunity to save the multilateral trading order for Japan. The country knows firsthand the importance of multilateralism. Japan was shut out of international oil and raw materials markets during the interwar period, giving Japanese expansionists the upper hand in leading Japan down a devastating wartime imperialist path. Its image has however changed radically under the reformist post war development oriented parties.

Japan’s role in the negotiations in the Regional Comprehensive Economic Partnership (RCEP) is another strong example of its role in promoting the rules based multilateral trade order, although the relative significance of the RCEP seems to have been undermined by India not joining the “world’s largest free trade agreement (FTA)” but there remains much scope whereby Japan can persuade India to let go of its hawkish stance and not pander to domestic concerns when it comes to intensify efforts at accommodating and promoting a rules based inclusive trade order.

Japan is actively promoting trade-related capacity building for developing countries through such means as bilateral development assistance schemes. It is also imperative to forge support from all relevant parties, including the civil society. The WTO needs countries like Japan to take the lead in shaping the global trade body in accordance with the needs of the countries of the global South, although Japan falls in the list of first world countries, but having intimate ties with many of the third world countries and Japanese have a pacifist constitution committed to global peace and inclusive economic development augers well for Japan’s role in promoting reforms in the WTO.

Conclusion

The world is on the threshold of the dawn of a new trade order, one where Japan is poised to play a decisive role, although the actions of the populist leaders across the globe has thrown up all kinds of conspiratorial narratives regarding the efficacy of multilateralism, yet it is imperative that Japan takes the lead in the difficult task of steering the world closer to multilateralism.

Tags
Show More

Foreign Policy News

Foreign Policy News is a self-financed initiative providing a venue and forum for political analysts and experts to disseminate analysis of major political and business-related events in the world, shed light on particulars of U.S. foreign policy from the perspective of foreign media and present alternative overview on current events affecting the international relations.

Related Articles

Back to top button
Close

Adblock Detected

Please consider supporting us by disabling your ad blocker