Trade and connectivity in the post COVID-19 world
Trade and connectivity in the post COVID-19 world
WRITTEN BY TRIDIVESH SINGH MAINI
28 June 2020
As countries look to recover from the economic setback caused by the coronavirus pandemic, the three T’s – trade, travel and technology are likely to play an important role in getting the global economy back on the rails.
Even in the midst of the pandemic, countries have been in talks regarding Free Trade Agreements (FTA’s). The UK is seeking to sign an FTA, not just with the US, but also with Japan, so as to buttress the bilateral economic relationship and gain entry to the 11 member Comprehensive Partnership for Trans Pacific Partnership (CPTPP).
On 8 June 2020, Vietnam’s national assembly ratified an FTA with the European Union known as EUVFTA (European Union Vietnam Free Trade Agreement). According to the terms of the FTA, the EU will now lift 85% of its tariffs on Vietnamese exports, while the remaining tariffs will be removed over a period of 7 years. Vietnam on the other hand will lift nearly half ( 49%) of its import duties on EU goods, while the rest of the tariffs will be removed over a period of 10 years.
Beyond dependency on China
The CPTPP is also likely to expand in the near future as Japan seeks to get Thailand, Taiwan, Indonesia and the Philippines on board. The aim is to create an alternative set of supply chains in a post corona world, where dependence upon China is reduced. In recent weeks, there has also been a growing debate with regard to the development of new technologies.
An important step in this direction is the UK’s suggestion for the creation of a new organisation (the D10) to consist of the G7 countries + India, South Korea and Australia. The aim of the D10 would be to provide alternative technologies, so that dependence upon Chinese tech is reduced. At the launch of the report titled Future Tech Trade Strategy (at London Tech Week), Britain’s Trade Secretary Elizabeth Truss announced a new 8 million GBP initiative which would enable British companies to expand tech ties with Asia-Pacific countries, especially Japan and Singapore. In turn British companies would be assisted by the stationing of tech experts in its high commissions and embassies.
Resuming connections post virus
In recent days, the resumption of international air travel has also been an important matter of discussion. Members of the CPTPP, notably Japan, New Zealand and Australia have been in talks about resuming air connectivity. Japan is also likely to ease entry bans for countries like Vietnam and Thailand where cases have reduced. Singapore, another member of the CPTPP is also in talks with South Korea, Malaysia and New Zealand about a resumption of air connectivity (passengers travelling by Singapore Airlines and Silk Air flights from select destinations in Australia and New Zealand have been allowed to transit at Changi Airport).
China too has been seeking to revive air travel. While it has set up a travel corridor with South Korea, it has also signed an agreement with Singapore for reciprocal travel for essential purposes – business and official duties. Initially, this arrangement will be for six provinces - Shanghai, Tianjin, Chongqing, Guangdong, Jiangsu and Zhejiang though travellers will need to apply for a visa in advance, and get tested for COVID-19 both before departing for China and upon arrival. Vietnam which removed its lockdown at the end of April, and resumed domestic flights in June is also reviving international travel with a few countries such as South Korea, (South Korean students enter ASEAN country through a special permit).
The EU is seeking to resume air connectivity with Non-EU countries by the first week of July (it has already opened travel within EU member states) and it is likely that air connectivity will begin to resume with low risk countries. Any resumption in travel will of course be a step by step process. Japan for instance has indicated that it will open air connections with other countries on a staged basis, first for businessmen, then students and finally tourists.
The recalibration
What is fascinating to observe is that the narrative surrounding the three T’s is not being set by the West - but instead Asian countries. Even within the Asia-Pacific, it is not just a China driven narrative, Japan too is playing an important role and from within ASEAN it is not just Singapore, but Vietnam which has emerged as an important stakeholder. In the post corona world, there are likely to be a number of changes with geo-political and economic dynamics in Asia expected to witness a significant shift.
What is also interesting to note is that while earlier, travel and technology were broadly thought of as key tools of ‘Soft Power’, post pandemic there will be a strong hard power component. In the context of travel, each country will need to be cautious with regard to opening up air connections, and stick to linkages with countries which have managed to control the coronavirus. As far as technology is concerned, due to rising tensions with China, the creation of alternative technologies is likely to be viewed as a security requirement, particularly given trade had already acquired a strong strategic component long before the pandemic.
DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.
Author biography
Tridivesh Singh Maini is a New Delhi-based policy analyst associated with the Jindal School of International Affairs, Sonipat. His areas of interest include the India-China-Pakistan triangle, Belt and Road Initiative (BRI), the role of India’s state governments in foreign policy (especially the economic dimension), and federalism in India. He was a South Asian Voices Visiting Fellow at the Stimson Center, Washington DC and a Public Policy Scholar with The Hindu Centre for Politics and Public Policy, Chennai. He can he reached by email. Image credit: Bridget Coila/Flickr.