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Product Details
| ISBN-13: | 9789382573678 |
|---|---|
| Publisher: | VIJ Books (India) Pty Ltd |
| Publication date: | 08/01/2013 |
| Series: | National Security Series |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 184 |
| File size: | 2 MB |
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CHAPTER 1
Session -1 Chairman's Opening Remarks
Dr Daesung Song
The topic for the session is "Trade and commerce in the Asia-Pacific- Region and its impact on security". We have three distinguished panelist here and rather than me introducing them I would like to give two minutes to each panelist to introduce themselves. First, I would request Venkat Subramanian, to introduce himself.
Mr. TC Venkat Subramanian
I am Chairman and Managing Director of Export-Import Bank of India (Exim Bank). Prior to this I was the Managing Director and CEO of Exim Bank. I joined Exim Bank of India in 1982 when the Bank was set up. I actively participated in the setting up of Exim Bank as a model public sector organization with a professional work culture.
Ms. Tsun-Tzu Hsu
I am Associate Research Fellow and Section Chief at the Taiwan WTO Centre, and Programme Coordinator at the Taiwan ASEAN Studies Centre (TASC), Chung Hua Institution for Economic Research (CIER), Taiwan (R.O.C). My areas of research include international trade policy and economic/trade law, trade and development issues, regional integration and gender issues.
Cmde Ranjit B Rai (Retd)
I have served as Director Naval Operations (DNO) and Director Naval Intelligence (DNI) at the Naval Headquarters (NHQ). I have served as a Defence Adviser in the Indian High Commission Singapore and South East Asia for four years and have visited Australia, USA and China. I am at present, vice-President of National Maritime Foundation, New Delhi.
Session I First Paper
Mr. TC Venkat Subramanian, Ex CMD (Exim Bank of India)
Trade and Commerce, in the Asia-Pacific Region and its Impact on Security
Introduction
Trade and Commerce have always remained important factors in determining a country's standing and the political influence it can exert on the global and regional issues. The political influence is derived from the economic strength which is built up through aggressive international trade and commerce. The following chart shows how the world trade has moved over the decades and how the fortunes of the major countries in the Asia-Pacific region have changed:
1948 1963 1983 1993 2003 2011
(Source: WTO/ITC)
India which had a share of 2.2 % of the world trade in 1948, saw its share dwindling steadily, until the trade reforms which were initiated in the 90s, retrieved its position somewhat. However, it is yet to regain the share it had in 1948. Japan also started losing its pre-eminent position it had till early 90s and its share has more than halved over last two decades as also its influence over the region. The star player over the last three decades has been China with its aggressive brand of trade expansion and penetration into all the global markets. Consequently, its influence over the countries in the region has expanded greatly which may become a cause of concern and may also impact the security of some nations.
Global Trade Scenario
Growth in global trade flows slowed down in 2011 due to economic crises in many parts of the world. Still, the overall exports amounted to US $ 17,780 billion as compared to US $ 14,850 billion in 2010. USA, Germany and China accounted for nearly 28 per cent of exports. Asian region including China accounted for 30 per cent of the total exports. In 2011, the top 4 exporting nations were China (US$ 1900 bn with 10.4% share), USA ( US$ 1480 bn with 8.1 % share), Germany (US$ 1470 bn with 8.1 shares) and Japan (US$ 823 bn with 4.5 % share). While USA posted a large trade deficit (export minus import) of nearly 700 bn, the other three nations posted trade surplus ranging from US$ 70 bn to US$ 200 bn. India was placed at 19 position with US$ 297 and 1.6 % share.
A significant amount of trade takes place within the region. In the European Union, the intra EU trade is as high as 71 per cent of EU's total exports to the world. Similarly, intra-Asian trade is around 53 per cent of Asia's total exports. Intra- NAFTA exports were around 50 per cent of their total exports. Every country wants to be a dominant player within its region and that may be the reason for increasing intra-regional trade which is more than the inter- regional trade. India's exports to countries in the Asian region (including West Asia) amount to nearly 50 per cent of its total exports. India's exports to countries in Asia-Pacific region alone is about 33 per cent of its total exports.
Asia's Trade Performance
The following chart will illustrate how major Asian countries had performed over last three years which were marked by bouts of economic crises and slowdown in many parts of the world (annual percentage change):
2009 2010 2011 2009 2010 2011 2009 2010 2011
(Source: WTO)
From above chart, it is seen that the performance of Asian region is better than the world, in all three parameters viz. GDP, Exports, Imports. As can be seen, this is primarily due to good performance of both China and India. However, in the year 2012, there has been deceleration in both these economies which may impact the region as a whole.
India's External Trade Performance
India's external trade has been quite buoyant in recent years and the growth rates have been significantly higher, though the imports are still much higher than the exports resulting in sizeable trade deficit. The following chart would give a snapshot of India's external trade over the years:
EXPORTS IMPORTS
India's exports to Asia-Pacific region in 2011-12 amounted to about US$ 85 billion, equivalent to 28 % of its total exports. Another 22% went to West Asian countries. Thus, India's engagements with Asian nations have been growing in recent years. India has also taken a number of initiatives like its "Look East Policy" to enhance the trade with countries in Asia Pacific region. India's bilateral trade (exports and imports) with Japan has increased from US$ 4 billion in 1996-97 to around US$ 18 billion in 2011-12. India's trade with China, however; increased from US$ 1.3 billion in 1996-97 to a phenomenal US$ 75 billion in 2011-12. But Foreign Direct Investment (FDI) from Japan has been steady and has been to the tune of almost US$ 63 billion over the last decade. FDI from China has been negligible. India's bilateral trade with South Korea in 2011-12 has been around US$ 17 billion. In addition, there are a number of Korean ventures operating very successfully in India.
India vis-a-vis China
India's bilateral trade with China started sometime in early 90s. Initially, China imported more from India than its exports to India, thus giving India a positive trade balance. This position progressively changed over the years and soon the trade balance shifted in favour of China. While China imported mainly raw materials and primary commodities like iron ore from India, its exports were mainly manufactured goods in a number of segments like telecommunication electronics, toys, consumer and industrial products and machinery. As these products were priced very competitively, domestic industrial units, particularly SMI's in these segments started losing out their competitive edge to Chinese firms. The export and import figures in the bilateral trade over the years are captured in the following charts:
YEAR EXPORTS TO IMPORTS CHINA FROM CHINA
Thus, in a span of 15 years the negative trade balance with China has increased from US$ 141 mn to US$ 39441 mn. This trade deficit is almost 22% of the total trade deficit of India for the year 2011-12. This is in spite of the fact that India is considered "less open to trade" than China. "Trade Openness" is measured as "total trade (exports imports) as a % of GDP" of the country. The following chart gives the trade openness of India and China over the decades:
Decade CHINA INDIA (%)
The above figures indicate that the Indian economy is less integrated with the global economy than the Chinese economy. This is understandable as reforms started in China much earlier (late 70s) as compared to India (early 90s). India's lesser openness to trade and the dominating role of domestic demand, explain why India is barely affected by external shocks compared to China or ASEAN economies.
Issues of Concerns and Impact on Security
Trade and commerce should not normally be a cause of concern or impact a country's internal and external security. But, in current times when trade is used to expand one's sphere of political influence over other countries within or outside the region and to dominate other countries' policies, it becomes a matter of concern. For example, China's aggressive forays into African markets with very cheap trade credits backed by Chinese government agencies, have somewhat dimmed India's age old traditional ties with African nations. The recipient nations are obviously more obliged and favourable to Chinese views than others. The same is the case with Chinese forays into Latin America and South Asia. This could impact India's leadership position in Asia and its close ties with Africa and Latin America. Chinese objection to India's oil exploration agreement with Vietnam is one such example.
China, over the years has emerged as the leading manufacturer and exporter of telecommunication equipment. With an estimated export of US $ 180 billion in 2011, China has overtaken EU as the major exporter of telecommunication equipment to the world. With its unbelievable low cost products, it has made its presence throughout Africa. China exported telecommunication equipment worth US$ 38 billion to USA and about US$ 92 billion to Asian countries last year. Telecommunication equipment is a sensitive item of import which can have security related issues. India has also imported telecommunication equipment from China worth about US$ 7 billion during last two or three years. To quote from the lead article published in a recent issue of the magazine "The Economist" of London: "Huawei, a private firm is a standard bearer in China'S long march into Western markets. Its founder, Mr. RenZengfei, who served as an engineer in the People's Liberation Army (PLA), at first struggled to win customers even inChina...... The company is now a US$ 32 billion business empire with 140,000 employees, customers in 140 countries. It commands respect by delivering high-quality telecommunication equipment at low prices. The company is said to be too close for comfort to the PLA. Westerners feel that the networks the firm is building are used by Chinese spooks to eavesdrop during peacetime and could be shut down during war time. They see the firm as a potent weapon in China's burgeoning cyber-arsenal. It is a view that some governments are taking seriously. Earlier this year Australia blocked Huawei's participation in a scheme to build a national broadband network in the country. The company also faced opposition to its commercial expansion in India. And in America, where Huawei's attempts to grow have often been stymied, a congressional committee that focuses on intelligence matters is putting the firm under the microscope; suspicions have been aggravated by a recent spate of cyber-attacks attributed to Chinese hackers." Similarly, a Chinese private firm was recently barred by the US from acquiring four wind mill farms in locations that US considered security sensitive.
Thus, trade and commerce also are subjected to security issues and each country needs to evaluate its own perception of the risks involved in expansion of trade with those countries with whom it had not had best of relations in the past. However, these issues will have to be dealt with caution within the broad framework of World Trade Organisation (WTO) on free flow of trade and commerce. Arguments against imports always need to be viewed with caution, since they will be used by protectionists to keep emerging rivals out, as pointed out by the magazine "The Economist".
Session- I Second Paper
Ms. Tsun-Tzu Hsu
Trade And Commerce In The Asia-Pacific Region And Its Impact On Security
Introduction
The close economic ties driven by various accelerated integration mechanisms in the Asia Pacific region, particularly among the Southeast and East Asian countries, have contributed significantly to economic growth and shared prosperity in the region in the past decades. Most economies, especially those being benefited from enhanced trade and investment activities with their neighbouring countries believe, economic integration brings positive effects and reduces political and security risks in the region. However, what has happened between China and its neighbouring countries, including Japan and some Southeast Asian countries, in the past months gives the region a lesson that close economic relations with a big neighbour needs more balancing and calculation in order to avoid possible negative consequences.
In the meantime, the Association of the Southeast Asian Nations (ASEAN) proposed to accelerate regional economic integration by developing a Regional Comprehensive Economic Partnership (RCEP) agreement among its 10 member nations and 6 countries which have signed Free Trade Agreements (FTAs) with them, namely China, Japan, South Korea, Australia, New Zealand and India. The major rationale behind the RCEP initiative is the strong political will of the ASEAN to counter balance the US-led trade initiative - the Trans- Pacific Partnership (TPP), and other major powers in the region. Likewise, the initiative also raises the issues of security and stability.
This paper in its first part aims to examine the recently emerging economic tensions or "economic retaliations" of China against some of its trading partners and discusses their policy implications. In the second part, this paper aims to analyze the possible development of the RCEP initiative and tries to assess its impact on the security issues at regional and national level.
The Rise of China and the Two-Sided Effects on the Regional Economy
The rise of China as an economic powerhouse is no doubt an important driving force for the phenomenal economic performance in the East Asia region in the past two decades. Although some countries in the region have been skeptical about China's fast growing economy, political and military influence, no countries have ever tried to refuse the trading opportunities with China. Every country wants to take advantage of China's huge market demands. The ASEAN and China signed the Framework Agreement on Comprehensive Economic Cooperation (ACFTA) in November 2002. The ACFTA was realized on 1 January 2010, since then almost 97 per cent of products classified by ASEAN-6 (Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand) and China in the Normal Track have been eliminated. The tariffs between the other 4 less developed members, namely Cambodia, Laos, Myanmar and Vietnam, or the CLMV countries, will be fully implemented on 1 January 2015.
According to ASEAN Secretariat statistics, in 2010 China maintained its position as ASEAN's largest trading partner, accounting for 11.3 per cent of ASEAN's total trade, while ASEAN was China's fourth largest trading partner, accounting for 9.8 per cent of China's total trade. ASEAN's exports to China reached US$113.5 billion in 2010, increasing by 39.1 per cent as compared with 2009 and becoming ASEAN's second largest export destination. ASEAN's imports reached US$117.7 billion in 2010, increasing by 21.8 per cent as compared with the previous year. The global financial crisis has made ASEAN more dependent on China as a result of the shrinking demand in the Western countries.
At country level, according to the WTO statistics, in 2010, China is the largest trade partner of Japan, South Korea, Taiwan, and among ASEAN Member Nations, is the largest trade partner of Malaysia and the second or third largest trade partner of several other ASEAN Member Nations. It is also the largest import source of Indonesia, Vietnam and Cambodia, with fast growth in import trade with other Member Nations.
(Continues…)
Excerpted from "Trade, Commerce and Security Challenges In the Asia-Pacific Region"
by .
Copyright © 2013 United Service Institution of India, New Delhi.
Excerpted by permission of Vij Books India Pvt Ltd.
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Table of Contents
Concept Note,
Participants,
Acronyms,
Inaugural Sessions,
Welcome Address Lt Gen PK Singh, PVSM, AVSM (Retd), Director, USI.,
Keynote Address Ambassador Kanwal Sibal, IFS (Retd) Former Foreign Secretary.,
First Session Trade and Commerce in the Asia Pacific Region and its Impact on Security.,
Chairman Dr Daesung Song,
Co-Chairman Maj Gen YK Gera (Retd),
First Paper Mr TC Venkat Subramanian,
Second Paper Ms Tsun-Tzu Hsu,
Third Paper Cmde Ranjit B Rai (Retd),
Discussion,
Concluding Remarks Major General YK Gera (Retd),
Second Session Energy, Environmental and Maritime Security.,
Chairman Vice Admiral PS Das, PVSM, AVSM, VSM (Retd),
First Paper Dr. Annika Bolten-Drutschmann,
Second Paper Vice Admiral Arun Kumar Singh, PVSM, VSM, NM (Retd),
Third Paper Sr Col Le Kim Dung,
Fourth Paper Mr. Ivan Safranchuk,
Discussion,
Concluding Remarks Vice Admiral PS Das, PVSM, AVSM, VSM (Retd),
Third Session (Panel-1) Future Security Challenges and Opportunities.,
Chairman Major General Dato' Pahlawan Dr William R. Stevenson,
First Paper Professor Richard Rigby and Dr. Brendan Taylor,
Second Paper Professor Swaran Singh,
Third Paper Sr Col Do Mai Khanh,
Fourth Paper Dr. Satoru Nagao,
Third Session (Panel-2) Future Security Challenges and Opportunities.,
Chairman Air Chief Marshal SP Tyagi, PVSM, AVSM, VM (Retd),
First Paper Dr. Daesung Song,
Second Paper Dr. Elichi Katahara,
Third Paper Major General BK Sharma, AVSM, SM**(Retd),
Fourth Paper Dr. Tuan Yao Cheng,
Discussion Chairman's Concluding Remarks Valedictory Session,
Valedictory Address Shri Asoke Mukerji, Special Secretary on behalf of Shri Ranjan Mathai, Foreign Secretary.,
Vote of Thanks Lt Gen PK Singh, PVSM, AVSM (Retd) Director, USI,