Congratulations to both China and Indonesia, their people and leaders on the 70th anniversary of diplomatic relations.

The enormity of the challenges facing all of us today, East and West, advanced economies and emerging and developing economies alike, necessitates stronger cooperation in all spheres of life. Regaining cooperative momentum rather than succumbing to the instinct of beggar-thy-neighbor policies will determine how far and how quickly we can return to a better shared sustainable growth. Given the rising knowledge and spatial complexities in which we all live, no government and no country will ever again be able to sustainably prosper alone.

The coronavirus pandemic has made and will continue to make life very difficult for billions of citizens. Its transmission has not been brought under control. As of Nov. 24, COVID-19 had infected over 58.7 million people and killed nearly 1.4 million of them. The number of new cases has risen steeply in recent days and some countries are struggling with a feared relapse.

On the economic front we are projected to lose almost 5 percent of the world’s 2019 output. The loss could even be greater than 10 percent in some countries. Everywhere investment will fall even more severely, setting the limit as to how far we can grow in the near future.

Foreign direct investment (FDI), which has served for many economies as an engine of technology acquisition over the years, may nosedive by 40 percent. The same trend is occurring in portfolio investment.

Trade in goods is projected to decline by nearly 10 percent this year, depriving our economies of the forces that inspire us to divide tasks and, thereby perfect them continuously or even reinvent them with great positive impacts on our income and wealth, or prosperity in short.

The equivalence of hundreds of millions of jobs have disappeared with the social restrictions and reduced mobility. Unknown but certainly huge numbers of small and medium businesses that happen to dwell overwhelmingly in contact-intensive industries have ceased operation or even gone out of business.

With such a de-facto deterioration of unemployment, poverty reverses its trend, rising rather than the desired reduction agreed in the 2030 Sustainable Development Goals. Billions of students at all education levels have lost months of learning or alternatively have shifted to virtual learning where technologies allow them to do so. We have yet to study this “lost learning” and how to regain it as quickly as possible.

A truly mammoth agenda is facing us these days and, probably, in the next few years to come. Recovering from the COVID-19-related damage constitutes only part of it. Another part is a carry-over from pre-pandemic times.

It also is huge and mind-boggling in nature. It includes the declining trend of growth of output and trade despite our grandiose talk about rapid technological progress. It also includes adaptation to climate change, which essentially necessitates a shift to decarbonizing growth in the demand for and supply of energy, food, building materials and means of transportation, to mention only a few. Failing to adapt implies huge costs, such as loss of coastal areas and increasingly irregular weather and the difficulties of adapting to such oscillations.

At the same time a worsening inequality has been haunting us all along. It has left a deep-seated divide between us. The technological progress that spreads across the physical, biological, synaptic and cultural sciences, with all their glitter, has endowed us with plentiful fruits or even ubiquity but not the social equalization that we yearn for while striving for a better life.

All these difficult issues are now part of our public knowledge. However, the saddest story of all is our weakening commitment to cooperation when it is most urgently needed.

Besides the importance of multilateralism at the global level, regionalism might be the strategic response of Asian countries to rising nationalist sentiments in the West. Asia is providing a vote of confidence in the rules-based multilateral system when many are turning to unilateral actions. If United States President Donald Trump has not been willing to support the World Trade Organization (WTO) or the Trans-Pacific Partnership or any multilateral institutions, we should continue what we have been doing by pursuing regionalism and inter-regionalism.

We should negotiate high-quality regional trade agreements (RTAs) with regional blocs, such as the Pacific Alliance and Mercosur. We should push for resumption of the stalled EU-ASEAN free trade agreement. We should encourage other countries, in particular India to join the Regional Comprehensive Economic Partnership (RCEP) when they are ready, with the ultimate goal of merging the RECP with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP-TPP) to create a Free Trade Area of Asia Pacific (FTAAP), which is a long-term vision of Asian integration.

At one time we were afraid RTAs were going to go against globalism. But in fact, the establishment of a new RTA, per se, is neither good nor bad. It depends on how the institutions work with others. If there is “functional complementarity” between global and regional institutions rather than “unhealthy competition”, then the benefits of establishing a new institution will outweigh the risks. A good example of this is the relationship among the Asian Infrastructure Investment Bank (AIIB), the World Bank and the Asia Development Bank (ADB).

Functional complementarity in international trade means that when WTO talks stall, RTAs provide an alternative approach for trade liberalization and compared with the shallow integration of the WTO, which focuses on tariff reduction, RTAs, especially “new generation” ones, also focus on deepening integration by addressing issues relevant to 21st century trade. RTAs are theoretically associated with trade diversion, but this appears to be less serious in actual practice. Mega-FTAs are sizable and cover large segments of world trade/GDP and could therefore undermine the “WTO centralists”.

Needless to say, global initiatives are indispensable in a world where connectivity in good and bad times is widening and deepening with the rising similarity in people’s aspirations and in the technologies that they deploy for turning those aspirations into reality. Unfortunately, it does not seem realistic at this point in time to expect a meaningful success in global negotiations partly because the issues at hand are of extreme complexity, such as those of nontariff measures, intellectual property rights, carbon trading and biodiversity-related issues of trade and investment.

We may also be reminded at this juncture that the General Agreement on Tariffs and Trade (GATT), the International Monetary Fund and the World Bank or the Bretton Wood System following the Second World War, can be seen as an indirect outgrowth of the “Atlantic Order” under the leadership of the US and also of western Europe.

In a similar way a reinvigorated East Asian regionalism under a shared leadership can be expected to result in a new consensus on the global order that is effective in addressing the issues of inequality in its multi-dimensionality, climate change, new geo-economy and the huge social issues that arise from the COVID-19 pandemic. Regional success will more easily cumulate to global success than the other way around.

China and Indonesia can go forward together to improve the international system together with other developing nations, with the big ideas China has proposed: the Belt and Road Initiative (BRI)-the AIIB-Brazil Russia India China South Africa (BRICS)-Shanghai Conference, combining these initiatives with ASEAN-led ones such as the ASEAN Regional Forum (ARF), ASEAN Defense Ministerial Meeting Plus (ADMM+) and the East Asia Summit (EAS) to implement common ideas and programs could achieve a lot. 

ASEAN has to understand the new lineup and strategy to the future. ASEAN+3 (Japan, China and South Korea) is going to be the critical regional institution that will be able to push plans and proposals into action. ASEAN can be the central part, but ASEAN+3 will be the decisive regional power to push them into action.

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Vice chair, Board of Trustees, CSIS Foundation

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