Trends in Trading Relationships

The Stimson Center, in its Security & Strategy Policy Memo December 2022 warns that Western incomprehension of the Global South is dangerous, and the U.S. needs to reimagine a grand strategy to include it. Otherwise, we could lose the Global South. This became painfully obvious when old assumptions that those countries would follow the U.S. lead on the UN resolution against Russia’s annexation of four provinces in Ukraine turned out to be misguided. Although most Latin American countries voted in favor, 24 African nations abstained, opposed, or did not vote, and 52 Global South nations voted against. This did not mean that they were in favor of the Russian invasion. They were far more worried about their trading relationships with China and Russia (the world’s largest exporter of wheat), upon which much of their economic survival is still based. Thus we find nations like India not wanting to “take sides,” and the Prime Minister of Malaysia, Anwar Ibrahim, openly stating “Ukraine has nothing to do with us!” All this despite the fact that both nations are so-called democracies.

As Quincy Institute’s Sarang Shidore notes, the Eurasian nations, including India, China, Mongolia, Pakistan, and all five Central Asian states plus Iran, did not vote for the resolution. Interestingly, he points out that all of these nations belong to the China-created Shanghai Cooperation Organization. Also, many nations in the Global South have not forgotten that they were not a priority when the rest of the world planned for pandemic aid. Additionally, more and more of those nations are facing dire consequences from flooding (onethird of Pakistan was underwater last August), also drought, and famine, primarily due to consumption patterns and carbon emissions caused by developed countries in the Global North as well as China. The Stimson report recommends we work with Global South “neutrals,” like South Africa, to counter perceptions of a “self-serving” Global North, develop “off ramps for conflict,” and work productively to bring about positive change without expecting to “recreate the Free World.” These nations want to be treated as equals. The fact is the U.S. relies deeply on economic and political partnerships in the Global South to expand its understanding and to counter China’s influence.

APEC Meetings in the U.S.: Chance for Reset of China Trade Policy

Katherine Tai, the first U.S. Asian American to ever serve as U.S. Trade Representative, has stated many times that the U.S. needs more discipline in identifying problems and addressing the challenges in global trade. This year she has an enormous opportunity to steer the Biden Administration along this path. For the first time since 2011, 2023 is the U.S. Host Year for meeting sites for Asia-Pacific Economic Cooperation (APEC) Senior Officials and Ministers’ meetings. The theme is “Creating a Resilient and Sustainable Future for All.” Meetings of the first two clusters have taken place in Honolulu and Palm Springs, with end May meetings scheduled in Detroit and August meetings in Seattle. The APEC Economic Summit week will take place later in the year. She first wants the 21 member countries of APEC to witness the innovative developments and digital transformation in the great automotive city of Detroit.

In her view, how the U.S. and China relate via trade policy as the world’s two largest economies has profound implications for the entire world. Her goal is to “level-set,” not just “reset.”

In her words, she has been tasked with defining a new, more agile trade approach less focused on one-off free trade agreements, one which is worker-centric and provides an enduring platform taking into account U.S. resiliency. In the past, U.S. trade policies have pushed to maximize and incentivize efficiencies. This has led to pooling of supply chains in one general global location for lowest-cost solutions at the expense of U.S. workers. But during a pandemic or major climate event, this has left the U.S. high and dry, especially when China was the first to shut down during Covid-19, for example. She believes the most difficult topic of conversation with Chinese leaders during upcoming meetings will be a more resilient trade policy using new trade approaches and platforms in the Indo-Pacific that hopefully result in better outcomes for the U.S. The focus will be on competition, not confrontation. (PBS Amanpour & Co. Interview with Katherine Tai, May 11, 2023)

MO ASIA JULY: THE GLOBAL SOUTH, PART 2. Manufacturing Relationships and Export Trends

Author profile: Christine is co-founder and President of China Human Resources Group, Inc, a management consulting firm based in Princeton NJ. She has provided U.S. companies with strategic development and project implementation services for projects in China since 1986. n

JUNE 2023