Source: East Asia Forum
Author: Editorial Board, ANU
For decades, trade hovered confidently over the Asia Pacific region as its vital growth engine. As average tariffs fell from 17 per cent in 1989 to 5.3 per cent in 2018, regional trade multiplied — faster than the rest of the world — along with jobs and incomes. Deepening integration even helped the region to bounce back from shocks as severe as the Asian financial crisis of 1997 and the 2008–09 global financial crisis.
Escalation of geopolitical tensions seems to have unsettled trade from its perch. As rivalries heightened and criticism of globalisation grew in recent years, the multilateral trading system on which Asia’s prosperity and security had been based was challenged and the WTO’s relevance called into question.
It took a global pandemic to shift the narrative. What the COVID-19 pandemic has done more than anything else is accentuate the importance of the digital economy in the future of the global economy, and how Asia is set to lead its rapid digital transformation.
Our latest issue of East Asia Forum Quarterly, ‘Reinventing global trade‘, launched today, illustrates how the region’s economies have emerged from the COVID-19 crisis bruised but not defeated. Supply chains have proven surprisingly resilient, partly because of their greater interconnectivity within Asia. Lockdowns have accelerated digital transformation to the benefit of small and medium-sized businesses. Some countries such as Singapore, New Zealand and Chile have finalised partnerships aimed at expanding the digital economy. Even long-brewing mega trade agreements like the Regional Comprehensive Economic Partnership (RCEP) came to fruition in the middle of the COVID-19 crisis, highlighting the leadership of regional groupings such as ASEAN.