Rebalancing of global economy in last few decades: S Jaishankar

PTI
Friday, 28 February 2020

"This very centrality underlines the extent of polarization in what was largely perceived as a more inter- dependent existence till recently. Linkages to non-trade issues have complicated matters even more," he said. 

Pune: External Affairs Minister S Jaishankar on Friday said there has been a visible rebalancing of the global economy in the last few decades and the changing trade scenario is expressed in the forging of new partnerships and dependence on sourcing. 

Reaching international understandings on issues of trade is now more challenging than in the past, he said in a video address on 'Asia and the Emerging International Trading System' at the Geo-Economic Conference of the Pune International Centre here. 

Jaishankar also underlined the "pulls and pressures of the international system" which he said are today most evident in the trade domain. 

"This very centrality underlines the extent of polarization in what was largely perceived as a more inter- dependent existence till recently. Linkages to non-trade issues have complicated matters even more," he said. 

"The changing trade scenario is expressed today in the forging of new partnerships, dependence on sourcing, and mapping of supply chains," he said. 

"An erosion of globalization will certainly influence the trading habits of many societies. Their implications for rules, regimes and mechanisms cannot be overstated. Reaching international understandings on issues of trade against this backdrop is naturally more challenging than in the past," he said. 

Linkages to non-trade issues, whether of a social nature or a security concern, have added further to the challenge, he said. 

"Nevertheless, the perception of convergences and the reality of transnational supply chains do make a powerful argument for limited frameworks such as FTAs. For a nation like India, this raises a number of issues that constitute an ongoing debate. Much of that centres around how well prepared we are to engage the global economy more openly," he said. 

Competing against those with structural advantages cannot be a casual decision justified by political correctness, Jaishankar said. 

Many industrial economies of Asia were built as a result of political choices, he said. "The rise of China, perhaps more than any other contemporary example, was influenced by the strategic calculations of others. To some extent, India finds itself on a similar cusp," he added. 

"Trade and other forms of economic growth are critical elements of creating more effective multi-polarity. Responding to opportunities means creating a strong-enough pull factor, and that is why the task is not just of diplomacy but equally of governance," he said.
 
"Each of us has to devise their own course and Indias prospects are heavily focused on the improvement of infrastructure. At the end of the day, this may be one of the defining element of comparative advantage. Getting politics, economics and governance all right at the same time is therefore particularly important at this moment," he said. 

"In the last few decades there has been a rebalancing of the global economy. A primary characteristic of that has been the emergence of more diverse production centres and consecutively, of different patterns of trade," Jaishankar said. 

"Today, as conversations about trade between nations get more animated, there is less pretence that we are also talking about the parallel exercise of political influence. It is, therefore, important that any debate about Asia and the emerging international trading system factor in this reality. Trade has never been politically neutral; it is even less so now," Jaishankar said. 

He said the two striking developments of our times the rise of China and the nationalism of the United States are both inextricably tied to their performance in trade.
 
"The first captures the challenges of accommodating state capitalism in the current framework of international trade. The second reflects the debate about fair market access, terms of trade and the merits of protectionism. Both not only impact directly on the other economies of Asia, but pose conceptual and practical challenges to them," he said.  

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