Following the signing of the Regional Comprehensive Economic Partnership (RCEP) on November 15, media reporting around the world has entered into a fanfare mode. In particular, media from Western countries and China are reporting such mega free trade deal as headlines within the narrow lens of US-China competition and conveniently overlooked ASEAN’s international agency (capability to act internationally) in the formation of such trade bloc. For instance, global media outlets such as the CNN and Reuters, had been highlighting the RCEP as a China-backed free trade bloc that excluded the US while further alluded to the view that Beijing is affirming itself as the pivotal economic partner for Southeast Asia, Japan, South Korea, Australia and New Zealand.
Likewise, another major media, New York Times, is suggesting that the regional free trade deal to which China is participating as a major actor, stands to be a counterweight to Washington’s economic influence in the East Asian region. Meanwhile, China’s official mouthpiece, Global Times, also joined in the foray. Supplanted with the views of Chinese economists emphasizing the active role Beijing played in concluding the regional free trade deal, RCEP is been branded as the success of China’s path to trade liberalization and multilateralism as opposed to the American protectionism and unilateralism. Such discourse framing, of course, is not surprising considering the economic, high-tech and even ideological competition Beijing is mired into vis-à-vis the US today.
By all means, the framing of RCEP within the context of US-China competition (as showcased by these reports)has led to the prevalence of the popular “myth” that RCEP is a China-backed free trade bloc and as such, Beijing is affirming its economic influence in the East Asian region through the trade deal. This boils down to the questions: Is this the reality on the ground? Are there differences between such “myth” and realities? In tackling these two questions, there is a need to separate such “myth” into two parts of arguments.
First and foremost, RCEP is an ASEAN-led free trade agreement (FTA) that comes with the Southeast Asian bloc’s centrality. By that, it means not only ASEAN is leading the charge by bringing both major economies such as China and Japan, into one platform for FTA, it is also harmonizing the existing bilateral FTAs it signed with each external partners into a standardized regional version known as RCEP. Whether it is equal or not less better than bilateral agreements that ASEAN signed with five external partners of China, Japan, South Korea, Australia and New Zealand, RCEP is basically agreed based on the pretext that such FTA starts with lower standards for trade and services’ liberalizations but progresses over time (maybe 10 years or more) into a new version of FTA with higher standards of liberalizations. It is such progressive liberalization that forms the core component in defining ASEAN’s centrality for its free trade quests around the world.
As far as the claim on RCEP being a China-backed trade deal, it should be treated as such since Beijing is indeed actively supporting ASEAN for such deal. That said, any over-emphasis of it without greater recognition to ASEAN, gives the misleading perception that the regional trade deal is Beijing-led and therefore, the remaining 14 countries are band-wagoning China as passive or subservient followers without any international agency. As Brookings Institution coined it very well, if ASEAN is not in-charge of the agreement back in 2012, the RCEP would never go beyond its starting line as both China and Japan were not politically accepted as the chief negotiators back then. Therefore, emphasizing RCEP as a “China-backed” trade deal is doing disservice to ASEAN which spent 10 years of efforts in deliberating, negotiating and concluding the trade deal as the central party for its six external partners (including India which pulled out from the trade pact last year).
The other argument pertains to the claim that China is affirming its economic influence in the region through the RCEP. While this is true to a certain extent, it is again far from the overall reality in East Asia. As alluded earlier, the RCEP is a FTA with lower standards of liberalizations and given such limitation, sensitive trade and service industries were basically protected from any free trade commitments. For instance, tariffs for trading products such as pork and tiles, remained high in both Japan and Vietnam, making it hard for other RCEP partner countries (including China) to export their goods to these countries. As for trade in services, the schedules of reservations and non-conforming measures for services and investment among the states, are even more overwhelming. Not only China excluded its automobile, rare earths, and communication equipment industries from RCEP’s liberalization commitments, other fourteen countries also furnished with their own lengthy schedules of reservations and non-conforming measures with the exception of Singapore which continued to open its economy within the regional trade pact.
Considering such reality within the RCEP, it is not hard to understand the reason both Peterson Institute of International Economics (PIIE) and University of Queensland (UQ)-Indonesian Ministry of Finance (MOF Indonesia),are projecting marginal gains for China from the mega trade deal ⸺ the former predicting an additional 0.4% to the country’s real income by 2030 while the latter’s 0.08% by the same year. As opposed to that, Japan stands to gain a lot from RCEP, especially its industrial goods that make way into the Chinese market. With 86% of the Japanese industrial goods to China eliminated within the RCEP, Japan’s auto parts suppliers are the big winners of the mega trade deal so much so that domestic Chinese players would face strong competition from its neighbour once the trade liberalization measures kick off in the coming years.
With all these realities in the offing, the claim that China is affirming its influence in East Asia through RCEP should be taken with a pinch of salt. With the conclusion of lower-standard liberalizations of RCEP, it is arguably hard to conclude that the trade deal actually affirms China’s economic influence in East Asia when it is staring at marginal gains from such a deal. Furthermore, with China being the largest trading partner for most of the RCEP countries (if not all) even before the regional trade deal is signed, any claim that Beijing will gain even more economic influence through the trade pact is harder to substantiate given that sensitive industries remained protected by other participating countries.
Given all the realities that challenge the “myths” propagated by media from the West and China, RCEP is best described as a mixed success for Beijing ⸺ as in backing the regional trade deal but not leading it, while at the same time, deriving marginal gains instead of huge gains in the next 10 years. The promise of RCEP, however, is best appreciated by focusing on ASEAN as the “new kid on the block” that has been the center of economic courtship from major powers in the West as to the East’s. Notwithstanding the limitations of RCEP in the next 10 years, the fact that ASEAN managed to assemble all major economies under its platform while simultaneously, ensuring that mega trade deal serves the economic interests of these powers, served as a boost toits capability as a middle power in the East Asian region. With this new dynamic emerging in the global trade order, it is time for the media to move on from the conventional fixation of “China, China and China” in their media reporting of RCEP and treat ASEAN as an actor with its own international agency.
The Blazing Revival of Bitcoin: BITO ETF Debuts as the Second-Highest Traded Fund
It seems like bitcoin is as resilient as a relentless pandemic: persistent and refusing to stay down. Not long ago, the crypto-giant lost more than half of its valuation in the aftermath of a brutal crackdown by China. Coupled with pessimism reflected by influencers like Elon Musk, the bitcoin plummeted from the all-time high valuation of $64,888.99 to flirt around the $30,000 mark in mere weeks. However, over the course of the last four months, the behemoth of the crypto-market gradually climbed to reclaim its supremacy. Today, weaving through national acceptance to market recognition, bitcoin could be the gateway to normalizing the elusive crypto-world in the traditional global markets: particularly the United States.
The recent bullish development is the launch of the ProShares Bitcoin Strategy ETF – the first Bitcoin-linked exchange-traded fund – on the New York Stock Exchange. Trading under the ticker BITO, the Bitcoin ETF welcomed a robust trading day: rising 4.9% to $41.94. According to the data compiled by Bloomberg, BITO’s debut marked it as the second-highest traded fund, behind BlackRock’s Carbon fund, for the first day of trading. With a turnover of almost $1 billion, the listing of BITO highlighted the demand for reliable investment in bitcoin in the US market. According to estimates on Tuesday, More than 24 million shares changed hands while BITO was one of the most-bought assets on Fidelity’s platform with more than 8,800 buy orders.
The bitcoin continued to rally, cruising over the lucrative launch of BITO. The digital currency rose to $64,309.33 on Tuesday: less than 1% below the all-time high valuation. In hindsight, the recovery seems commendable. The growing acceptance, albeit, has far more consequential attributes. The cardinal benefit is apparent: evidence of gradual acceptance by regulators. “The launch of ProShares’ bitcoin ETF on the NYSE provides the validation that some investors need to consider adding BTC to their portfolio,” stated Hong Fang, CEO of Okcoin. In simpler terms, not only would the listing allow relief to the crypto loyalists (solidifying their belief in the currency), but it would also embolden investors on the sidelines who have long been deterred by regulatory uncertainty. Thus, bringing larger, more rooted institutional investors into the crypto market: along with a surge of capital.
However, the surging acceptance may be diluting the rudimentary phenomenon of bitcoin. While retail investors would continue to participate in the notorious game of speculation via trading bitcoin, the opportunity to gain indirect exposure to bitcoin could divert the risk-averse investors. It means many loyalists could retract and direct towards BITO and other imminent bitcoin-linked ETFs instead of setting up a digital custodianship. Ultimately, it boils down to Bitcoin ETFs being managed by third parties instead of the investor: relenting control to a centralized figure. Moreover, with growing scrutiny under the eye of SECP, the steps vaguely intimate a transition to harness the market instead of liberalizing it: quiet oxymoronic to the entire decentralized model of cryptocurrencies.
Nonetheless, the listing of BITO is an optimistic development that would draw skeptics to at least observe the rampant popularity of the asset class. While the options on BITO are expected to begin trading on the NYSE Arca Options and NYSE American Options exchanges on Wednesday, other futures-based Bitcoin ETFs are on the cards. The surging popularity (and reluctant acceptance) amid tightening regulation could prove a turn of an era for the US capital markets. However, as some critics have cited, BITO is not a spot-based ETF and is instead linked to futures contracts. Thus, the restrain is still present as the regulators do not want a repeat of the financial crisis. Nevertheless, bitcoin has proved its deterrence in the face of skepticism. And if the BITO launch is to be marveled at, then the regulations are bound to adapt to the revolution that is unraveling in the modern financial reality.
Is Myanmar an ethical minefield for multinational corporations?
Business at a crossroads
Political reforms in Myanmar started in November 2010 followed by the release of the opposition leader, Aung San Suu Kyi, and ended by the coup d’état in February 2021. Business empire run by the military generals thanks to the fruitful benefits of democratic transition during the last decade will come to an end with the return of trade and diplomatic sanctions from the western countries – United States (US) and members of European Union (EU). US and EU align with other major international partners quickly responded and imposed sanctions over the military’s takeover and subsequent repression in Myanmar. These measures targeted not only the conglomerates of the military generals but also the individuals who have been appointed in the authority positions and supporting the military regime.
However, the generals and their cronies own the majority of economic power both in strategic sectors ranging from telecommunication to oil & gas and in non-strategic commodity sectors such as food and beverages, construction materials, and the list goes on. It is a tall order for the investors to do business by avoiding this lucrative network of the military across the country. After the coup, it raises the most puzzling issue to investors and corporate giants in this natural resource-rich country, “Should I stay or Should I go?”
Crimes against humanity
For most of the people in the country, war crimes and atrocities committed by the military are nothing new. For instances, in 1988, student activists led a political movement and tried to bring an end to the military regime of the general Ne Win. This movement sparked a fire and grew into a nationwide uprising in a very short period but the military used lethal force and slaughtered thousands of civilian protestors including medical doctors, religious figures, student leaders, etc. A few months later, the public had no better options than being silenced under barbaric torture and lawless killings of the regime.
In 2007, there was another major protest called ‘Saffron Uprising’ against the military regime led by the Buddhist monks. It was actually the biggest pro-democracy movement since 1988 and the atmosphere of the demonstration was rather peaceful and non-violent before the military opened live ammunitions towards the crowd full of monks. Everything was in chaos for a couple of months but it ended as usual.
In 2017, the entire world witnessed one of the most tragic events in Myanmar – Again!. The reports published by the UN stated that hundreds of civilians were killed, dozens of villages were burnt down, and over 700,000 people including the majority of Rohingya were displaced to neighboring countries because of the atrocities committed by the military in the western border of the country. After four years passed, the repatriation process and the safety return of these refugees to their places of origin are yet unknown. Most importantly, there is no legal punishment for those who committed and there is no transitional justice for those who suffered in the aforementioned examples of brutalities.
The vicious circle repeated in 2021. With the economy in free fall and the deadliest virus at doorsteps, the people are still unbowed by the oppression of the junta and continue demanding the restoration of democracy and justice. To date, Assistant Association for Political Prisoner (AAPP) reported that due to practicing the rights to expression, 1178 civilians were killed and 7355 were arrested, charged or sentenced by the military junta. Unfortunately, the numbers are still increasing.
Call for economic disengagement
In 2019, the economic interests of the military were disclosed by the report of UN Fact-Finding Mission in which Myanmar Economic Corporation (MEC) and Myanmar Economic Holding Limited (MEHL) were described as the prominent entities controlled by the military profitable through the almost-monopoly market in real estate, insurance, health care, manufacturing, extractive industry and telecommunication. It also mentioned the list of foreign businesses in partnership with the military-linked activities which includes Adani (India), Kirin Holdings (Japan), Posco Steel (South Korea), Infosys (India) and Universal Apparel (Hong Kong).
Moreover, Justice for Myanmar, a non-profit watchdog organization, revealed the specific facts and figures on how the billions of revenues has been pouring into the pockets of the high-ranked officers in the military in 2021. Myanmar Oil & Gas Enterprise (MOGE), an another military-controlled authority body, is the key player handling the financial transactions, profit sharing, and contractual agreements with the international counterparts including Total (France), Chevron (US), PTTEP (Thailand), Petronas (Malaysia), and Posco (South Korea) in natural gas projects. It is also estimated that the military will enjoy 1.5 billion USD from these energy giants in 2022.
Additionally, data shows that the corporate businesses currently operating in Myanmar has been enriching the conglomerates of the generals and their cronies as a proof to the ongoing debate among the public and scholars, “Do sanctions actually work?” Some critics stressed that sanctions alone might be difficult to pressure the junta without any collaborative actions from Moscow and Beijing, the longstanding allies of the military. Recent bilateral visits and arm deals between Nay Pyi Taw and Moscow dimmed the hope of the people in Myanmar. It is now crystal clear that the Burmese military never had an intention to use the money from multinational corporations for benefits of its citizens, but instead for buying weapons, building up military academies, and sending scholars to Russia to learn about military technology. In March 2021, the International Fact Finding Mission to Myanmar reiterated its recommendation for the complete economic disengagement as a response to the coup, “No business enterprise active in Myanmar or trading with or investing in businesses in Myanmar should enter into an economic or financial relationship with the security forces of Myanmar, in particular the Tatmadaw [the military], or any enterprise owned or controlled by them or their individual members…”
Blood money and ethical dilemma
In the previous military regime until 2009, the US, UK and other democratic champion countries imposed strict economic and diplomatic sanctions on Myanmar while maintaining ‘carrot and stick’ approach against the geopolitical dominance of China. Even so, energy giants such as Total (France) and Chevron (US), and other ‘low-profile’ companies from ASEAN succeeded in running their operations in Myanmar, let alone the nakedly abuses of its natural resources by China. Doing business in this country at the time of injustice is an ethical question to corporate businesses but most of them seems to prefer maximizing the wealth of their shareholders to the freedom of its bottom millions in poverty.
But there are also companies not hesitating to do something right by showing their willingness not to be a part of human right violations of the regime. For example, Australian mining company, Woodside, decided not to proceed further operations, and ‘get off the fence’ on Myanmar by mentioning that the possibility of complete economical disengagement has been under review. A breaking news in July, 2021 that surprised everyone was the exit of Telenor Myanmar – one of four current telecom operators in the country. The CEO of the Norwegian company announced that the business had been sold to M1 Group, a Lebanese investment firm, due to the declining sales and ongoing political situations compromising its basic principles of human rights and workplace safety.
In fact, cutting off the economic ties with the junta and introducing a unified, complete economic disengagement become a matter of necessity to end the consistent suffering of the people of Myanmar. Otherwise, no one can blame the people for presuming that international community is just taking a moral high ground without any genuine desire to support the fight for freedom and pro-democracy movement.
The Covid After-Effects and the Looming Skills Shortage
The shock of the pandemic is changing the ways in which we think about the world and in which we analyze the future trajectories of development. The persistence of the Covid pandemic will likely accentuate this transformation and the prominence of the “green agenda” this year is just one of the facets of these changes. Market research as well as the numerous think-tanks will be accordingly re-calibrating the time horizons and the main themes of analysis. Greater attention to longer risks and fragilities is likely to take on greater prominence, with particular scrutiny being accorded to high-impact risk factors that have a non-negligible probability of materializing in the medium- to long-term. Apart from the risks of global warming other key risk factors involve the rising labour shortages, most notably in areas pertaining to human capital development.
The impact of the Covid pandemic on the labour market will have long-term implications, with “hysteresis effects” observed in both highly skilled and low-income tiers of the labour market. One of the most significant factors affecting the global labour market was the reduction in migration flows, which resulted in the exacerbation of labour shortages across the major migrant recipient countries, such as Russia. There was also a notable blow delivered by the pandemic to the spheres of human capital development such as education and healthcare, which in turn exacerbated the imbalances and shortages in these areas. In particular, according to the estimates of the World Health Organization (WHO) shortages can mount up to 9.9 million physicians, nurses and midwives globally by 2030.
In Europe, although the number of physicians and nurses has increased in general in the region by approximately 10% over the past 10 years, this increase appears to be insufficient to cover the needs of ageing populations. At the same time the WHO points to sizeable inequalities in the availability of physicians and nurses between countries, whereby there are 5 times more doctors in some countries than in others. The situation with regard to nurses is even more acute, as data show that some countries have 9 times fewer nurses than others.
In the US substantial labour shortages in the healthcare sector are also expected, with anti-crisis measures falling short of substantially reversing the ailments in the national healthcare system. In particular, data published by the AAMC (Association of American Medical Colleges), suggests that the United States could see an estimated shortage of between 37,800 and 124,000 physicians by 2034, including shortfalls in both primary and specialty care.
The blows sustained by global education from the pandemic were no less formidable. These affected first and foremost the youngest generation of the globe – according to UNESCO, “more than 1.5 billion students and youth across the planet are or have been affected by school and university closures due to the COVID-19 pandemic”. On top of the adverse effects on the younger generation (see Box 1), there is also the widening “teachers gap”, namely a worldwide shortage of well-trained teachers. According to the UNESCO Institute for Statistics (UIS), “69 million teachers must be recruited to achieve universal primary and secondary education by 2030”.
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