According to the British Commissioner for Trade, what poses the far greater danger for the future is not the size of Asia, but the introspection and fearfulness of Europe
Europe should view a rising Asia as an opportunity, not a threat. In a special address at the World Economic Forum' s Asia Roundtable, Peter Mandelson, Commissioner for Trade, said that Europeans should position themselves to take advantage of Asia' s rise, or risk being marginalized.
"What poses the far greater danger for the future is not the rise of Asia but the introspection and fearfulness of Europe. People have to see the growth of Asia and its rise not in a short term, but in the longer term. People have to see the growth of Asia' s markets as an opportunity for European exporters and investors, rather than some sort of rising giant that is settling about crushing Europe' s economic livelihood. Europe needs more confidence about its potential and its ability to manage change and to remain competitive. The EU is the world' s leading exporter of goods and services and the world' s leading investor abroad. Asia and its growth is the means of sustaining this performance, not reversing it", said the Commissioner.
While Mandelson said that there were legitimate worries from a European perspective regarding the rise of Asia -European competitiveness, protection of intellectual property, the opening up of public procurement, genuine market access for European service businesses and persistently high industry tariffs- Europe needs to respond by taking urgent action to reassert its technological leadership. "We need to advance economic reforms to equip people for change and to bring governments and business to work in partnership to improve competitiveness".
Mandelson said the EU' s export performance remains strong, with Europe more successful that the US in competing at the top of the market. This leaves Europe well positioned to reap the benefits of a rising generation of wealthy Asian consumers, specifically households in India and China, hungry for luxury western imports. "Emerging Asia is, and will increasingly be, the essential trade partner of choice for Europe", he said.
This point was taken up by Kim Hyun-Chong, Minister of Trade of the Republic of Korea, who said he was surprised to hear Mandelson making reference to the defensiveness of Europe in relation to Asia. He added that a more prominent Europe would do much to balance the strength of the US in Asia and that a more significant European presence in Asia would be welcome to achieve more of a balance between the US and Europe.
Mandelson said that despite the spectrum of heightened competition it raised, Asian growth rates above 9% are not a danger to Europe. This represents a new source of economic growth, dynamism and stimulus to innovation, as well as an opportunity for cooperation. To illustrate this point he said that 20 years ago Japan was the only Asian country among the EU' s top-ten trading partners. Today, four of the top-ten are Asian: China, Japan, South Korea and Taiwan -a trend he expected to grow and evolve further.
In reference to the subject of surging Chinese textile exports, currently a sore point with European manufacturers, Mandelson said "China is entitled to the prize of the liberalization of this sector, it is entitled to the prize of its WTO membership, it is entitled to the generous growth in its exports and market share in this sector". He added that a more innovative attitude to the winds of economic change and the shifting of the global economic centre to Asia should come from the realization that, in time, this will grow the Chinese economies and markets and ultimately benefit European producers of goods and suppliers of services.
Mandelson also stressed the role of governments in bringing about acceptance of change and providing assistance and help to smooth the path for change. "What we need to do in the meantime is to understand people' s misgivings, to understand the insecurities and fears that such economic change sparks, and we have the responsibility as governments to help manage that change and support people and industry in the process of change and transition from one era to another".
He said the world is on the cusp of a series of succeeding generations of changes and that modernization and openness to change and restructuring is never ending. Mandelson added that Europe needs to build a stronger, more dynamic relationship with the countries of Asia individually and bilaterally, but also with the Asian region. This, he said, must move beyond "goodwill and warm words" and necessitates a commitment to multilateral as well as bilateral cooperation. "We need to work together to create new economic and trade opportunities within a rules based economic system, both through multilateral cooperation within the WTO and, where it helps, through bilateral and inter-regional trade agreements. These tracks should run together".
With regard to region-building in Asia, Mandelson said he would like to build a partnership between Europe and Asia to help deepen a regional integration in Asia. Lim Hog-Kiang, Minister of Trade and Industry of Singapore, agreed that there were a lot of reasons to be learned from the EU' s experience of the creation of a regional economy. "All of us in Asia are on the threshold of looking towards greater economic integration. Within ASEAN we are working towards an ASEAN economic community by 2020. ASEAN is also working with China, Japan, Korea and India to look at greater integration".
On the impact of an evolving Asia on international trade, Mandelson said that efforts to strengthen intra-regional cooperation should not overshadow the need to push multilateral trade liberalization forward. He highlighted the crucial importance of the Doha Round. "You are aware of the pressures on the Round. We need it to make progress in a more even and balanced way and in advance of the mini-ministerial in Paris next week, we have already seen some people express concerns". However, Mandelson conceded that multilateral negotiations can be frustrating and slow, and might not cover all areas, and this was where regional or bilateral negotiations would take centre stage.
By: N. Peter Kramer
