Davos Notebook

A golden opportunity for a new trading system


By Mari Pangestu, who is the Trade Minister of Indonesia. The opinions expressed are her own.

The world continues to face great uncertainties. Global recovery has been uneven, unemployment high and current account imbalances have led to continued tension including the use of currencies and other mercantilist policies for protectionist purposes. And we have yet to conclude the Doha Round of World Trade Organization Negotiations. So what do trade policymakers have to do to face this situation and ensure trade continues to contribute to growth and development?

For Indonesia, trade has recovered to higher than pre-crisis 2008 levels and in line with the higher growth in emerging economies. Like other East Asian economies, Indonesia is increasingly integrated with the region, clearly indicating that East Asia is a growing market with the rise of its population, middle class and purchasing power.

Increased integration within East Asia has taken place because of growth, the unilateral opening up of trade and investment, and more recently the various regional and bilateral free-trade agreements (FTAs). The regional agreements include the Association of Southeast Asian Nations (ASEAN) Economic Community by 2015, as well as FTAs between ASEAN with China, Japan, Korea, India, Australia and New Zealand. Is this an alternative to the multilateral trading system?

The answer is no. As the Chair of ASEAN and East Asia this year, Indonesia’s vision is not that of an insular Asian bloc — but for an ASEAN community in a global community of nations. This means that as Asia grows economically, Asian nations will and should do their part to increase growth and demand, develop regional agreements that are open and become model agreements for others. The various regional agreements should not overlap like a noodle bowl.

Will Goldman’s new BRICwork stand up?

RTXWLHHJim O’Neill, the Goldman Sachs economist who coined the term BRICs back in 2001, is adding four new countries to the elite club of emerging market economies. But does his new edifice have the same solid foundations?

In future, the BRIC economies of Brazil, Russia, China and India will be merged with those of Mexico, Indonesia, Turkey and South Korea under the banner “growth markets,” O’Neill told the Financial Times.

Hmmm.  Doesn’t quite grab you like BRICs, does it? The Guardian helpfully offers an amended branding banner of  “Bric ‘n Mitsk” (geddit?). But which ever way you cut it, it’s hard to see a flood of investment conferences and funds floating off under the new moniker.