Foreign Policy Watch: India-ASEAN

Foreign Policy Watch: India-ASEAN

Time for an Asian Century

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 2- Challenges in securing RCEP

Asian centrality

  • China’s response is a ‘dual circulation’ strategy for self-reliance and military-technological prowess to surpass the U.S.
  • The global governance role of the U.S. is already reduced.
  • The U.S. now exercises power with others, not over them.
  • Despite its military ‘pivot’ to Asia, the U.S. needs India in the Quad, to counterbalance the spread of China’s influence through land-based trade links.
  • India, like others in the Quad, has not targeted China and also has deeper security ties with Russia.
  • With the ASEAN ‘code of conduct’ in the South China Sea, both the security and prosperity pillars of the U.S.-led Indo-Pacific construct will be adversely impacted.
  • Leveraging proven digital prowess to complement the infrastructure of China’s Belt and Road Initiative will win friends as countries value multi-polarity.

Atmanirbhar Bharat and Challenges

  • ‘Atmanirbhar Bharat’ will leverage endogenous technological strength, data and population.
  • With the Rafale aircraft purchase, India has recognised that there will be no technology transfer for capital equipment.
  • Military Theatre Commands should be tasked with border defence giving the offensive role to cyber, missile and special forces based on endogenous capacity, effectively linking economic and military strength.
  • The overriding priority should be infrastructure including electricity and fibre optic connectivity; self-reliance in semiconductors, electric batteries and solar panels; and skill development.

Conclusion

There are compelling geopolitical and economic reasons for shaping the building blocks of the Asia-led order, which is not yet China-led, to secure an ‘Atmanirbhar Bharat’, and place in the emerging triumvirate.

Foreign Policy Watch: India-ASEAN

[oped of the day] Opportunities for India in the Asian Century

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Asian Century

Context

India is at an inflection point. Its recent period of significant growth was faster than the global average. 

Slowdown in growth

Indian growth has stalled in the face of global headwinds against trade, volatile commodity markets, stagnant private investment, weaker domestic consumption, and constrained government spending.

Asian potential

    • Asia is becoming the world’s powerhouse and economic center. 
    • Economic contribution – research from the McKinsey Global Institute finds that Asia could generate more than half of the world’s GDP by 2040.
    • Cross-border flows – they are increasingly shifting towards the region, which is rapidly integrating. With 60% of goods traded, 56% of greenfield foreign direct investment (FDI) and 74% of journeys by Asian air travelers taking place within the region.

Asian connectivity

    • There are 4 distinct sub-Asias which are diverse groups of economies with characteristics that complement each other and are fast becoming increasingly interconnected.
    • In the new era of regionalization, Asia is taking a lead. 
    • Historic account – Historically, India—and other countries in ‘Frontier Asia’ (Bangladesh, Sri Lanka, Kazakhstan, Uzbekistan, etc)—have had relatively low levels of integration when compared with the rest of the region. Only around 31% of their flows are intra-regional. 
    • What lies ahead – how they now respond to the shifting flows and the opportunities they present will be the key in defining and delivering its next chapter of growth. 

What India offers

    • Services – account for 53% of India’s GDP
    • Young labor force – younger than China’s median age by around ten years
    • New markets for the rest of the region
    • Growth – despite the downturn, GDP in India is expected to grow at well above 5% for the coming period.

Adding Asia focus – opportunity # 1: Manufacturing

    • Advanced Asian countries shift gears – countries like China move up the economic development ladder and phase out manufacturing in favor of a shift to R&D and knowledge-intensive manufacturing. There is room for India to become a larger sourcing base for global supply chains.
    • Example of mobile phones – the global sourcing value of mobile handsets is over $500 billion in scale. India could aspire for a 15-20% share of this footprint. 

What needs to be done for #1

    • Improving infrastructure – Investments are needed to improve the logistical backbone supporting manufacturing. 
    • R&D – Incentives are needed to encourage future investments in R&D.
    • Innovation – Large-scale innovation hubs need to be developed to move to manufacture to the next phase and help to capture the demand opportunity.
    • Recent corporate tax cut – The recent move towards an attractive corporate taxation regime could provide the much-needed ignition to attract more investment for Make in India.

Opportunity # 2: Capital

    • For development – India can benefit from the flows of capital and investment powering development.
    • Advanced Asia – which comprises Japan, South Korea, Singapore and China have been huge contributors to the development of ‘Emerging Asia’ – small highly interconnected economies like Indonesia, Malaysia, the Philippines, Thailand, Vietnam, etc.
    • Example – China accounts for 42% of total Asian outbound FDI in 2013-17 and 43% and 61% of Emerging Asia’s imports and exports respectively.

To do for #2

    • Attract investments – while India is beginning to attract investment from firms across Asia, more needs to be done to realize the potential opportunity of investment flows from other countries.

Opportunity # 3 : Innovation

    • Hub of innovation – East Asia has emerged as a leading hub that rivals the leading innovation hubs globally.
    • Technologies – It has already gained pole position in driving innovation relating to key disruption themes such as electric mobility, 5G telecom, and renewable energy. 
    • Patents – Nearly 65% of global patents stemmed from Asia between 2015 and 2017, derived from the 50 fastest-rising innovation cities in Asia.
    • This gives an opportunity for Indian firms to be a part of this Asia-wide innovation arc.

Opportunity # 4: Growth

    • Rapidly growing Asia – is catapulting its major cities into leading consumption centers.
    • The market for India – This offers a market opportunity for Indian businesses ranging from IT services, tourism services, generic pharmaceuticals, automotive components, agrochemicals, and so forth. 
    • Reduce trade deficit – Just with China alone, India runs an over $50 billion of trade deficit. This could be narrowed down by targeting these export opportunities. The research found that about 420 cities in emerging markets could generate 45% of global growth, many of them residing in Asia.

Conclusion

The Asian century is truly underway. As globalization gives way to regionalism, Asia takes a leading position. India could look to many of the opportunities arising out of the region’s rapid integration and shifting networks and flows to help drive its next chapter of growth.

Foreign Policy Watch: India-ASEAN

[oped of the day] Quad in the spotlight

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : QUAD - its position; with respect to China

Context

Quad convened on November 4 at the level of senior officials on the margins of the EAS in Bangkok.

China – QUAD animosity

  • The US Secretary of State said that the “Quad” between Japan, Australia, India, and the United States would ensure that “China retains only its proper place in the world”. 
  • The Chinese Foreign Ministry retorted to condemn the American plain-speaking as habitual lies and malicious slandering. 

QUAD

  • Early origins – Japanese Prime Minister Shinzo Abe proposed in early 2007 to hold a Quadrilateral Security Dialogue.
  • It was endorsed by US Vice President and the governments of India and Australia, leading to the first meeting at the official level.
  • Non- military – There was a general understanding that it would not take on a military dimension against any country. 
  • Chinese response
    • The strategic community in China branded it an emerging “Asian NATO”. 
    • It began with maritime-centric concerns.
    • It is gradually seen by China as a means to involve the use of the wider Indo-Pacific theatre to target China.
  • Growing idea – Abe’s “Confluence of Two Seas” address to the Indian Parliament gave a fresh impetus to the nascent concept. Abe had spoken of a “broader Asia” taking shape at the confluence of the Indian and Pacific Oceans. 
  • Broader Asia – It recognised the economic rise of India and brought Japan and India together as part of a network spanning the entirety of the Pacific Ocean, the US, and Australia. It was seen as a network that would allow people, goods, capital, and knowledge to flow freely.
  • Australia walked away – The Quad dissipated when Australia walked away on account of Chinese sensibilities. 
  • Later, Asia’s “Democratic Security Diamond” was announced – involving Australia, India, Japan, and the US to safeguard the maritime commons from the Indian Ocean to the western Pacific.
  • Reducing differences – differences among the Quad countries have narrowed down in the last two years. They hold a common interest in the creation of a free, open and inclusive regional architecture, rules of the road, freedom of navigation and overflight, and, ASEAN centrality. 

Challenges

  • Friendships with China – Even as the US has described China and Russia as revisionist powers, Japan has dropped the word “strategy” from its own Free and Open Indo-Pacific to better ties with China. 
  • Dependence on China – Japan’s overwhelming economic dependence on China, Australia’s continued commitment to a Comprehensive Strategic Partnership with China signify the nations’ relationship with China.
  • Chinese response – 
    • China believes that the concept of the Indo-Pacific and Quad is a plot by the US to contain its rise. 
    • It believes that trilateral compacts involving the US, Japan and India and the US, Japan, and Australia are aimed at strengthening the Quad.
    • China believes in “Asia-Pacific” for building an inclusive regional cooperative structure. A switch to “Indo-Pacific” implies erosion of its pre-eminence.
  • Chinese five-point formula for Asia – Pacific
    • making greater efforts to work together on the BRI
    • forging China-ASEAN digital cooperation, including in 5G
    • fully implementing the China-ASEAN FTA
    • finalising regional rules-of-the-road based on the negotiating text of the Code of Conduct 
    • engaging in joint maritime exercises
  • China – ASEAN 
    • China also pitched for synergies between the BRI and ASEAN’s development. 
    • China has signed bilateral agreements with ASEAN countries to advance transportation routes, including the existing economic corridors, China-Thailand Railway, China-Laos Railway, and Jakarta-Bandung high-speed Railway.

India – China

  • India’s commitment to “strategic autonomy” is reassuring to China. It suggests that India would never agree to fully align itself with the US against China.
  • This impression has been reinforced by India holding up Australia’s participation in the annual Malabar naval exercise. 
  • India did not join the Indo-Pacific Business Council.
  • The recent Mamallapuram summit is a positive development as the key to giving strategic guidance to stakeholders on both sides. 

China – other QUAD nations

  • Japan – With Japan, the opportunity for China lies in working together on agreed-upon projects in third countries
  • Australia – it is an alliance partner of the US and is involved in freedom of navigation operations in the South China Sea. China wants to leverage its deep economic engagement to balance the hard line being taken by Australia’s security and intelligence establishment.

China – QUAD : way ahead

  • China remains wary of the Quad and its future contours. 
  • It remains worried about the advantages that the Quad process might offer to India in the Indo-Pacific. 
  • It will seek to use its considerable bilateral engagement with Japan, Australia as well as India to ensure that the Quad does not flip over from a regional coordinating mechanism focused on connectivity and Infrastructure, capacity-building, HADR and maritime security and cyber security and counter-terrorism to become an “Asian NATO”. 
  • Much will depend on China’s actions and how others perceive her capabilities and intentions.

News2Vocab

https://youtu.be/pxJRAhrB3TY

 

 

 

Foreign Policy Watch: India-ASEAN

RCEP: Opportunity, fears in regional trade deal

Note4Students

From UPSC perspective, the following things are important :

Prelims level : RCEP; ASEAN

Mains level : ASEAN negotiations

News

Commerce Minister is in Bangkok for the eighth RCEP ministerial meeting. The meeting is expected to work out the unresolved issues in the negotiations on the mega trade deal.

What is the RCEP?

  • It is a trade deal that is currently under negotiation among 16 countries — the 10 member countries of ASEAN and the six countries with which the ASEAN bloc has FTA.

The deal

  • Negotiations on the details of RCEP have been on since 2013, and all participating countries aim to finalise and sign the deal by November.

What does the RCEP propose?

  • The purpose of RCEP is to create an “integrated market” spanning all 16 countries, making it easier for products and services of each of these countries to be available across this region.
  • ASEAN says the deal will provide “a framework aimed at lowering trade barriers and securing improved market access for goods and services for businesses in the region”.

Negotiations

  • The negotiations are focussed on areas like trade in goods and services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, e-commerce, and small and medium enterprises.

Why is the RCEP important?

  • It is billed as the “largest” regional trading agreement ever.
  • These countries account for almost half of the world’s population, contribute over a quarter of world exports, and makeup around 30% of global GDP.

How have the talks progressed?

  • Of the 25 chapters in the deal, 21 have been finalised. 
  • Chapters on investment, e-commerce, rules of origin, and trade remedies are yet to be settled.

How does India stand to gain?

  • Sections of the Indian industry feel that being part of RCEP would allow the country to tap into a huge market if the domestic industry becomes competitive. 
  • Pharmaceuticals and cotton yarn are confident of gains, and the services industry too may have new opportunities.

What are the concerns?

  • Several industries feel India needs to be mindful of the amount of access it gives to its market. 
  • There is fear that some domestic sectors may be hit by cheaper alternatives from other RCEP countries. 
  • Apprehensions have been expressed that cheaper Chinese products would “flood” India.
  • Critics are also not confident that India would be able to take advantage of the deal, given its poor track record of extracting benefits from the FTAs with these countries. 
  • India’s trade gap with these countries may widen if it signs the RCEP deal.
  • Industries like dairy and steel have demanded protection. 
  • The textile industry has already raised concerns about growing competition from neighboring countries.
  • The bigger players in steel are apprehensive of the potential impact on their businesses.
  • Makers of finished goods have argued that limiting steel supply to domestic producers through higher import duties will put them at a disadvantage.

Foreign Policy Watch: India-ASEAN

[op-ed of the day] Reclaiming the Indo-Pacific narrative

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : ASEAN's approach on indo Pacific

CONTEXT

  • At the 34th summit of the Association of Southeast Asian Nations (ASEAN) in Bangkok in June, its member states finally managed to articulate a collective vision for the Indo-Pacific region in a document titled “The ASEAN Outlook on the Indo-Pacific”.
  • At a time when the geopolitical contestation between China and the United States is escalating, it has become imperative for the ASEAN to reclaim the strategic narrative in its favour in order to underscore its centrality in the emerging regional order.
  • An awareness of the emergence of a great power contest around its vicinity pervades the document as it argues that “the rise of material powers, i.e. economic and military, requires avoiding the deepening of mistrust, miscalculation and patterns of behaviour based on a zero-sum game”.

 

Change in approach

Despite individual differences and bilateral engagements ASEAN member states have with the U.S. and China, the regional grouping can now claim to have a common approach as far as the Indo-Pacific region is concerned and which the Prime Minister of Thailand, Prayuth Chan-ocha, suggested “should also complement existing frameworks of cooperation at the regional and sub-regional levels and generate tangible and concrete deliverables for the benefit of the region’s peoples”.

Code of Conduct in the China Sea

  • Tensions continue to rise over the militarisation of this waterway; in June, a Philippine fishing boat sank after it was rammed by a Chinese vessel.
  • It is hoped that the first draft of the code for negotiations will see the light by this year end.
  • With these moves, the ASEAN is clearly signalling its intent to be in the driving seat as it seeks to manage the geopolitical churn around it.

In response to other major powers

  • The release of the U.S. Free and Open Indo-Pacific (FOIP) strategy report in June — it focusses on preserving a “free and open Indo-Pacific” in the face of a more “assertive China” — was perhaps the final push that was needed to bring the ASEAN discussion on the subject to a close.
  • Japan had already unveiled its Free and Open Indo-Pacific concept in 2016, while Australia released its Foreign Policy White Paper in 2017, detailing its Indo-Pacific vision centred around security, openness and prosperity.
  • Prime Minister Narendra Modi articulated India’s Indo-Pacific vision at the Shangri-la Dialogue in 2018, with India even setting up an Indo-Pacific wing in the Ministry of External Affairs (MEA) earlier this year.

The framework

  • The ASEAN is signalling that it would seek to avoid making the region a platform for major power competition.
  • Instead its frame of reference is economic cooperation and dialogue.
  • The fact that the ASEAN has gone ahead and articulated an Indo-Pacific outlook is in itself a seeming challenge to China which refuses to validate the concept.
  • But the ASEAN’s approach is aimed at placating China by not allowing itself to align with the U.S.’s vision for the region completely.

India’s Response

  • India has welcomed the ASEAN’s outlook on the Indo-Pacific as it sees “important elements of convergence” with its own approach towards the region.
  • During U.S. Secretary of State Mike Pompeo’s visit to India in June, India was categorical that it is “for something” in the Indo-Pacific and “not against somebody”, seeking to carefully calibrate its relations with the U.S. and China in this geopolitically critical region.
  • As External Affairs Minister S. Jaishankar has suggested “[and] that something is peace, security, stability, prosperity and rules”.
  • India continues to invest in the Indo-Pacific; on the sidelines of the recent G-20 Summit in Osaka, Japan, Mr. Modi held discussions on the Indo-Pacific region with U.S. President Donald Trump and Japan Prime Minister Shinzo Abe with a focus on improving regional connectivity and infrastructure development.

Conclude

With the ASEAN finally coming to terms with its own role in the Indo-Pacific, the ball is now in the court of other regional stakeholders to work with the regional grouping to shape a balance of power in the region which favours inclusivity, stability and economic prosperity.

Foreign Policy Watch: India-ASEAN

[op-ed snap] Raja Mandala: Modi’s Taiwan opportunity

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Stronger relationship with Taiwan may boost India's Act East policy

CONTEXT

Some in Delhi, however, would say that Modi’s focus on Taiwan is too big and risky an idea. They worry it might offend Chinese political sensitivities. But productive engagement with Taiwan is not about abandoning India’s “One-China” policy or playing some kind of a “card”. India has been rather scrupulous in respecting China’s sovereignty and territorial integrity.

Relationship with Taiwan

  • Most major nations have significant cooperation with Taiwan without extending it diplomatic recognition. India, however, has too many self-imposed constraints on its Taiwan policy.
  • It is now time to lift many of them.
  • To be sure, since the establishment of formal channels of contact in the mid-1990s, there has been steady progress in the relationship.
  • Annual bilateral trade has reached $7 billion last year and the hope is to raise it to $20 billion in the next few years.
  • There has been a rise in Taiwan’s investments in India and a steady growth in exchanges between the two societies.
  • During the last five years, the NDA government has taken steps to enhance the relationship.
  • These include the upgradation of the bilateral investment agreement, promotion of major Taiwanese investments, expanding parliamentary exchanges and facilitating track-two dialogues on regional issues.

Reasons to enhance the relationship

There are at least three reasons why Delhi should take a fresh look at Taiwan and replace its current incrementalism with a more ambitious policy.

  1. Geopolitical –
  • The delicate three-way political compromise between US, China and Taiwan crafted in the 1970s appears to be breaking down, thanks to rising China’s regional assertiveness, the renewed threat of forceful reunification of Taiwan and Beijing’s relentless pressure tactics against Taipei.
  • If there is one piece of real estate that holds the key to the geopolitics of East Asia, it is Taiwan. The unfolding dynamic around Taiwan will have significant consequences for India’s Act East Policy and its emerging role in the Indo-Pacific Region.

2. Geo-economic –

  • The unfolding trade war between the US and China is compelling Taiwan to accelerate its plans to move its large manufacturing bases away from China to Southeast Asia and India.
  • As the structure of industrial production in East Asia undergoes a profound transformation, amidst the prospect of an economic decoupling between the US and China, India has once-in-a-generation opportunity to boost its own manufacturing sector.

3. Talent and technology

  •  As it turns out, Taiwan has embarked on a big mission to attract skilled workers.
  • With a declining birth rate and growing emigration, Taiwan’s industry, education, and technology development could do with Indian engineers and scientists. At present, there are barely 2,000 Indians working in Taiwan.

Future of relationship

  • There is no shortage of ideas for the transformation of India’s relations with Taiwan.
  • An agreement on comprehensive economic cooperation is one of those.
  • The synergy in human resources provides the basis for massive collaborations between the universities, research institutions and technology enclaves in the two countries.
  • Expanding the engagement with Taiwan can’t be a tactical game; it should be an important part of Delhi’s effort to come to terms with all corners of Greater China that looms so large over India’s future.

Those who think Taiwan is small beer in the wider scheme of Indian grand strategy should ponder over two facts. Taiwan’s GDP is about $600 billion and twice the size of Pakistan’s economy. And few entities in the international system are today as eager and capable of boosting Modi’s domestic economic agenda.

Foreign Policy Watch: India-ASEAN

[op-ed snap]Charting a clear course in the Indo-Pacific

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing Much

Mains level : Indo pacific approach overhaul is a welcome step in foreign policy relations.

CONTEXT

Though the term Indo-Pacific has been gaining traction in Indian policy circles for some time now, it achieved operational clarity after the Indian vision was presented by Prime Minister Narendra Modi in his keynote address at the Shangri-La Dialogue in June 2018. His speech underscored that for India the geography of the Indo-Pacific stretches from the eastern coast of Africa to Oceania (from the shores of Africa to that of the Americas) which also includes in its fold the Pacific Island countries.

Many mechanisms regarding Indo Pacific

  • India’s Act East policy remains the bedrock of the national Indo-Pacific vision and the centrality of ASEAN is embedded in the Indian narrative.
  • India has been an active participant in mechanisms like the Indian Ocean Rim Association (IORA), in ASEAN-led frameworks like the East Asia Summit, the ASEAN Defence Ministers’ Meeting Plus, the ASEAN Regional Forum as well as the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation and the Mekong-Ganga Economic Corridor.
  • India has also been convening the Indian Ocean Naval Symposium, in which the navies of the Indian Ocean Region (IOR) participate.
  • Through the Forum for India-Pacific Islands Cooperation, India is stepping up its interactions with the Pacific Island countries.

 

The approach towards Indo Pacific

  • Inclusiveness – Inclusiveness, openness, and ASEAN centrality and unity, therefore, lie at the heart of the Indian notion of Indo-Pacific.
  • Security – Security in the region must be maintained through dialogue, a common rules-based order, freedom of navigation, unimpeded commerce and settlement of disputes in accordance with international law.
  • Connectivity – More connectivity initiatives impinging on respect for sovereignty, territorial integrity, consultation, good governance, transparency, viability and sustainability should be promoted.

The idea behind setting up Indo Pacific Wing

  • The setting up of the Indo-Pacific wing in the Ministry of External Affairs (MEA) in April 2019 is a natural corollary to this vision.
  • Major powers defining their vision – Given how the term Indo-Pacific has been gaining currency and how major regional actors such as the U.S., Japan and Australia are articulating their regional visions — including this term in their official policy statements — it was becoming imperative for India to operationalise its Indo-Pacific policy.
  • Renaming by the USA – The renaming of the U.S. Pacific Command to U.S. Indo-Pacific Command as well as the Asia Reassurance Initiative Act in December 2018 showcase Washington’s more serious engagement with the Indo-Pacific.
  • Huge geographical spread – Given the huge geography that the Indian definition of Indo-Pacific covers, there was a need for a bureaucratic re-alignment to create a division that can imbibe in its fold the various territorial divisions in the MEA that look after the policies of the countries which are part of the Indo-Pacific discourse.
  • Focus on IOR – The integration of the IORA means that attention will continue to be focused on the IOR.

 

Challenges ahead

  • Integrating quadrilateral with Indo-Pacific – There are  challenges for India, especially how it will integrate the Quadrilateral initiative which got revived in 2017 with its larger Indo-Pacific approach.
  • Commerce and connectivity – Commerce and connectivity in particular will have to be prioritised if India is to take advantage of a new opening for its regional engagement.
  • The balance between the interests – .While India has been consistently emphasising “inclusiveness” in the Indo-Pacific framework, it will be challenging to maintain a balance between the interests of all stakeholders.
  • Difference in vision –There are differences between India’s vision and the U.S.’s strategy for the Indo-Pacific even as countries like China and Russia view the Indo-Pacific with suspicion.

Conclusion

As geopolitical tensions rise between China and the U.S., the MEA’s new division will have its task cut out if India’s long-term political and economic interests in the region are to be preserved. A bureaucratic change was indeed needed, but going forward the challenge would be to see how effectively this change manifests itself in managing India’s growing diplomatic footprint in the Indo-Pacific.

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