What is "Asia"?

Map of Eurasia Continent

From a historical perspective, the idea that Europe and Asia were different “continents” came from the ancient Greek view that the lands to the east of Greece somehow made up a single, organic whole called Asia, while the lands to its west made up another whole, known as Europe. This view eventually became the modern Western understanding of Europe and Asia as separate continents.

The idea of Asia as a distinct continent is problematic in both a geological and cultural sense. Geologically, there is no particular distinction between Europe and the rest of Asia; together, they sit on the same geological plate, the Eurasian plate. The Ural Mountains, which are traditionally considered the boundary between Europe and Asia, are moreover not very distinct and are hardly an impediment to the movement of peoples. South Asia, which lies on a separate tectonic plate and is separated by the far more formidable Himalayas, is actually physically much more distinct from the rest of Eurasia than Europe is (South Asia is also not too dissimilar in size to Europe, minus Russia).

Culturally, Asia is also a problematic concept. What is Asia, other than a way of setting apart a group of non-Western cultures from the West? The West, is fairly well defined – to put it simply, it is a civilization that arose from Roman civilization, Christianized, and then went through developments such as the Renaissance, Enlightenment, and Industrial Revolution. But what, really, is Asia? It consists of cultures as diverse as Japan and the Arabs, who really have no more in common with each other than with Europeans. It can in fact be strongly argued that Islamic civilization is, in many ways, more similar to the West because of their related religious origins than to China. This is not to say that there are no common histories or cultures in Asia; rather Asia has many regions, each as distinct as Europe, which share their own commonalities, such as East Asia (Chinese civilisation and states influenced by Chinese culture such as Japan and Korea) or South Asia. Between these civilisations, there was, of course, some interaction so it is reasonable to see all of Europe and Asia as an interconnected system with specific sub-regions.

It is important, in fact, to not worry too much about the exact definition of regions or continents, since doing so often creates mental boxes that obscure rather than clarify reality. A few decades ago, the idea of pan-Asian solidarity or brotherhood became popular in many parts of Asia, but this was the result of Asians internalizing a Western construct. It led to some beliefs, for example, in India that Indian and Chinese interests or patterns of thought were similar when, in fact, this was not the case.

Connections between regions are also often obscured by the tendency to classify and separate territories into regions. It is not as if there is a sudden break in the cultures, or even genetics of people who live next to each other who happen to inhabit countries separated into different regions. For example, Greece is in Europe while Turkey is considered to be part of the Middle East (which is geographically in Asia, technically). Notwithstanding this, Greeks tend to exhibit cultural traits much more similar to those of the Turks than to Europe’s Swedes (for example). Iran and Afghanistan, meanwhile, share a common heritage and language but they are placed in different regions in most classification schemes, with Iran being part of the Middle East and Afghanistan in South or Central Asia. All this obscures the connections between regions in Europe and Asia and the fact that they generally gently transition into other cultures without there being huge breaks.

A much more accurate way of looking at Europe and Asia is to consider them, geographically, all part of a single large landmass. However, since the major divisions within this landmass are cultural and civilizational, the descriptive terms within this landmass would have to reflect this fact. Thus, this landmass would either have several continents of which Europe would be one, or would have several regions, including Europe and many others. Different manners of division could emphasize civilization (Western, Islamic, Hindu, Confucian, and so on in Samuel Huntington’s sense) or common zones of interaction (the Mediterranean, for example). However, the simplest shorthand manner of describing Asia is to define it as a physical continent (including Europe) with approximately seven evolving regions, which balance geography and culture, and do not follow exact political boundaries: Europe, the Middle East (including North Africa), South Asia, Central Asia, Russia, East Asia, and Southeast Asia, with several transitional zones in between.

The GeoTradeBlog does not believe that Asia holds any valid geographical or cultural meaning as a single whole. Rather, it sees a single geographical landmass, Eurasia, with separate and distinct regions, which is not to diminish the fact that these regions have all shared many common cultural and historical events and trends. Maybe dominant civilisations will always be defined by what they are, while others are given common identity by what they are not. In which case, as some nations in Asia rise to global ascendancy the notion of Asia will undoubtedly fade away.

The Alianza del Pacífico signs a historic agreement

Alianza del Pacífico countries in blue and observer states in brown

The Alianza del Pacífico agreement signed on 10  February 2014 aims to eliminate most trade and non-trade barriers between Perú, Chile, Colombia and México and also improve the mobility of capital and people. It will also reduce members’ export dependence on single goods (in the cases of Peru, Chile and Colombia) or single markets (as in the case of Mexico), and will create economies of scale that will make it easier to compete with Asian markets.

The Landmark agreement

The landmark framework agreement covers a wide range of topics, ranging from the elimination of trade and non-trade barriers on 92pc of the goods traded within the bloc to the adoption of measures to improve the mobility of capital and people. The countries making up the trade bloc have a combined population of over 210m people, a total GDP of US$2trn (and a per-head GDP in excess of US$10,000) and account for around 40pc of all foreign trade and inward foreign investment flows to the Américas (not including the US). The Alianza del Pacífico is due to increase shortly with Costa Rica just been accepted to begin the formal membership process.In addition, the Alianza del Pacífico’s goal of strengthening ties with the Asia-Pacific region means that a broader trade bloc in the Américas will join ongoing talks to create the Trans-Pacific Partnership (a free-trade area comprising Australia, Brunei, Chile, Canada, Japan, Malaysia, México, New Zealand, Perú, Singapore, the US and Vietnam). 

A massive opportunity

The recent agreement has been welcomed in the countries of the Alianza del Pacífico, where it as seen as a massive opportunity for achieving complementarities among its members. México is set to strengthen its intra-bloc exports of value-added manufactures, such as automobiles and metal-mechanics goods. Colombia is expected to benefit from increased exports of basic manufactures, such as processed foods, clothing and leather. And Chile and Perú are likely to boost their cross-border sales of agro-industrial goods. 

Furthermore, the Alianza del Pacífico constitutes an opportunity to build strong intra-bloc competitive advantages to penetrate Asian markets. This would be achieved through the creation of productive chains that generate economies of scale. According to a study by the Inter-American Development Bank (IDB), these chains could include the production of fibres and carpets by Perú and Chile; phosphates and detergents between Mexico and Perú; wood, paper and cardboard between Chile and Colombia; and chemicals and plastics between Colombia and México. 

But there will be challenges ahead

The Alianza del Pacífco’s success also hinges on its capacity to put in place accords in other, non-trade related areas. Progress has been made on the elimination of visas, the establishment of joint embassies in many Asian countries, and the subscription of agreements to promote education, tourism, small and medium enterprises and infrastructure investment. 

However, advances have been limited in more complex areas, such as the harmonisation of customs procedures, rules of origin and tax and financial sector regulation. The lack of progress in the latter two areas, for example, is delaying the implementation of the Mercado Integrado Latinoamericano (MILA, which aims to create a single stock market between Chile, Colombia and Perú and México).

Finally, although it is clear that the Alianza del Pacífico does not have political motivations, Mercosur comprised of Argentina, Brazil, Paraguay, Uruguay and Venezuela and the Alianza Bolivariana para los Pueblos de Nuestra America (ALBA) which includes Antigua and Barbuda, Bolivia, Cuba, Dominica, Ecuador, Nicaragua, St Vincent and the Grenadines and Venezuela are likely to see the recent advances as a threat to their political ideology and existence.

APEC Indonesia 2013

APEC Family Photo of Leaders

APEC continues to go from strength to strength, with an ever-expanding agenda, and an impressive share of the world economy held by its 21 members: this year, APEC accounts for 55pc of global GDP, 44pc of trade and 40pc of the world's people which shows just how dynamic and prosperous the region is becoming.

APEC's aim was never to be a negotiating forum. Its guiding principle is “concerted unilateralism”, that is, it has no power to force its members to do anything; it merely seeks to inspire good policy by example and co-ordination. This is where APEC's real accomplishment lies within a region not accustomed to working and coordinating together in a similar way to the the EU regional supranationalism integration. Instead APEC has developed many technical committees doing useful work in areas such as trade facilitation. It helps foster habits of consultation and co-operation. And, furthermore, its Leaders’ meetings provide an opportunity for useful and sometimes informal bilateral talks.

Since the Doha round of world-trade talks more or less came to a stand still with almost no hope of moving forward in the foreseeable future, APEC’s ambitions have spread into other areas. This year its motto is “resilient Asia-Pacific: Engine of Global Growth”, and its three main themes are the Bogor goals; improving “connectivity” (infrastructure, harmonising procedures and making it easier for people to travel); and “sustainable growth with equity”.

APEC's core interest has always been trade liberalisation. Twelve of its members (including two of the three biggest economies, the US and Japan, but not China) are pursuing the Trans-Pacific Partnership (TPP), an ambitious “21st-century” free-trade pact, covering areas such as labour, government procurement, state-owned enterprises, intellectual property and e-commerce, as well as traditional merchandise trade.

Meanwhile, eight TPP members (but not the US), along with four other APEC members (including China) as well as India and three other non-APEC countries are talking about yet another regional trade group, the Regional Comprehensive Economic Partnership.

The Latin American member economies, Chile, Perú and México are also pursuing the "Alianza del Pacífico" in the hope that a stronger regional alliance will give them more bargaining power in their trade relations with China. 

All, this adds up to a very dynamic Asia Pacific region. Hence a possible further grand aim for APEC over the next decade may be to try to co-ordinate these parallel processes, in the hope of bringing them all together in a grand Free Trade Area of the Asia-Pacific eventually. This is a role that APEC is well prepared for given its twenty or more years of existence across the Asia Pacific region and its technical expertise on trade liberalisation.

The New Global Middle Class

The new global middle class in the 21st century

The New Global Middle Class

Since the beginning of the 21st century there has been a massive expansion of the new global middle class. This has not occurred in a vacuum. The BRICS and second tier countries such as Brazil and Turkey have made the headlines for their rise in income and high annual GDP growth but this is only part of the story, with increasing wealth has also come a massive rise in development. According to the OECD, Brazil's middle class has risen from 29pc of the population in the 1980s to 52pc in 2009 almost doubling. In Turkey's case, income per capita nearly tripled between 2002 and 2011 bringing more and more people into a growing middle class and increasinging the ranks of the global middle class.

According to the Brookings Institution, there are now 700 million more people with $US10-100 per day to spend than there were in 2003. Moreover, what they call the global middle class is expected to grow by another 1.3 billion over the next ten years. This new phase of creating a global middle class brings major benefits for the global economy. Instead of the somewhat one-sided trade pattern of the last two decades, it means greater well-being for households in “developing countries” and opportunities for more producers in the advanced economies.There has also been a massive re-alignment of world trade between what has been tradionally called South-South countries. Trade between South-South countries currently stands at around 30pc.

As a result there have been tectonic shifts in the rebalancing of the world in development terms. It is no longer clear which countries are “developed” and which are still “developing”. This re-alignment has in turn brought a massive expansion of human capabilities and provided choices to people entering the new global middle class that they clearly did not have in the 20th century. This point is well illustrated in the 2013 UN Human Development Report 2013. The Report highlights the fact that progress on human development has accelerated in the last decade and all of the 40 countries analysed in the Report are doing better than expected.

Why have some countries done better than others?

Interestingly several factors have influenced the overall outcomes of accerlating people's accession into the global middle class when comparing the different experiences of countries on a global level.

In countries where the State has taken a long term perspective on development, people have been accelerated in to the middle class. In some countries the state has actively promoted job creation, this has also helped to sustain the creation of the middle class. Where the state has enhanced investment in health and education – these policies have greatly helped to assist people to move into middle class. In Turkey, for example, the Government decided to provide healthcare for all and target the poor. In Brazil, the Government managed to expand education by matching the funds available across regions and municipalities. In México, the state provided cash transfers for social policy interventions.

Some countries have also taken an active role in nurturing the industrial capacities and by actively investing in people which has allowed them to make the most of trade opportunities in global markets.

What is the flipside?

Interestingly a new global middle class made up of educated, inter-connected youth will increasingly demand far greater accountability. This point has already been illustrated by large-scale demonstrations in Brazil and Turkey which are a direct result of the creation of an enhanced middle class and both countries' economic success over the last decade.

Growing middle classes are far less tolerant when it comes to governments performing inadequately. Delivery of services, such as education and health, is poor in both Brazil and Turkey. In its last scorecard on educational attainment referred to as the Program for International Student Assessment (PISA), the OECD found that Turkey and Brazil ranked especially poorly in maths and science. In maths, Turkey ranked 41st out of 62 countries, while Brazil was in 55th place. In science, Turkey was 40th and Brazil 50th. In the UNDP's 2013 Human Development Index, Brazil ranked 85th and Turkey 90th out of 186 countries. It is not clear what the implications of the current protests will be for these two countries.

Much will depend on how the democratically elected leaders of Turkey, Prime Minister Erdogan and the President of Brazil, Dilma Rousseff react to these challenges. The aspirations of the middle class are colliding with the current capacity of these countries to deliver.

Conclusion

In order for the new global middle class to be sustainable it has been shown that countries with less inequality do better and improve far more as more people are added to the middle class. Furthermore educating women to adulthood has been shown to be key to reducing fertility rates. Another key point is that in order to reap the benefits of youth bulge that exists in so many emerging economies, job creation for the young is also key.

Finally participation and inclusion is essential to stability and social cohesion – this in itself is what will ultimately sustain the new global middle class.

Europe’s Smart Pivot: The European Union in the Asian Century

The Geo-Trade Blog endorses and reproduces in full an article by Javier Solana, published on 25 Jun 2013 on World Politics Review and on: http://javiersolana.esadeblogs.com. Javier Solana was the EU high representative for foreign and security policy, NATO secretary-general and foreign minister of Spain. He is currently president of the ESADEgeo Center for Global Economy and Geopolitics and distinguished fellow at the Brookings Institution.

Eastern Hemisphere: Europe & Asia

One of the key differences between Western and Asian cultures is their view of time: Whereas history is linear and consequential as seen from the West, Chinese and other Asian cultures perceive time as being cyclical. In the latter view, the emerging Asian century is simply a natural phase within this recurring flow. As renowned economist Angus Maddison showed, China and India were the world’s largest economies for centuries. Only upon the dawn of the Industrial Revolution did Western Europe and the “Western offshoots”—Maddison’s term for the U.S., Australia, New Zealand and Canada—catch up and overtake the Asian giants. The weight of the continents effectively changed as the technological advances of the Industrial Revolution shrank the relative effect of population size with respect to productivity and output.

Today, we are witnessing another such tipping of the scales. Asia is returning to its place in history, “re-emerging,” as it were, with China currently holding second place in the ranking of world economies and poised to take the lead in the near future. The wealth of opportunities and challenges surrounding these changes can only be managed through strategic thinking and cooperation on the part of all parties involved.

After nearly two centuries at the apex of the world economy, Europe, the "old” continent, together with its American counterparts, must now adapt to new realities. Though the United States’ role in Asia has traditionally been higher profile, particularly in security matters, it is undeniable that Europe is already looking east. Trade and investment links between the European Union and Asia are strong and dynamic: Speaking in regional terms, Asia has surpassed NAFTA to become the EU's main trading partner, constituting a third of total trade. More than 26 percent of EU outward investment is currently destined for Asia, while inward investment is also on the rise. China on its own is the EU’s second-biggest trading partner, after the United States.

In a global context of strong interdependence and flux, Europe must work from its strengths. It must draw on its history in order to play a constructive and active role in the transition toward the Asian century. Just last year, the European Union, the key piece in Europe’s institutional architecture, was awarded the Nobel Peace Prize for its accumulated history of reconciliation and its contributions to peace. The EU and its predecessor organizations were indeed the fulcrum that turned a continent of war into a continent of peace and stability: What started as a commercial alliance developed into the most sophisticated regional institution on the planet. The EU and its member states are now facing the most acute difficulties in the union’s existence—but the construction’s historical role in achieving European stability is indubitable.

In contrast, Asia, in its current configuration, is still an unstable continent. Reconciliation was never achieved in a number of painful conflicts between its countries; borders remain contested, and disputes regularly flare up. These unhealed wounds are supremely delicate, particularly in the absence of a strong regional institutional network capable of containing sparks of conflict. Especially critical is the unbreakable nexus between security and trade, which looms large for Asia’s governments, dependent as they are on the endurance of steady, intelligent economic growth in their task of providing their young and dynamic populations with the means to shape their own lives.

A Vertiginous Ascent

The defining characteristic of Asia’s present rise has been its unprecedented, sustained growth rates. After the Industrial Revolution, it took Britain 150 years to double its economic output per capita. While the same doubling took the United States 50 years, China and India have recently achieved this feat in as little as 12 and 16 years, respectively. What is more, the Asian acceleration is affecting populations on an entirely different scale than in the past: The two Asian giants alone have taken no fewer than 2.5 billion people with them in their take-off, over a third of the earth’s population.

This growth explosion has granted a large portion of the global population positive freedoms that were formerly unattainable. China alone managed to lift 680 million people out of extreme poverty between 1981 and 2010, and the proportion of East Asians living on $1.25 per day plunged from 77.2 percent to 12.5 percent over the same three decades. However, there is still a long path ahead. According to the World Bank’s poverty indicators, for example, almost 70 percent of India’s 1.2 billion inhabitants still subsist on less than $2 per day.

Important challenges follow in the wake of these momentous changes. Countries will have to tackle domestic issues such as urbanization and the related issues of pollution and congestion. Resource stress is another cross-border problem that will not dissipate on its own. As hundreds of millions are catapulted into the global middle class, their demands grow—but the resources and energy required to meet these demands are in short supply.

The consumption shift is already taking on geo-economic and geopolitical expressions in the short term. They have recently hit front pages in the West: As America’s Smithfield Foods, the world’s largest pork producer, was targeted by a Chinese meat processing firm in an acquisition effort, the contours of the largest Chinese takeover of a U.S. corporation to date came into view. The long-term consequences, however—which require a type of policymaking that is perpetually subject to the effects of time discounting—are no less daunting. It is unquestionable that the negative externalities of the Asian demand hike and of the overall current brand of growth, such as rising greenhouse gas emissions and their contribution to climate change, will be felt globally.

Injecting Energy Into an Unstable Continent

As Asia heats up through the energy of its economy, its countries become more dynamic, multiplying both opportunities and risks. It is a well-known principle of physics that as energy is applied to moving gas molecules, collisions between them become both more frequent and more powerful. Since Asia lacks a strong network to soften, mitigate and contain potential friction, risk levels surge with the growing kinetic energy of its states.

The Asian paradox is thus as follows: Integration among Asian nations is deep in economic terms, but underlying security and political tensions are also deep and even growing, all without an undergirding set of norms, rules and institutions to manage the countervailing pressures. Asia is, in effect, an unfinished continent, where historical wounds did not fully heal and ragged scars remain where reconciliation was never achieved. Historical mistrust magnifies anxieties stemming from the asymmetric rise of certain countries within the continent.

Worrying signs of this phenomenon abound: Nationalism is on the rise and is repeatedly put on provocative display. Territorial disputes over unsettled borders, whether in barren stretches of no man’s land in the Himalayas or small islands in the South and East China Seas, flare up recurrently. Meanwhile, as military spending continues to decline in Europe and North America, it is on the rise in Asia, growing at 3.3 percent last year, according to SIPRI. Vietnam, in particular, increased its defense spending significantly in the face of the increasing naval assertiveness of its large neighbor. The second-largest military spender in the world, China, has increased its expenditure by 175 percent in real terms over the past decade, the largest increase for the period among the top 15 spenders in the world.

In our globalized and interdependent world, however, trade and security are inseparable. Take the ongoing spat between Tokyo and Beijing over the Senkaku/Diaoyu Islands, for example, in which a territorial dispute saw Japan's auto exports to China plummet 80 percent in just three months last year. The security-economy nexus is one Europe understands all too well: It is indeed the foundation on which the European Union was built. It also forms a solid bedrock for European engagement with Asia: By way of its own experience, Europe is capable of contributing to the gradual construction of rules-based, cooperative security in Asia. The benefits of such cooperation, as well as further regional integration, would extend far beyond continental borders.

A Smart Pivot

Since World War II, Asia’s security stability has largely been based on U.S. guarantees. The United States has acted as an outside underwriter and balancer in the continent just across the Pacific—but today’s shifts in economic weight and the assertiveness that come with them are changing not just the perspectives, but also the stakes. In this context, the United States has commenced a pivot, more delicately termed “rebalancing,” toward Asia. Although President Barack Obama’s plan to focus more on Asia is clearly being hampered by dramatic events in the Middle East that continually clamor for his attention, America remains committed to its strategic reorientation.

In one of her final speeches as secretary of state, Hillary Clinton insisted that the U.S. wanted “Europe to engage more in Asia along with us: to see the continent not only as a market, but as a focus of common strategic engagement.” Following the tides of history, trade is the scout that moves quickly into new territories, generally with further engagement in tow. The EU’s trade relations with Asia already flow strong, and the ongoing bilateral free trade agreement (FTA) negotiations will serve to accelerate this critical stream. Nevertheless, European engagement does not stop at trade.

Herein lies the key to the EU’s reorientation toward Asia, which may at first sight appear illogical: The European Union is not a Pacific power and has never been seen as a great power in Asia. This, precisely and paradoxically, is part of its strength. Europe is engaged in Asia but does not represent a threat. The relations between the two continents are therefore not restricted to the sticky, black-or-white choice between competition and cooperation, but can and have advanced beyond such calculations. In a continent hardwired to focus on hard security and national interests, some might yet question Europe’s relevance. But Europe’s niche lies in outside-the-box thinking, in the kind of smart security that only diplomacy and institutionalized cooperation can bring. Along with its extensive experience in institutional architecture, the old continent has a unique toolbox on offer.

Working From Experience: Regional Integration

Europe’s history has proved that regional integration is a powerful path to a more peaceful coexistence, creating fertile ground for trade to prosper. Clearly, it is also a fruitful area for development within Asia, whose regional network will require strengthening to absorb the shocks that can arise within the energetic continent. In Southeast Asia, one such institution is already firmly in place: the Association of Southeast Asian Nations (ASEAN), which is now almost 50 years old. ASEAN’s institutional architecture bears the closest resemblance to the EU’s structure of any regional organization in the world, making it a natural and like-minded partner for the union.

As ASEAN continues to evolve, striving toward its goal of three-pillared integration—political-military, economic and socio-cultural—by 2015, EU support to the project will be invaluable. Recent experiences have reminded us, however, that experiments in regional integration are anything but effortless. These structural building exercises are novel in world history, and as in any innovation process, each failure represents a lesson learned and a way forward. ASEAN, for one, operates in a particularly challenging environment, where many of its interlocutors prefer traditional bilateralism over multilateralism, to a degree that can be damaging to the regional integration process.

From its side, the EU is working through a range of difficult issues brought front and center by the storm winds of the global economic crisis. These struggles are likely to have a twofold effect on the region-to-region association. On one hand, some of the challenges to regional integration have been exposed. As is the way of European integration, however, these hurdles too will ultimately be overcome, doubtless providing fruitful lessons for future integration blueprints—in Europe and elsewhere.

On the other hand, Europe’s dire economic situation highlights and enhances the need to harness growth. One of the main channels of opportunity is the emerging markets of Asia. Here too, the ASEAN-EU link, which represents a combined market of more than a billion people, is paramount. The bloc of 10 ASEAN member states is the EU's third-largest trading partner outside Europe, with more than $270 billion in goods and services traded in 2011. For ASEAN, the EU is the second-largest trading partner after China and the largest provider of investment by far, averaging some $12 billion annually from 2000 to 2009.

Reinforced relations with ASEAN will also prove critical if the EU is to continue on its path to becoming an official participant in the East Asia Summit. An encouraging sign in the relationship upgrade came last year, when the European Union was finally legally able to sign ASEAN’s Treaty of Amity and Cooperation, and an additional stumbling block was removed from the equation when Myanmar recently shifted to political reforms and opening.

The Security Niche

Beyond the two-way institutional bonds, Europe brings further concrete experience to the table in Eurasian relations. Not too long ago, Europe was a war-torn continent crisscrossed with deep wounds and trenches. It has since then been uniquely successful in reconciling the once-warring parties, making it well-placed to share its conflict resolution experiences. This is one aspect of a second axis to Europe’s smart pivot, which builds on instrumental cooperation in such nontraditional security areas as maritime security, humanitarian assistance, disaster prevention and response, and peacekeeping.

The EU’s first-ever European Security and Defense Policy (ESDP) mission in Asia is a concrete demonstration of Europe’s contribution to strategic stability in Asia. It was Jakarta that formally invited the EU to lead a monitoring mission in Aceh after signing the Helsinki Memorandum of Understanding with the separatist Free Aceh Movement (GAM) in 2005. In cooperation with five ASEAN countries—Thailand, Malaysia, Brunei, the Philippines and Singapore—as well as with Norway and Switzerland, the EU’s Aceh Monitoring Mission monitored the implementation of various aspects of the peace agreement, including disarmament, demobilization and reintegration of GAM fighters and the implementation of the legislative changes in the MOU. While Asia’s circumstances are undeniably very different from Europe’s, the “old” continent’s expertise has already shown its value in the East.

There are many other concrete security areas that connect even more directly to trade. The South China Sea, for example, sees the passage of more than half of the world’s commercial shipping. Asia’s seas and straits are therefore extremely sensitive. One concrete danger, as recognized by Singapore, Malaysia, Indonesia and Thailand in their Malacca Strait Patrol initiative, is piracy. In the adjacent Indian Ocean, the EU has been implementing successful counterpiracy measures since 2008. The lessons from Operation Atalanta are already bearing fruit, leading to joint military operations between the EU and its strategic partner India in the Indian Ocean.

Increasing Flow Rates: Trade Liberalisation

Today’s global crisis has provided irrefutable proof that the link between economic growth and stability is bidirectional: Both for Europe’s advanced economies with their corresponding demographics and for Asia’s extremely young, burgeoning populations, growth is vital. Despite its present difficulties, Europe continues to hold great opportunity as the world’s largest economy, with half a billion consumers in a $16.7 trillion market. Asia is the European Union’s largest trading partner, accounting for 42.5 percent of total trade in 2011. South and East Asia’s exports to the EU may have fallen by 7.2 percent last year, but trade ties remain robust, and the incredible economic potential for both parties is obvious. It is critical to fully grasp that potential, by stepping up trade and investment initiatives and continuing ongoing trade liberalization.

It was Asia’s opening to international trade, first implemented by the Asian tigers and later advanced by China, that propelled Asia forward in its cycle of re-emergence. This opening has continued in the form of a three-dimensional proliferation of trade liberalization agreements: From intraregional agreements whose number—counting both established and developing agreements—has quintupled over the past 12 years, to bilateral agreements with non-Asian nations and larger-scale projects such as the Trans-Pacific Partnership.

Last year’s EU-South Korea FTA, which was the first bilateral EU-Asian FTA to enter into force, was the first of a new generation of free trade agreements. The deal is comprehensive in scope, rapid in implementation and high in ambition: 98.7 percent of EU-Korean commerce is set to be tariff-free after five years. With the EU-Singapore FTA scheduled to enter into force this year, negotiations with Malaysia, India and Vietnam ongoing, and formal negotiations recently commenced with Japan and Thailand, the EU is providing an unequivocal signal of its commitment to free trade and its openness to business with exterior markets. This momentum must continue and be fit securely into a strong, long-term EU strategy in order to harness the economic growth that is so critical to all sides.

The Global Dimension: Shared Interests

Throughout history, the world’s economic heavyweights have carried corresponding and sometimes oversized shares of global political and strategic power. Great powers’ influence works most efficiently when it is enshrined within globally accepted frameworks and channels. Unilateral actions, by actors large and small, can provoke dangerous effects that carry with them the risk of collateral damage. On the other hand, the legitimacy and effectiveness of the world’s global governance structures depend on constant evolution to suit the shape of their participants. Only continuous development can ensure that the world’s stabilizing systems do not fall into disuse and irrelevance; this is another challenge the international community urgently needs to face.

Given China’s growth rates and the size of the population it is bringing along with it on its rise, Europe clearly would like to see a more engaged and constructive role for China in global governance issues. Moreover, Europe is an excellent partner for Beijing, which feels more comfortable on the global front in a G-3 constellation with the Europeans than alone with the United States. In a possible G-2 relationship with the U.S., the hegemon that shaped the current international system, the forces of competition presently prevail over the possible benefits of cooperation. This international panorama sets an optimal scene for the fourth aspect of Euro-Asian engagement, the global dimension.

One of Europe’s unique advantages is its experience in bringing together diverse coalitions of parties to get things done. This instrumental diplomacy and the international legitimacy it brings could suit China well. By identifying key areas of alignment on the global front, China and Europe could intelligently combine their complementary forces to move affairs along swiftly, sending constructive international signals. The seven local emissions-trading schemes poised to launch in China, which drew lessons from the EU’s pioneering initiative, in addition to reports of possible moves toward a Chinese carbon cap in 2016, make climate change an excellent starting point for Sino-European strategic cooperation on the global stage. Such targeted alliances, with their high impact factors, would improve more than just the meteorological climate.

Asian and European interests may also converge in the Middle East. The region is as combustible as ever, but now there are strong signals of circumstantial change. While the U.S. is attempting to shift its focus to the East in light of both domestic energy developments and global economic shifts, Asia is growing ever more dependent on the Middle East for its growing energy needs. According to International Energy Agency forecasts, 90 percent of Middle Eastern oil exports will be destined for Asia by 2035. This kind of dependence can turn toxic without a degree of strategic engagement. With its international focus and presence, Europe, the Middle East’s direct neighbor, is a natural and instrumental partner to Asia.

The Way Ahead: Resolutely Pivoting Forward

As the world’s trade flows consolidate their new directions, political and strategic power must naturally follow. The final destination of these flows, however, is for now an unstable place. As energy pools in Asia, its networks are tested and its unhealed wounds strained. What Asia needs is strategic stability, the kind Europe has achieved through cutting-edge design projects of regional integration unique to this world. This is at the heart of the EU’s smart pivot East, a pivot that commenced with trade but must be sustained and redirected based on strong ingredients of the “old” continent’s history.

Present-day events show with increasing intensity that Europe cannot navel-gaze as the world transforms. It badly needs the growth that Asian markets can provide. It is critical, however, that European nations refrain from building familiar roadblocks on this route to growth. A renationalisation of foreign policy toward the world’s most vibrant actor is understandably tempting, but it will ultimately damage both national and EU interests.

With dynamics unmarred by the disturbances of great power struggles, the EU is well-placed to engage with Asia. The cooperative dynamics described here, which target concrete areas of synergy and instrumental collaborations, both intercontinental and global, stand to bring both continents great returns.

The Américas and China – Alianza del Pacífico

Map of Alianza del Pacífico

La Alianza del Pacífico (Pacific Alliance)

The four countries of the Alianza del Pacífico formally established in June 2011 - México, Colombia, Chile and Perú - together account for 35pc of GDP in América Latina, 50pc of exports from the continent and together their population exceeds 200 million people which gives them a similar magnitude of scale to Brazil (located on the Atlantic side). It also means a new model of regional integration focusing on strengthening institutions to create a regionally integrated trade area, oriented towards the free movement of goods, capital, services and people towards the key markets in ASEAN countries and China. México, by far the largest of the four countries sees an opportunity to diversify its exports from the US to Asia. Currently México sends around 77pc of its exports to the US. But there are considerable opportunities for México's Agricultural-food, footwear and textile sectors to export to Asia. Costa Rica attends the Alianza del Pacífico as an observer, and it is highly possible that it will seek to become a full member in the foreseeable future. Panamá too has expressed interest in joining. In the last 15 years or so in América Latina, several trading blocs have been established from MERCOSUR to ALBA, but the Alianza del Pacífico is different, it is the first to see itself as a truely regional integration project.

Xi Jin Ping's习近平 First Visit to the Américas

On his way back from a trip to the Américas, the new Chinese President Xi Jin ping 习近平 will meet US President Barack Obama, in California on 7-8 June 2013. But first President Xi Jin Ping 习近平will spend a week from 31 May to 6 June visiting México and Costa Rica. It is no coincidence that the Alianza del Pacífico decision to seek further regional integration was formally agreed ahead of Xi Jin Ping's 习近平visit. This visit will provide México's President with the possibility to begin to re-balance the trade relationship with China. Interestingly Xi Jin Ping 习近平will also visit Costa Rica (another potential member of the Alianza del Pacífico) as well as Trinidad and Tobago. The visit to Trinidad and Tobago is significant as it will be the first visit of a President of China to the English-speaking Caribbean. Costa Rica is China 's second largest trading partner in Central America while China is the second largest trading partner of Costa Rica. In recent years, bilateral trade between the two countries has grown rapidly. In June 2007, China and Costa Rica established diplomatic relations. In November 2008, Chinese President Hu Jintao visited Costa Rica and announced the launch of China-Costa Rica free trade negotiations. The China-Costa Rica free trade agreement (FTA) came into force on 1 August 2011. 

Finally, when Xi Jin Ping 习近平 meets the US President, the meeting will not take place in Washington or on the Atlantic coast, instead the symbolism of the meeting taking place in California could not be clearer, it highlights the increasing importance of the Pacific over the Atlantic.

Nicaragua's proposed new canal between the Atlantic and the Pacific

The Nicaraguan government has recently stated publicly that it would like to construct a new canal with links between the Atlantic (Caribbean coast) and the Pacific Ocean. It has already started working with a Chinese company on a canal construction project. 

Map of the Proposed Nicaragua Canal Route

The idea is that the Nicaraguan canal would not be in competition with the Panamá canal, which is currently undergoing full expansion, instead, the Nicaraguan project would be focussed on receiving vessels up to 250,000 metric tons, the locks would be 460 meters big with a capacity to take boats with a depth greater than 20 meters. 

Detailed Map of possible routes for the Nicaragua Canal

The exact route of the Nicaragua canal is still to be determined but some experts believe that the project could be developed using the recommended routes of a multidisciplinary study presented in 2006 by the then President Enrique Bolaños. This study recommended the canal be built on the Caribbean coast of Nicaragua, near Bluefields Bay City, and then go along rivers within Nicaraguan territory and then through the Great Lake of Nicaragua, over a distance of 280km.

This is a mammoth project that will require considerable investment not only to build the Canal, but also in construction of port infrastructure, railway infrastructure and potentially airport runways too. The Nicaraguan government sees the canal as a pipeline for oil crossing from the Caribbean Sea to the Pacific across to the markets in Asia but it will be used for all trade.The Geo-Trade Blog will continue to follow closely developments on the new canal. 

Most interestingly, this mega project adds more evidence that world focus is increasingly moving away from the Atlantic and the focus in the 21st Century is on building the infrastructure and diplomatic ties with the Pacific.