The G20 and the United States’ Pivot to East Asia
This past weekend was held the Group of 20 (G20) meeting in Hangzhou, China, which brought together the leaders of the world’s twenty largest economies. On a yearly basis, the G20 facilitates reunions amongst heads of state from North America, the European Union, and the BRICS nations, amongst others. This article examines some of the outcomes from the most recent G20 meeting and the prospects for the world’s economy going forward.
The G20 and the United States’ Pivot to East Asia
Together, the G20 economies account for more than 80% of the world’s gross production and more than 60% of the world’s total population. Therefore, the group, through its regular meetings, seeks to coordinate international economic and financial policy in order to foster growth and prosperity. For the United States and China, this meeting is particularly important given the increased relevance that the Asia Pacific region has gained within the global economy. In the case of China, it has gone from representing less than 5.0% of the world’s GDP in 2004 to the second largest economy in the world accounting for approximately 20.0% today. Similarly, the current US administration has been engaged in efforts to “pivot towards East Asia” for several years.
The “pivot to East Asia” policy is significant because it represents the first time in modern history that the focus of US attention moves away from the Atlantic world region. This move, which is exemplified by initiatives such as the US-led Trans-Pacific Partnership (TPP), occurs because the most promising and dynamic markets of the 21st century are in the Asia Pacific region. The sustained growth of East and South Asian economies has led to competition for commercial access into those markets. Furthermore, these economic dynamics have created a wide array of political ventures aimed at Asian and Pacific Rim integration.
However, cooperation is not always easy, nor smooth, nor coordinated. Competition amongst global actors con lead to antagonism in the economic and political playing field. For example, the TPP initiative, whose faith is yet to be determined within domestic politics in the US, seeks to bring together new East Asian markets with North and South American markets that have traditionally been intrinsically tied with the US. However, the TPP excludes China in what is perceived as an attempt by the US to gain an upper hand through trade by making market advances into Asia and solidifying its position throughout the Pacific Rim region.
Meanwhile, Asian nations are seeking to advance their own regional integration policies. Such is the case of the Association of Southeast Asian Nations (ASEAN) and the proposed Regional Comprehensive Economic Partnership (RCEP). The ASEAN is an economic and political union incorporating ten nations, including Indonesia, the Philippines, and Vietnam, which is actively promoting the creation of the Regional Comprehensive Economic Partnership (RCEP). The RCEP is a proposed trade union between the ten ASEAN member states and the six nations with whom it has Free Trade Agreements, which are Australia, New Zealand, China, India, Japan, and South Korea. The ambitious RCEP would be the largest and most important trading bloc in Asia if it became a reality.
As the US “pivots towards East Asia”, it is important to keep in mind the ongoing regional dynamics, which will determine the future of international economic interactions. As it relates to agribusiness, the emerging markets of Asia and their growing proximity with the Americas create unique opportunities in terms of both supply and demand of agricultural goods.