Asia and Europe: Prospects for Asia-Europe Economic Cooperation in a New World Order

The 14^th Asia-Europe Economic Forum (AEEF), which took place in Seoul from September 20-21, 2017, included sessions on international trade and investment, the 4^th industrial revolution and macroeconomic policy coordination among others. In light of the economic ministers’ meeting of the Asia-Europe Meeting (ASEM) member states, which took place at the same time, special consideration was given to the role of European-Asian economic cooperation in times of Trump and Brexit.

The GED team was involved in two panels, giving input on international trade and the impact of the 4^th industrial revolution on trade and investment. Moreover, the GED team invited Bernard Hoekman, Professor and Director at the European University Institute to join the AEEF as a speaker on behalf of Bertelsmann Stiftung.

In times of change, international cooperation is the key

The world is currently undergoing fundamental change. This leads to public debate on key questions, such as: should countries take on a more inward-looking attitude or do we need even more globalization and opening up? Should countries promote free trade or choose a more protectionist political course? For open economies, which are export-oriented, such as Germany, Belgium or the Netherlands, it is clear that more cooperation beyond national borders is the key to enhancing economic development and digital connectivity in the 21 century. This was the key message of the session on “Strengthening digital Connectivity in the ASEM Area”, in which Kris Peeters, Deputy Prime Minister and Minister of Employment, Economy and Consumer Affairs, Federal Government of Belgium, gave the key note.

In this context, European-Asian relations play a central role and will only gain in importance in the era of digitization. Guntram Wolff, Director at Bruegel, even went a step further and pointed out that some observers are expecting a „pacific century“, in which the Asia-Pacific region including the United States would be the center of gravity of the world economy. Europe, however, could try to juxtapose the vision of a Eurasian century and, in doing so, strive for strengthening European-Asian relations.

Especially in the realm of trade, there has been some progress in this regard. Currently, the EU already is negotiating trade or investment agreements with important Asian economies, such as Japan, India and China. However, the discussion on the current world trade order, chaired by Andreas Esche, co-director of the Shaping Sustainable Economies Program at Bertelsmann Stiftung, made clear that there still are considerable differences between the EU and Asian countries. Views are diverging in particular on topics such as data protection or e-commerce regulations.

Cooperation and competition need to be balanced

Another sensitive issue is the rising tension between cooperation and competition. No country and no company will be able to manage the fundamental changes related to digitization alone. This means that cooperation gains even more in importance. At the same time, competition for the best digital solutions increases. Some countries, such as China, actively intervene in these developments to enhance the competitive edge of their own domestic firms, explained Cora Jungbluth, project manager in the GED team. For Europe, it is therefore time to find a sustainable solution to preventing this kind of unfair competition.

The difficulties arising from this situation point to another key problem that the international community has to address as quickly as possibly vis-à-vis increasing digitization in all areas: current international, but also national, regulations very much lack behind these developments and need to be updated.

Cooperation between Asia and Europe should be strengthened

In order to find sustainable solutions for these urgent international problems, Asia and Europe should strengthen their cooperation in all areas, especially digitization. This was one of the key results of the conference. The Asia-Europe Meeting (ASEM) already gives European-Asian relations an institution that would lend itself to this purpose. The promotion of economic cooperation is an important pillar in the ASEM process. As we already argued in our recently published GED Focus Paper, in the future, Asia and Europe could make greater use of this platform in order to further expand the framework conditions for European-Asian trade and investment relations. Also, the AEEF itself could make an important contribution in this regard. The fact that the conference was mentioned in the Chair’s Statement of the ASEM economic ministers’ meeting is a first step in this direction.

Established in 2006 under the leadership of Bruegel, namely then director Jean Pisani-Ferry, the Asia Europe Economic Forum (AEEF) brings together scholars, experts and policy-makers from Asia and Europe in order to discuss different perspectives on current macroeconomic topics and look for solutions to pressing economic policy issues. Bertelsmann Stiftung has been part of the network of think tanks organizing the AEEF since 2013.