East Asia-EU Economic Roundtable (Summary)

The macroeconomic situation is worsening in most of Asia and Europe. Economic uncertainties are compounded by political changes: While East Asia may witness a change of governments in its three largest economies (China, Japan, and Korea), general elections in Italy (April 2013) and in Germany (October 2013) may create new turbulences in Europe.

Macroeconomic authorities are still in a crisis mode. The balance sheets of central banks in Asia and Europe have swollen, yet it is debated whether money stimulus has been either too small or too big. Governments are consolidating fiscal policy and are faced with increased criticism for not stimulating economies (enough) on the fiscal side. Banks in both regions also remain fragile despite or due to the expansionary policies in the past years.

While downside risks for the global economy have been reinforced, signs suggest that central banks and governments are adjusting policy to a "new normal" of macroeconomic instability. Few appear to suggest that the world economy will return to the "golden age" of stability in the growth up to 2007. But there is an increasing debate over how macro authorities should act - continue with current approaches or change course - and what is necessary to avoid further stress within and between the countries.

Moderator: Fredrik Erixon (ECIPE)
Introductory presentations

• Professor Kiyotaka Sato and Professor Junko Shimizu (RIETI)
• Professor Yoon-Je Cho (Sogang University)
• Professor André Sapir (Université Libre de Bruxelles and Bruegel)

Is global trade policy fragmenting? A stalled Doha Round has undermined the role of the World Trade Organization (WTO) as the place to negotiate and discuss trade issues. Even uncontroversial issues, or low-hanging fruits such as trade facilitation or duty-free-quota-free for least-developed countries (LDCs), seem hard to settle.

Meanwhile, all of the countries in the world have jumped aboard the preferential trade agreements (PTAs) bandwagon. However, PTAs are not easy to negotiate or manage. The most advanced PTA today is the Trans-Pacific Partnership with the United States and possibly Japan. The China-Japan-Korea PTA has been re-launched, and it is complemented by bilateral negotiations between China and Korea. A couple of weeks ago, the EU finally decided to give a mandate of negotiations to the Commission to negotiate a PTA with Japan. All of these "mega-PTAs" are likely to have substantial discriminatory effects on the countries not involved in them.

How can we ensure that these agreements will deliver the true pro-growth trade and investment liberalization that both regions need in order to overcome the current crisis, without generating discriminations that are doomed to create distortions and conflicts? Which kinds of domestic and international institutions would ensure that no major drift towards protection among the major world economies?

Moderator: Guy de Jonquieres (ECIPE)
Introductory presentations

• Professor SeYoung Ahn (Sogang University)
• Professor Ronglin Li (Nankai University)
• Dr. Dorothée Rouzet (Organisation for Economic Co-operation and Development (OECD))

Europe and East Asia both need structural reform. However, they appear to share a common feature of having made only few significant structural and regulatory reforms in the past few years, let alone during the past decade. While the record is patchy, recent economic difficulties appear to have induced governments to introduce more rigid regulations in areas such as finance, energy, and services. Product market regulations seem to have expanded and entry barriers have increased (e.g. in the banking sector). Competition policies regarding subsidies (when such policies exist) have shown serious limits.

What is the state of the structural reform agenda in East Asia and Europe? What reforms are needed for liberalization in services (the bulk of our economies), state-owned enterprises, and subsidies (in declining or promising sectors)? Which kinds of institutions would ensure a smooth flow of reforms during crisis periods?

Moderator: Alan Winters (University of Sussex)
Introductory presentations

• Professor Peter Drysdale (Australian National University)
• Dr. Jean-Jacques Hallaert (International Monetary Fund)
• Professor Jianping Zhang (National Development and Reform Commission)
• Dr. M. Buge (OECD)

The attention on "green" issues (climate change, green growth, natural resources, water scarcity, et cetera) has declined in the past years. Trends in both regions are worrying. First, there is a profound lack of cooperation between different parts of the world, which leads to friction, trade discrimination, and higher welfare costs. There is an absence of international institutions that command authority and legitimacy in addressing these issues. Second, many "green" initiatives have undermined market-based systems for pricing and competition, which leads to profound misallocation of resources and increased state interventionism.

What should be the agenda for international cooperation, and what needs to change in domestic and international current approaches for "green" initiatives to be efficient and economically sustainable?

Moderator: Jaime de Melo (University of Geneva)
Introductory presentations

• Professor Song (Chinese Academy of Social Sciences (CASS))
• Professor Jaime de Melo (University of Geneva)

This session aims at drawing a few key lessons from our discussions during the whole day. It will also make a first "tour de table" to see whether there is some willingness to do the same exercise next year.

Moderator: Professor Yung Chul Park (Korea University)
No introductory presentations