HKUST Business School Magazine

Biz@HKUST Biz@HKUST 20 21 // Cover // Thought Leader Regional Success With the disruption caused by geopolitical tensions and the pandemic, regional agreements are more urgent than ever. Deborah ELMS, founder of the Asian Trade Center – a Singapore-based advocate and educator for trade in Asia, explains why agreements like the Regional Comprehensive Economic Partnership (RCEP) could become a global game changer. When it comes to international trade, the last few years have been tumultuous. With the disruption brought on by geopolitical tensions, and the onslaught of the COVID-19 pandemic, it is impossible to deny that the world has started on a path of change. “We are now in a shift,” says Deborah Elms, Founder and Executive Director of the Asian Trade Center. “This shift is equivalent to the collapse of the Soviet Union, the moment when the old world order changes into the new world order.” The world order that Elms is referring to relates to international trade, the systems of which, many industry leaders agree, have been fraying for many years. COVID-19 has accelerated the disruption of the old order and created even more uncertainties about what the future will look like. Elms has some advice for those struggling to cope with the changes. “Get used to it!” she says. But she also understands that today’s global economy is not easy to navigate. Elms highlights the general anxiety and uncertainty that business owners feel, and understands the extra layer of disruption that COVID-19 has brought. “The combination of the two is even more unsettling. People were already disoriented and disrupted by the grind of the US-China trade war, and then COVID-19 arrived on top of that. It’s no surprise that companies are looking for answers,” she says. Educated guesses Elms offers some educated guesses about geopolitics and the relationship between the US and China as we slowly move towards a post-pandemic world. “Everything from hardcore decoupling to decoupling in certain sectors, especially around tech, is on the cards. The stalemate may continue, or there may be increased cooperation, but that is likely to exist at a fairly low level at the moment,” she says. “I think all these scenarios are equally plausible.” In a best-case scenario, economic issues will remain separate from political and security concerns, and there will be no significant backsliding into economic conflict. In the worst- case scenario, the US-China relationship will continue to fray, she says. “If this [US] administration continues to say that China is its mortal adversary, then everything that we do must be predicated on managing an enemy. This will result in many different kinds of policies,” she says. “That leads to an extremely tense situation, and there is a high risk of it going in directions that no one quite intended.” Due to the political tensions, Elms feels that regional agreements are more urgent than ever. “The idea that you will get global action on anything in the near term has got to be close to zero. I find it hard to imagine we will get closure on meaningful outcomes in a global setting any time soon,” she says. Elms points to the discussions about subsidies on illegal fishing at the WTO as an example. She notes that if countries cannot even agree on whether or not they should subsidize something that is illegal, there is not much hope for managing other kinds of issues. The idea that there will be global cooperation any time soon is simply misguided, so regional agreements will be needed instead, Elms says. Regionally, countries can agree on a set of policies, principles and regulations that can offer clarity. This will make it easier for the rest of the world to do business with them, too. Asia is pragmatic, and for them, economics has always trumped everything else Deborah Elms Executive Director of the Asian Trade Center