Is the world returning to bipolarity?

Deglobalisation is no more a buzzword. It has rather become a well-grounded reality, particularly after the formal exit of Great Britain from the European Union (EU), dubbed Brexit.

Similar illiberal sentiments are brewing in another EU member country of Poland – a hypothetical withdrawal from the EU which is being called Polexit. Similarly, across the Atlantic, prompted by his “America First” rhetoric, former US president Donald Trump restructured North American Free Trade Agreement (Nafta), which he called America’s worst trade deal.

The seemingly liberal Nafta, enacted in 1994, was substituted by United States-Mexico-Canada Agreement (USMCA) in July 2020 with president Trump calling it “the best and most important trade deal ever made by the USA”.

In general, the latter is believed to be more evenly reciprocal and favourable to American workers and farmers than the former. Another protectionist measure of president Trump was the US withdrawal from Trans-Pacific Partnership (TPP) in 2017. Before the US withdrawal, the TPP was set to become the world’s largest free trade deal covering 40 per cent of the global economy.

In addition, it had a strategic angle as well being the centrepiece of the US Pivot to Asia Policy. Across the Pacific in Asia, however, globalisation-led trade integration seems to be still in vogue. In what appears to be an intent to capitalise on the vacuum provided by the US withdrawal, China, the biggest economy in Asia, has formally requested to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – the new version of the erstwhile TPP.

China formally requesting to join the CPTPP gives credence to the belief that there is still a strong understanding within the Asian Continent that trade-related economic integration is still beneficial for the world and the region.

Another mega-regional alliance, the Regional Comprehensive Economic Partnership (RCEP) – a 15-member free trade agreement within the Asia Pacific region – is set to take effect from January 1, 2022. It is going to be the world’s biggest free trade agreement despite the absence of the US. It may be argued that the world appears to be divided into two blocks.

On one hand, there is a US-led “protectionist” block which is primarily aiming to contain Chinese expansionism by hammering out security and military coalitions among the likeminded countries. Quadrilateral Security Dialogue (QUAD) and Australia-United Kingdom-United States (AUKUS) are examples of such arrangements.

On the other hand, there is a China-led “liberal” block which is largely ironing out mega trade deals with a short-term goal of creating economic interdependence and a long-term goal of achieving political and military supremacy across the world. The CPTPP and the RCEP are the vehicles of short-term goal, whereas the Chinese Belt and Road Initiative (BRI) can be termed as the vehicle of achieving the long-term goal.

The question that arises here is which block is going to be sustainable and prevail at the end? Although, no clear conclusions can be drawn here, it can be argued that trade creates interdependence among countries. In fact, the above-mentioned liberal block has learnt this art from the post-World War II Europe which, bolstered by the US, embarked upon a path of gradual economic integration which culminated into the establishment of the most potent and sustainable economic integration arrangement in the world – the EU.

It can also be argued that economic strength precedes the strategic or military strength of any country. The world has experienced it in the case of China which has adopted a policy of “peaceful coexistence” since its economic rise starting 1979. However, with the onset of BRI in 2013, buttressed by its exponential economic growth, China has started to flex its expansionist muscles with an ostensible end goal of becoming a political and military hegemon of the world.

There is only one argument which may assertively be made in favour of the sustainability of the emerging liberal block that there are many countries in the US-led block who are the major trading partners of China and the economic interdependence among them is quite significant. For instance, Australia, Japan and India are not only America’s QUAD partners, but also major trading partners of China.

Similarly, South Korea, a major political and military ally of the US, is one of the biggest trading partners of China. Moreover, the UK, which has just exited from the EU and entered AUKUS with the US and Australia, is considering a free trade agreement with China.

Most importantly, Japan and Australia are the member countries of the CPTPP and South Korea of the RCEP. South Korea, the fourth largest economy in Asia, exported goods worth more than $136 billion to China in 2019 which comprises a quarter of its total exports.

Similarly, The Hindu reported that despite the Galwan Valley military face-off, India-China bilateral trade is set to cross $100 billion mark in 2021. It may be averred that decoupling from such an integrated trade relationship will not be easy and advisable and such an alliance is bound to be long-lasting vis a vis a military or security alliance. It remains to be seen, however, which block is going to sustain in the long run.

The writer is a graduate of Crawford School of Public Policy, Australian National University and presently works as a senior consultant in Sustainable Development Policy Institute, Islamabad, Pakistan.