The Pacific Forum, in collaboration with the Institute of International Relations, National Chengchi University, held a workshop in Taipei titled “Economic Security and Strategic Trade Management in the Indo-Pacific” on October 26-27, 2023. Additional funding support for the workshop was provided by Carnegie Corporation of New York, the Prospect Foundation, and Taiwan’s Ministry of Foreign Affairs and Ministry of Education. About 35 senior researchers and officials attended, as well as three Pacific Forum Young Leaders, all in their private capacity. The off-the-record discussions focused primarily on concepts and mechanisms associated with economic security and statecraft, with a specific focus on managing access to strategic goods and emerging technologies. The group also examined the implications of economic security for the development of international multilateral institutions and its relationship to national security. Key findings include:
The current iteration of the workshop reflects an evolution in the thinking among analysts related to economic statecraft. While the original focus sought cooperative approaches to controlling the export of strategic goods to non-state actors, the content has grown to include an examination of a broader range of issues related to economic security including the transfer of technologies, proliferation financing, and supply chain management in the context of the growing economic and security competition among states, and particularly between the United States and China.
There is a growing consensus that market driven globalization has failed to meet the economic expectations of large segments of societies around the world, which has led to a loss of confidence in global governance mechanisms and a reversion toward national measures to promote economic and security interests. The net effect has been an increased emphasis on national security considerations and a decreased emphasis on inclusive mechanisms designed to inhibit illicit activity by non-state actors.
Recent events, especially the Covid-19 pandemic and the Russian invasion of Ukraine, along with systemic issues such as climate change and disruptive technologies, have been seen as proximate accelerants of the shift in thinking regarding economic security. By creating systemic instability, these events have securitized economic relationships and led to questions about the efficacy of existing multilateral economic governance mechanisms.
The concept of economic security is somewhat undertheorized. One definition offered was “the absence of threats to acquired values,” was viewed by several as inadequate. There was some agreement among participants that different aspects of economic security (trade policy, industrial policy, investment policy, and development assistance) create a complex system of interactions that make it difficult to articulate a theoretical framework for understanding the impact economic statecraft has on international relationships and the dynamic between national security and economic security. Nevertheless, the threat based definition clearly reflects the current emphasis on the “deterrence” and competition that are commonplace in “Western” thought related to values in the context of national security.
Controlling the trade of strategic goods, imposing economic sanctions, and limiting access to emerging technologies have a long history as components of economic statecraft. During the Cold War Era, these mechanisms were used to isolate and contain the Soviet Union and its allies. During the Global War on Terror, these mechanisms were used to isolate and contain non-state terrorists and their supporters. In both cases, the focus of these efforts was on limiting access to goods and technologies associated with military warfighting capabilities. In recent years, there has been a significant expansion in the range of items and scope of controls associated with these efforts to control access.
There was considerable disagreement among participants over the efficacy of applying measures such as sanctions, limiting access to broad classes of strategic goods, and denying access to technologies against other states. While these measures have been relatively successful in preventing the spread of weapons of mass destruction and military capabilities to non-state actors, they have been less successful when applied to so-called rogue or revisionist states. One argument made in this context was that the difficulty with restricting access to broad classes of goods and technologies requires full compliance by “like-minded” states, while the resultant supply scarcity creates additional incentive for profit seeking by multinational corporations.
The expanded range of goods and technologies considered to be critical to the preservation of national security in the context of global trade has led some to consider the existing multilateral export control regimes (Nuclear Suppliers Group, Australia Group, Missile Technology Control Regime, Wassenaar Arrangement) as inadequate. Some argued for a more robust control regime that restricts access to the burgeoning class of “omni-use” goods to preserve national security interests and values. Others argued for better control over “foundational and emerging” technologies to ensure technological dominance for the foreseeable future. Still others argued that the multilateral regimes have failed because non-member states are not constrained by the regimes and the unanimity basis for the regimes limits their effectiveness.
Several participants expressed the view that the influence of global institutions associated with economic security such as the World Trade Organization, the World Bank, and the International Monetary Fund has deteriorated in recent years. In their place, smaller “minilateral” institutions have emerged as alternative mechanisms for coordinating and implementing economic policies among participating countries. Most participants viewed this development as a setback for globalization and something that will likely perpetuate a fractured economic system centered on the United States and China, with European Union also playing a major role.
Trade promotion has become an increasingly contested idea in the Indo-Pacific region. While most Asian countries continue to promote broad free trade agreements that focus on tariff reductions and market access such as the Comprehensive and Progressive Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, the Indo-Pacific Economic Framework being promoted by the United States has focused on standards enforcement, supply chain resilience, and limited trade facilitation. Some argued that the shift away from market access by the United States has created a new tension among states and will lead to a further fracturing of trade relations in the region.
There is a great deal of uncertainty about the relationship between economic statecraft and national security. Some argued that an overemphasis on national security has led to mercantilist trade policies or at least economic protectionism in the form of industrial policy. Others saw protectionist measures as a basis for maintaining technological superiority, which serves a fundamental basis for national security. In its most expansive view, economic leadership was characterized as a function of a country’s ability to innovate and create new technologies and set standards, which establishes global economic order. In this context, controlling strategic goods and technologies become the basis for maintaining superiority and ensuring national security.
Event Agenda: Click Here
Event Participants: Click Here
This document was prepared by Carl Baker. For more information, please contact Carl at ([email protected]). These findings provide a general summary of the discussion and is not a consensus document. The views expressed do not necessarily reflect the views of all participants.
