EU trade relations with Emerging Asia: identifying the issues

Abstract

Trade interdependence between Europe and Asia has rapidly increased in recent years. Europe–Asia trade flows now constitute a ‘third link’ in the global economy. As trade expands, however, global trade governance has declined and free trade agreements (FTAs) have increased. Hence, the Global Europe strategy has been designed to enhance trade relations with emerging Asia which is the most dynamic region in the global economy today. But Asia’s model of export led growth leaves it more exposed to shocks emanating from outside the region than ever before raising questions about its sustainability. Deep integration agreements between Europe and Asia are needed to foster economic growth. They also need a development dimension to help Asian countries address their key development challenges.

Annex 1: Progress towards the millennium development goals in Asian countries

India

According to the Indian Government, the number of people living below the poverty line has fallen from 37.5% in 1990—the baseline year for MDG, to 22% in 2005 which suggests that the goals of 2015 will be met. However the World Bank has recently recommended that the benchmark for extreme poverty should be raised to $1.5 a day, which would change the picture significantly in India. The revised benchmark would increase the amount of poverty to 42% of the population, that is over 450 million people. Whatever the figures, it is clear that large numbers of households in India still live close to the poverty line and there has been little improvement in malnutrition in India over the past 10 years.

Indonesia

Despite efforts by the Indonesian government to achieve the MDGs, the latest progress report disclosed that 16.6% of the total population lived below the poverty line in 2007—which is more than in 1990. Another rising indicator is the number of children under five years of age that are severely underweight. Thirty-five per cent of the population have incomes that place them only marginally above the poverty line which makes them very vulnerable to adverse economic changes.

Malaysia

It is one of the wealthiest and most developed countries of South East Asia, only surpassed by Singapore and oil-rich Brunei. Malaysia is being held up as a model for the Asia Pacific region as it has already achieved seven of the eight MDGs. Since 1970, the percentage of the population living below the poverty line has fallen from 50% to 5%, extreme poverty is rare, and infant mortality has dropped from 40.9% to 7.9% of 1,000 births and adult literacy has increased from 64% to 90%. However, the Gini coefficient is the highest in the region showing large inequality between urban and rural areas.

Thailand

Due to its strong economic performance, Thailand has made significant progress towards achieving most of the MDG targets. The percentage of the population living below the poverty line has dropped from 38% in 1990 to 11% in 2004, with literacy rates at 96% for men and 91% for women and almost universal primary education enrolment Because Thailand has already done so well, it has set itself the new targets of MDG + to further decrease poverty levels to 4% by 2009. However the environment has suffered due to the rapid economic progress.

The Philippines

It is called a middle income developing country but it suffers from major development problems. Recent adverse developments have raised doubts about the country’s ability to reach the MDG targets of 2015. Between 2003 and 2006 extreme poverty increased in the country from 13.5% to 14.6% while the broader measure of poverty assessed by inability to buy food and other essentials rose from 30% to 32.9%. The MDG targets are 12% and 22.5% for the two measures of poverty.

Cambodia

Cambodia has made slow progress towards achieving the poverty reduction goals of the MDGs. The latest World Bank Poverty Assessment shows that 35% of Cambodida’s population live below the national poverty line, and the overall reduction has been only 10% over the past decade. Nearly 80% of the population survive on less than $2 a day, while a small elite enjoys a business boom in the capital city. Cambodia has become one of the most unequal countries in Asia in terms of divergence between rural poverty and urban wealth.

Laos

Results towards achieving the MDGs are disappointing and the targets will be further challenged by the projection that the population will double in less than 25 years. In 2005, 27% of the population remain below the $1 a day benchmark of extreme poverty—which is a considerably higher figure than what was recorded in the 1990s. According to the Governments own evaluation, the amount of extreme poverty has fallen from 46% in 1992 to 38% in 2004—the latest figures available. This is insufficient progress to meet the target of 24%.

Vietnam

It has the most successful record among developing countries for reducing poverty to meet the MDG goals. It has achieved the goal of halving poverty one decade in advance of 2015. According to the most recent progress report, published in 2005, the number of families living below the poverty line (defined in terms of food and non-food essentials) fell from 58% in 1993 to less than 24% in 2004, while extreme poverty—defined in terms of food alone—fell from 25% to below 8%. It is believed that this positive trend has continued since then. Vietnam has also made remarkable progress in achieving other social targets of MDG—except those of HIV-AIDS and sanitation.