The annual World Trade Organization Chairs Programme (WCP) Conference was successfully held on 25-27 July 2022, in Geneva, Switzerland. The representatives from World Trade Organization (WTO), WCP board, and WCP chairholders gathered to discuss various issues related to international trade and the vision for WCP years ahead. Topics such as the results of the 12th WTO Ministerial Conference (MC12), WTO responses towards the impact of COVID-19 pandemic, and the advancement of sustainable trade became the main focus of the three-days conference. 

Established in 2010, WCP is a programme that aims to enhance research activities and knowledge dissemination related to international trade in developing countries. Initially, there were only 14 academic institutions that were chosen as chairholders, in which Center for World Trade Studies (CWTS) UGM  has been one of the chairholder since the beginning. Currently, there are 36 universities from various developing countries that have joined the WCP scheme. 

The Director of CWTS UGM, Dr. Riza Noer Arfani, represented Indonesia in the 2022 WCP Conference. In this conference, Dr. Riza presented several case studies related to circular economy activities, MSMEs development, and Indonesia economic recovery which have been actively implemented by CWTS UGM since 2021. The activities of CWTS UGM related to the previously mentioned issues include both local and international workshops, webinar, journal publication, and podcast releases. Together with other delegates, such as the delegates of Mauritius, Barbados, and Kenya, Dr. Riza reiterates how WCP projects, which are relevant for both developed and developing countries, can play a significant role in promoting sustainable and inclusive international trade. 

During the annual conference, WTO Director-General Dr. Ngozi Okonjo-Iweala conveyed the importance of the chairholders role in propelling the implementation of MC12 by delivering research-based policy recommendations. In the closing statement delivered by WTO Deputy Director-General Xiangchen Zhang, the active participation from chairholders is hoped to maintain and improve the research and dissemination activities on international trade related issues, as well as collaborations with policymakers and stakeholders.  

ASEAN member countries have signed RCEP (the Regional Comprehensive Economic Partnership) with non-ASEAN countries: China, Japan, Australia, New Zealand, and South Korea. The signatory countries are expected to benefit from this agreement by gaining higher efficiency and enhanced economic development. ASEAN initiated RCEP in 2011, which was later negotiated from 2012 and eventually signed in 2020.In the midst of negotiations, India decided to withdraw from the agreement. RCEP, which has been implemented since the beginning of 2022, covers more than 30% of the world's GDP with a combined value of US$ 26.2 billion and represents one third of the world's population. This article will discuss the role of ASEAN and its interest in RCEP.

Prior to the signing of RCEP, ASEAN had established separate trade agreements with each of the RCEP signatory countries. Known as ASEAN+1 FTAs ​​(Free Trade Agreements), ASEAN cooperated with Australia and New Zealand under the framework of AANZFTA (2010), with China under ACFTA (2015), with South Korea under AKFTA (2007), and with Japan under AJCEP (2008). Besides initiating cooperation through ASEAN, ASEAN member countries also have bilateral trade agreements with  RCEP members such as IA-CEPA by Indonesia and Australia, which was also agreed in 2020. Furthermore, ASEAN also has exclusive trade agreements between its members such as AFTA (ASEAN Free Trade).

It is feared that the existence of RCEP will lead to the so-called spaghetti bowl effect, in which the increasing number of free trade agreements will be counterproductive to the goal of increasing regional trade because their contents overlap and are out of sync. Yet, RCEP has the potential to become a catalyst for ASEAN's trade efficiency  and provide a way out of the spaghetti bowl effect. Arguably, RCEP will not hinder the flow of ASEAN international trade, but will further support the improvement of ASEAN trade relations with its partners because RCEP has the ability to  unite each trade agreement that each country has previously made. 

ASEAN has a very big role in determining the success of RCEP, both through initiating and leading the negotiations by adhering to the concept of ASEAN Centrality. ASEAN Centrality is a principle that locates ASEAN at the core of every cooperation to protect its interests, especially from the interventions of world’s major powers.  This principle requires other parties, such as China and the United States, to follow the mechanisms that apply in the ASEAN region. ASEAN's leadership in the RCEP negotiation process is not merely driven by ASEAN’s high concern for regionalism in Asia-Pacific. Instead, ASEAN moves based on the motivation to improve its economy and trade because ASEAN  views that the implementation of its multilateral trade agreements have not been significantly impactful. Thus, it can be said that ASEAN's main interest is to enhance trade facilitation between ASEAN with its trading partners. ASEAN Centrality in the RCEP negotiation process signals ASEAN's determination to place itself as a leader and facilitator of RCEP to achieve its interests.

The manifestation of ASEAN Centrality in RCEP is not only present in ASEAN’s duty to fulfill its responsibility of promoting international trade as a leader. ASEAN Centrality should also be viewed from ASEAN's opportunities to encourage the creation of agreement clauses that can benefit ASEAN in securing its position. According to Mueller, ASEAN is in danger because RCEP actively involves world's powerful economic countries that will only use ASEAN as a market destination. It is true that RCEP does not revolve around ASEAN benefits alone, but ASEAN through its centrality will strengthen RCEP which guarantees the accommodation of ASEAN interests. This can be seen from the achievement of RoO (Rules of Origin) or provisions on the origin of goods as part of ASEAN's interests.

Similar to other trade agreements, RCEP is formulated to reduce tariffs and trade barriers to increase the volume and economic gains from international trade. For ASEAN, RCEP is notably influential in increasing the integration of ASEAN’s preceding agreements. At the same time, RCEP eliminates trade barriers related to both tariffs and non-tariff barriers. The agreement on RoO (Rules of Origin) in Chapter 3 of RCEP regulates the identity of traded goods and commodities. RoO provides identification of the goods’ origin country to indicate where a commodity comes from. However, RoO can be a trade barrier when the regulations are strictly binding and detailed. Therefore, RoO becomes one of the most complicated RCEP negotiations because each country can be committed to one to three trade agreements with various parties. The complexity of RoO negotiation comes from RCEP's obligation to reconcile the interests of the countries involved since neither party wants RoO to jeopardize their future trade.

RoO provides a standard for a product set to be marketed to other countries by providing an integrated channel of various information according to the standards and criteria stipulated in a trade agreement. RoO gets extra attention in an FTA due to its ability to help countries of origin attain preferential and special treatment from countries that have agreed on the same international trade agreement. This is highly beneficial for each country in RCEP because RoO is prone to add quite a lot of trade costs, ranging from 1.4% to 5.9%. RCEP’s RoO arrangement is estimated to reduce export costs and accelerate trade between countries within the RCEP framework by US$ 90 billion per year. This certainly benefits ASEAN in increasing trade volume and simplifying international cooperation. The harmonization of RoO between ASEAN and fellow RCEP members as trading partners who previously had different regulations made trade more efficient, away from the spaghetti bowl effect.

As a leader in the RCEP negotiation process, ASEAN is considered successful for bringing many countries to agree on one agreement that is not simple. At the same time, ASEAN can also implement the value of ASEAN centrality to ensure the advancement of its interests. In addition to removing trade barriers such as with the RoO agreement, RCEP makes it easier for ASEAN to increase trade efficiency with its partners. The number of ASEAN+1 FTAs strengthens ASEAN’s drivein uniting its trading partners into a new trade cooperation. These factors allow RCEP to pave the way for achieving more of ASEAN's objectives instead of hindering the progress.

The swift influence of globalization encourages the creation of fashion trends that are changing very quickly. To survive, various fashion companies not only compete with competitors who offer low prices, but also compete to meet consumer demand in accordance with the latest trends or called fast fashion (Barnes & Lea-Greenwood, 2010). The phenomenon of fast fashion continues to grow with two main characteristics, namely reducing production process delays and increasing consumer choice by ensuring the stocks of goods constantly (Hines, 2004). Therefore, various fashion companies mass-produce 52 “micro-seasons” every year or equal to one new collection every week and it is estimated that by 2050 the production can reach 160 million tons.

Mass fashion production comes with consequences. UNEP notes that the fashion industry accounts for 8-10% of carbon emissions globally – more than the amount of carbon emitted by international aviation and sea freight. In the production process, this industry also requires abundant water resources and contributes to 20% of global wastewater as a whole. To produce synthetic textiles, this industry requires 42,534 kilo tons of plastic annually which then ends up as waste in the sea. Environmental problems in this industry also arise in the post-consumption phase with the accumulation of end-of-life fashion waste. These various data indicate that mass production in this industry has a significant impact on the environment without any serious handling efforts.

In order to support sustainability, the fashion industry which has been running a linear approach to the manufacturing, distribution and consumption processes must switch and be replaced with a circular economy approach through 3 main concepts, namely reduce, reuse, and recycle or called circular fashion. Circular fashion implementation requires strong support and commitment from various parties including the government as a regulator. This concept is implemented in a complex manner in every continuous phase starting from the early stages of the fashion product life cycle, namely at the design stage until when its use is complete by ensuring that the product will not end up polluting the environment (Brismar, 2017).

However, the implementation of circular fashion still faces challenges (Kirchherr, 2018). For example, companies tend to buy new synthetic textile materials because they are cheaper than recycling as a result of the government's policy of subsidizing fossil fuels being used to produce these materials. Therefore, public and business people's awareness of the importance of circular fashion needs to be accompanied and supported by regulatory readiness as the main supporting factor that has binding coercive power. Environmental problems in the era of sustainable development need to be resolved through the role of law as a social engineering tool. In this case, law is used as a scientific formulation, logical approach, and inventive skill to regulate, manage, and move society towards various reforms (Pound, 1965).

Researchers argue that the fast fashion phenomenon needs to be handled with smart regulatory solutions or smart regulation (Preston, 2017). Through this approach, while most of the investment, innovation and implementation of circular fashion is carried out by the private sector, the government plays an important role in passing policies that support innovation, investment and sustainable business activities. Policies to deal with fast fashion are designed as a whole through a series of policies that support the use of environmentally friendly materials and other innovations, fiscal policies by disincentivizing activities that are contrary to resource protection efforts, to end-of-life product regulation. 

The concept of smart regulation is no longer just an idea along with the publication of the European Union Strategy for Sustainable and Circular Textiles by the European Union last March. By 2030, the European Union has a vision to ensure that all textile products on its market are long-lived, made from recycled fiber, free from hazardous materials, and produced in a process that respects social and environmental rights. In this strategy, the European Union succeeded in designing a comprehensive policy and showing full support for the implementation of circular fashion.

The European Union regulates the start of the textile life cycle by implementing stricter product design rules to reduce microplastic waste from synthetic materials. In order to answer the cultural challenge in the form of public awareness, Digital Product Passport (DPP) is implemented to collect data about products and their supply chain and share it throughout the business chain so that all business people including consumers have a good understanding of the product, its supply chain, and environmental impact. As for dealing with end-of-life waste, the European Union applies Extended Producer Responsibility (EPR) which requires producers to be responsible for managing end-of-life products marketed in the country with the concept of reuse and recycle. This comprehensive policy from upstream to downstream has implications to 16 legislative actions which include the creation of new regulations such as the Eco Design for Sustainable Product Regulation, as well as revision and harmonization of related regulations, including the Textile Labeling Regulation, Waste Framework Directive, Best Available Techniques Reference Documents, and Taxonomy Regulation.

On the other hand, regarding the policies of the European Union, Kerry Bannigan, Executive Director of the Fashion Impact Fund––an organization that supports the role of women in the fashion industry––noted that fashion is a global issue that requires commitment from other countries to cooperate in building a circular economy infrastructure. Currently, 15 developed and developing countries along with various European Union member countries who are members of the Global Alliance on Circular Economy and Resource Efficiency (GACERE) have committed to implementing and advocating for circular fashion in 2020. In addition, G20 countries also held workshops in circular fashion which discuss the role of the state to contribute through supportive policies in 2021. However, to date, apart from the European Union, only the United States has regulated circular fashion through the New York Fashion Sustainability and Social Accountability Act which is currently entering the legislation process. Therefore, although various countries are currently committed to circular fashion through international cooperation, there are still many developed and developing countries that have not implemented this concept at the level of formation and harmonization of regulations.

As a reflection, Indonesia as one of the developing countries has paid attention to solving the problem of textile waste in a sustainable manner in the green industry program, precisely through the Regulation of the Minister of Industry of the Republic of Indonesia Number 13 of 2019. More broadly, the responsibility of the textile industry in relation to wastewater quality standards is regulated through Law Number 32 of 2009 concerning Environmental Protection and Management jo. Minister of Environment Regulation Number P.16/MENLHK/SETJEN/KUM.1/4/2019. However, these various regulations have not included new breakthroughs in relation to ongoing efforts to deal with the current fast fashion phenomenon. On the other hand, the development of environmental law in Indonesia has also been carried out partially, as evidenced by the fossil fuel subsidies that are still being implemented by the government, which reached USD 8.6 billion in 2019 and at the beginning of the pandemic, the G20 countries allocated USD 318.84 billion to support fossil energy. This indicates that the existing policies have not been compiled in a systematic and integrated manner to address environmental problems. Whereas on the one hand, this phenomenon continues to be worrying, supported by the fact that Indonesia has produced 2.3 million tons of textile waste in 2021. In fact, the Indonesian government's efforts to give an appeal about the circular economy to the people in Indonesia have been carried out in collaboration with the Danish government. However, the cooperation that has been established has not been able to encourage Indonesia to implement real policies and harmonize regulations so that this cooperation still needs to be strengthened.

In closing, a legal adage “het recht hink achter de feiten aan” describing legal conditions that are always struggling to follow reality. However, law as a tool of social engineering has been able to answer the modern problems that are happening today. Based on the description above, regulation and international cooperation play a central role in implementing circular fashion. The urgency to overcome fast fashion problems that have a major impact on the environment needs to be supported by the government's strong commitment to being on the pro-environment side and translating it into a holistic regulatory level. Furthermore, circular fashion is an effort that must be encouraged by cooperation between developed and developing countries. Thus, it is hoped that countries around the world have the same vision and mission to create an atmosphere that supports the implementation of circular fashion globally.

References

“A New Textiles Economy: Redesigning Fashion’s Future,” 2017. https://ellenmacarthurfoundation.org/a-new-textiles-economy

Barnes, L., and G. Lea‐Greenwood. “Fast Fashion in the Retail Store Environment.” International Journal of Retail & Distribution Management 38, no. 10 (2010): 760–72. https://doi.org/https://doi.org/10.1108/09590551011076533

Boucher, Julien, and Damien Friot. “Primary Microplastics in the Oceans: A Global Evaluation of Sources,” 2017. https://portals.iucn.org/library/sites/library/files/documents/2017-002-En.pdf

Brismar, Anna. “What Is Circular Fashion?,” 2017. https://greenstrategy.se/circular-fashion-definition/

Directorate-General for Environment. EU Strategy for Sustainable and Circular Textiles (2022). https://ec.europa.eu/environment/publications/textiles-strategy_en 

Institute for Essential Service Reform. “Subsidi Energi Fosil Menghambat Transisi Energi,” 2021. https://iesr.or.id/subsidi-energi-fosil-menghambat-transisi-energi 

Kirchherr, Julian, Laura Piscicelli, Ruben Bour, Erica Kostense-Smit, Jennifer Muller, Anne Huibrechtse-Truijens, and Marko Hekkert. “Barriers to the Circular Economy: Evidence From the European Union (EU).” Ecological Economics 150 (2018): 264–72. https://doi.org/https://doi.org/10.1016/j.ecolecon.2018.04.028

Kompas. “Kurangi Limbah Tekstil, Bappenas Ajak Industri Terapkan Konsep Fashion Sirkular,” 2022. https://money.kompas.com/read/2022/02/24/083300926/kurangi-limbah-tekstil-bappenas-ajak-industri-terapkan-konsep-fashion-sirkular?page=all 

“New York Fashion Sustainability Act: Now In Committee,” 2022. https://www.natlawreview.com/article/new-york-fashion-sustainability-act-now-committee

Preston, Felix. “A Global Redesign? Shaping the Circular Economy.” Chatham House Briefing, 2012. https://www.chathamhouse.org/sites/default/files/public/Research/Energy, Environment and Development/bp0312_preston.pdf 

Pound, Roscoe (1965) "Contemporary juristic theory," in Dennis LLOYD (ed.) Introduction to Jurisprudence. London: Stevens and Sons. Second edition, pp. 247-252.

Smitts, Helene. “Fashion Industry, We Must Prepare for New Regulations,” 2022. https://sourcingjournal.com/topics/sustainability/recover-texiles-recycling-fashion-industry-regulations-waste-337870/

Stanton, Audrey. “What Is Fast Fashion, Anyway?,” n.d. https://www.thegoodtrade.com/features/what-is-fast-fashion.

United Nations Environment Programme. “Financing Circularity: Demystifying Finance Fort The Circular Economy” 2020. https://www.unepfi.org/publications/general-publications/financing-circularity/

———. “UN Alliance For Sustainable Fashion Addresses Damage of ‘Fast Fashion,’” 2022. https://www.unep.org/news-and-stories/press-release/un-alliance-sustainable-fashion-addresses-damage-fast-fashion

Webb, Ella. “EU Moves to Legislate Sustainable Fashion. Will It Work?,” 2022. https://www.voguebusiness.com/sustainability/eu-moves-to-legislate-sustainable-fashion-will-it-work 

The development of cryptocurrencies adoption is increasingly massive in recent years. With various positive aspects of cryptocurrencies such as transparency, transaction speed, and also security, some countries such as El Salvador have begun to adopt cryptocurrencies as a domestic payment instrument. Since the emergence of Bitcoin in 2008, various cryptocurrencies have emerged with their various uses and advantages. One issue that comes with the proliferation of the use of cryptocurrencies and the expansion of adoption in the world's economy is the electrical energy used to keep the blockchain system running. According to information from the Columbia Climate School, the energy required to run the Bitcoin system alone exceeds Argentina's annual energy consumption. Furthermore, such massive consumption of electrical energy produces 65 megatons of carbon dioxide every year, which is equivalent to the total emission produced by Greece each year. Even the energy used in the Bitcoin mining process per minute is enough to meet the energy needs of the average United States household for 17 years. Furthermore, based on research conducted by Cambridge University, Bitcoin mining uses more electricity than the combined electricity consumption of Ukraine and Norway per year.

In addition to the use of cryptocurrencies, with their various advantages and conveniences, it has brought with it a more fundamental issue in recent years, namely the increasing use of energy. In addition, the issue of where the energy comes from is also important because the majority of energy sources in the world still come from extractive mining products such as coal. According to Coinbase, the use of energy in the crypto system is because the majority system is still oriented towards the Proof of Work system rather than the Proof of Stake system.

It is clear that the massive use of energy to keep the cryptocurrency system running requires an increase in the amount of energy produced. This has in fact triggered an increase in the production of electrical energy, such as from coal. The revival of a coal mining company, for example, occurred in the United States where one of the power plants that almost went bankrupt since closing, Hardin, who suffered a loss from 2018 again, got profits in his business due to the increasing energy demand for crypto miners. Even in 2020, the energy generated from this coal power plant is only intended for crypto miners. According to The Guardian, Hardin is a small part of the revival of coal-fired power plants due to the increased use of crypto in recent years.

Efficiency of Cryptocurrency

Cryptocurrencies are still developing massively in the last 10 years. The wider adoption of the community shows the potential for the financial system which actually started because of the financial crisis in 2008 with the emergence of Bitcoin which was allegedly developed by Satoshi Nakamoto (could be the name of the group/person). With systems that can still be developed, such as from Proof of Work to Proof of Stake, the blockchain system can reduce the consumption and energy required by the cryptocurrency system to keep the system running. This was conveyed, for example, in the “Change the Code not the Climate” campaign coordinated by Greenpeace United States and the Environmental Working Group that Bitcoin and cryptocurrencies need to improve the system in cryptocurrencies to make system efficiency, which then reduces energy consumption in the running of the system.

To NBC News, researchers from the Ethereum Foundation said that by using a proof of stake system, the energy used can be reduced to 99.99% lower than using a proof of work system. This certainly gives optimism for those who support crypto and also pays attention to the environment. Some cryptocurrency systems will and have used proof of stake systems such as Ethereum and Cardano. Reporting from Forbes, Proof of Stake removes the system elements of computing competition and makes one machine only work to solve one coding problem at a time. This is different from Proof of Work where many computer machines try to complete many transactions at one time which of course requires a lot of energy.

Utilizing renewable energy

With the massive amount of energy used, the use of environmentally friendly energy is important and pivotal, especially to support the cryptocurrency transaction system which is increasingly being adopted by the community. This has been done, for example, in Costa Rica, which has a surplus of renewable energy. According to DW News, the energy needed to carry out crypto mining is obtained from energy generated from hydroelectric power plants. However, Jose Daniel Lara, a researcher from UC Berkeley said that Costa Rica is a special country because it has a surplus of renewable energy and the logic of crypto mining with renewable energy is possible.

Therefore, it is important for countries that want to adopt the use of cryptocurrencies to not only pay attention to the convenience and advantages of using cryptocurrencies and blockchain technology, but also to pay attention to energy sources to keep crypto technology systems running well.

The Ministry of Trade of the Republic of Indonesia (Kemendag) has officially resumed negotiations on the Comprehensive Economic Partnership Agreement (CEPA) between Indonesia and Peru after a delay since 2017. Reporting from IDN Financials, Minister of Trade Muhammad Lutfi and Deputy Minister of Foreign Trade of Peru Ana Cecilia Gervasi Díaz held a special meeting to immediately start communicating and synergizing together so that trade negotiations between Indonesia and Peru can be carried out immediately. The meeting was held on the sidelines of the APEC 28th Minister Responsible For Trade (MRT) series of meetings held from 21 to 22 May 2022 in Bangkok, Thailand.

Minister of Trade Muhammad Lutfi revealed that the Indonesia-Peru CEPA negotiations had been delayed for 5 years due to the approach used for negotiations in 2017, when the Peruvian Minister of Foreign Trade and Tourism invited Indonesia to start the cooperation at the end of 2017 after the United States resigned from the Trans-Pacific Partnership (TPP). The steps taken by the Peruvian government are considered quite aggressive in the context of developing a cooperation plan in free trade with Indonesia.

The United States' withdrawal from the TPP on Monday (23/1/2017) strained their relations with their Asian allies with close ties to China. At that time, Peru had established free trade agreements with 15 countries with China as one of the countries that began to establish diplomatic relations. Negotiations for trade cooperation between Indonesia and Peru were delayed after the incident, but then managed to re-establish five years later in the middle of 2022.

The leaders of the two countries observed enormous potential that could provide positive benefits in the trade sector of both parties with the superior commodities owned by each country. The main commodities that Indonesia offers to Peru include motor vehicles, biodiesel, unused postage stamps, footwear, and yarn fibers. Meanwhile, Peru will be actively exporting cocoa beans, fertilizers, wine, coal, and raw zinc to Indonesia. In order to accelerate the establishment of a mutually beneficial cooperation agreement, they increased their pace to finalize the framework of their agreement.

In the first quarter of 2022, the total profit obtained by Indonesia and Peru in their trade sector was US$ 99 million, an increase of 18.84% compared to the first quarter of last year which was still around US$ 83.30 million. Meanwhile, throughout 2021, the total profit from the Indonesia-Peru sector was recorded at US$ 402.70 million, an increase of 61.8% compared to 2020 which was recorded at US$ 248.82 million. International trade activities with Peru managed to generate a surplus of US$ 234.21 million for Indonesia in 2021, an increase of 142% compared to 2020.

On Friday last week, (13/5) at 06:36, gold prices experienced a significant decline worldwide. This decline occurred after the price of gold had reached its peak on Tuesday (8/3) at US$ 2052.4 per troy ounce. Currently, the price of gold is pegged at US$ 1,818.93 per troy ounce, down 0.15% from the previous day's price of US$ 1,850.6 per troy ounce.

This price change was the result of a 3.4% price correction that occurred a week earlier on Friday (6/5), where the gold price was at US$ 1882.9. Moreover, the evidence of gold prices decreasing appeared more prominent when compared to the price on Friday (13/5) with the price a month earlier on Tuesday (12/4), which was US$ 19666.5. On Wednesday (13/4), the price of gold was still around US$ 1977.7, 7.8% higher than the price on Friday (13/5). Until this day, the gold price in May still remains on a flat line in the same range and has not shown any signs of recovering.

Good Returns considers the main reason behind the constant decline in gold prices is somehow related to the United States Dollar’s value increase. This occurs as the effect of the Federal Reserve's benchmark rise of interest rate. The main factor that caused the United States Dollar to skyrocket is the market expectation of a 50 basis points interest rate hike in June. High market expectations for an increase in interest rates are caused by the high inflation rate in April 2022 which reached 8.3%, which is far from the normal rate of 2%.

Quoted from Reuters, Bart Melek stated that the Federal Reserve shows concern on the possibility of more aggressive increase of interest rates on the United States Dollar which could continue to lower gold prices. The same issue was also expressed by Edward Moya from Oanda, where he explicitly stated that the strengthening of the United States Dollar made gold in the danger zone. It is feared that the price of gold will continue to decline to reach the range of US$ 1,750 if the price cannot penetrate the US$ 1,800 mark in the future.

Even though the price of gold has not yet shown progress, the price of gold still has the potential to rise if global economic conditions weaken. Reporting from CNBC, Ravindra Rao from Kotak Securities stated that gold will remain the safest asset of choice for people when economic conditions deteriorate. He also stated that the price of gold is unlikely to rise sharply unless the United States Dollar weakens drastically, like what happened in January 2022.

Reporting from Kompas.com, at the end of January 2022 the price of gold had increased due to geopolitical conditions, when the conflict between Russia and Ukraine had just begun. At that moment, these geopolitical conditions caused the Federal Reserve not to raise its benchmark interest rate which caused the value of the United States Dollar to decline. This can increase public interest in investing in gold and lift positive sentiment towards precious metals, especially gold.

It is expected that in May 2022, President Biden will formally announce a new economic cooperation framework with Indo-Pacific countries named Indo-Pacific Economic Framework (IPEF). Previously, President Biden submitted the IPEF proposal during the East Asia Summit in 2017 as a strategy to enhance the cooperation of economic and international trade with Indo-Pacific nations. Despite not being formally announced and itemized, according to the United States statement there are four main pillars that become crucial in IPEF, namely fair and resilient trade, resilient supply chain, infrastructure, decarbonization and renewable energy, and taxation and anti-corruption. This policy, however, also depicts the shifting of the US cooperation  policy towards the Indo-Pacific countries which previously have been dominated by security and defense cooperation. 

According to the research report by Centre for Strategic and International Studies (CSIS), the inclusivity of cooperation matters for the countries particularly in gathering the developed and developing nations that will support all countries in the Indo-Pacific. Hence, this cooperation will also push to include countries such as Australia, Japan, South Korea, and also all of 10 ASEAN member states to join IPEF. Indonesia Foreign Minister, Retno Marsudi also hopes that IPEF will also support the existing cooperation framework such as ASEAN Outlook on Indo-Pacific (AOIP). 

Beside strengthening conventional trade and economic cooperation, IPEF cooperation will also acknowledge regional digital economy advancement. This will also give opportunities towards digital economy advancement which has massive potential. Digital economy advancement within ASEAN countries such as Indonesia, Vietnam, Malaysia, Singapore, and Thailand can be a leeway 

Contender for China in the Indo-Pacific

Most of the US policies in recent years seem inalienable from the strategic balancing towards China in the Indo-Pacific, including IPEF cooperation. In recent years, China has been gradually dominating the economic aspect in the Indo-Pacific by actively forging regional cooperation such as Regional Cooperation Economic Partnership (RCEP). This is arguably apprehensive for the US in the context of the Indo-Pacific. Furthermore, integration and dependence from some of the Indo-Pacific countries towards China is also worrying for the US, geo-economically and strategically. 

Other countries such as South Korea, Japan, Australia have been not only gradually increasing their dependence on China economically through bilateral trade but also joining the RCEP mechanism which to many analyzed is perceived as China’s economic statecraft in the region. Therefore, the US propels Japan, South Korea, and Australia to join the IPEF in order to balance China's influence towards these countries. According to South China Morning Post, IPEF is also utilized as an alternative to fill the void left by the US since withdrawing from TPP uner President Trump administration.  

The Chinese government argues that the initiation of IPEF is an effort to alienate China from its regional partners in the Indo-Pacific. The Chinese Foreign Minister said that IPEF is a “Cold War mentality” strategy that still exists in the US foreign policy strategies. 

More than a mere “jargon”

According to the South China Morning Post, the governments of Indo-Pacific nations hope that the IPEF cooperation should give economic incentives more than support for domestic trade only. Instead of merely a “jargon” that depicts the US revival in the region, the US through IPEF should also broaden market access to Indo-Pacific nations. This is indeed in line with the research conducted by CSIS that Indo-Pacific have welcomed the IPEF, but at the same time they are expecting the US to broaden market accession to their domestic products that will also benefit the US by enhancing the trust between Indo-Pacific nations towards the US government. Vietnam Prime Minister, Pham Minh Chinh mentioned that Vietnam is ready to fully support the IPEF but still need more time to reconsider the benefit of joining the initiative. 

The clarity of IPEF cooperation that differs from other existing regional cooperation will be politically lucrative for the US in the Indo-Pacific region. The benefits and economic incentives for the Indo-Pacific nations such as market access and trade facilitation will depict that the IPEF cooperation is not merely for the US strategic purpose in the Indo-Pacific but also can be portrayed as the US commitment to  assist economic advancement in the region.

On September 16, 2021, China has officially submitted the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) – a forum that consists of 11 nations that agreed in 2018 –  membership proposal. This proposal surprises many as Beijing submitted the membership proposal when not only the geopolitical tension particularly with the US is being vigorously debated but also because it is done towards the regional cooperation that is principally forged to encounter China’s increasing influence in the international economy and trade. The process of being a CPTPP member, regardless of being accepted or denied by other CPTPP members, obviously has shown a clear geo-economy tension in the Indo-Pacific region. Despite the lucrative economic potential of China’s membership, the international political rivalry is and will dominate China’s proposal in joining CPTPP.  

CPTPP is the succession of regional economic cooperation initiated by the US called TPP (Trans-Pacific Partnership). TPP not only aims to enhance the trade and investment cooperation amongst the members but also to revive the US leadership in the Indo-Pacific region. Furthermore, it also forged to counter China’s expanding economic influence in the region. Concurrently with the formation of TPP, China was also negotiating the trade agreement called RCEP (Regional Comprehensive Economy Partnership), a trade agreement that involves all ASEAN countries such as Japan, South Korea, Australia, and New Zealand, which was agreed upon in November 2020 and effective from January 2022. For many US foreign policy analysts, the success of the TPP negotiation will enhance Washington’s strategic leverage as Beijing’s presence is increasing rapidly in the Asia-Pacific region.

Despite being the initiator of TPP during the Obama administration, his successor, President Donald Trump with his “American First” approach formally left the negotiation process. His administration argued that joining TPP was futile and overburdened the US itself (Narine, 2018). However, in spite of the US withdrawal, the remaining countries are continuing the negotiation and eventually agreed upon CPTPP. Recently, there are some countries that propose to join CPTPP namely the UK, Taiwan, and China.

Beijing, after the triumph in orchestrating RCEP negotiation, has visions to enlarge and strengthen its presence in other international trade such as CPTPP. The Chinese government has officially submitted the membership proposal to join CPTPP the day after the AUKUS (Australia, United Kingdom, and the United States) agreement has been publicly announced. Being a member of CPTPP after joining RCEP will give huge advantages to China, notably diminishing the trade war impact that is currently still in progress between China and the US, and further enhancing China’s influence in the international trade sphere.

Responses towards China's membership proposal have varied widely, from positive views that there will be a market expansion to skeptical views about China's membership in the CPTPP. The positive outlook was conveyed by Singapore and Malaysia which believed that China would bring a positive contribution to the CPTPP, especially in the context of market expansion just as when China joined the WTO. On the other hand, some countries that are skeptical, such as Australia and Japan, view that China will not be able to meet the regulations and conditions agreed upon by the CPTPP members with its strong state role in economic and business activities.

China's efforts to sign up for CPTPP cooperation demonstrate China's eagerness to take a greater role in the world economy by joining various international cooperation forums, especially those involving aspects of trade and investment. Instead of simply wanting to become the world's largest economy, China is trying to augment its influence and role in the broader aspect. Since joining the WTO in 2001, China has increasingly demonstrated active economic capabilities and participation in international trade. Even for some observers, China has the potential to alter the international trade landscape that has been too dictated by the influence of the United States and Western countries (Akita, 2021).

Concerns about China's utilization of economic dependence are quite reasonable because China's economic capabilities have surpassed other countries in the world in recent decades, including the United States. Conceivably, China's accession to international agreements such as the CPTPP and RCEP makes it has a higher bargaining power compared to the United States which in recent years has chosen not to get deeply involved in various regional cooperation agreements. Even China's success in joining the CPTPP could also illustrate a symbolic ascendancy victory from the United States by taking on a bigger role (Hopewell, 2021).  Furthermore, it is viable that China will, in the near foreseeable future, gain a bigger role or even become the leader of an international trade regime supported not only by its economic advancement but also with an increasingly visible role in every multilateral cooperation forum both, regionally and internationally.

Although China can meet the provisions to become a member of the CPTPP, some observers argue that China will find it arduous to join the CPTPP. China's frequent politicization of the economic sector to achieve national interests in aspects that are sometimes extraneous to the trade and economy also provokes concerns for countries that have joined the CPTPP. This, for example, is indicated by the sanction for Australia in terms of exported goods because Australia provides support to the United States in revealing the origin of the COVID-19 virus. The utilization of economic dependence provokes concerns for some countries with increased economic and trade dependence on China. Economic dependence on China will further lower the bargaining power of some countries that are close allies of the United States. The strategic utilization of trade entanglement with China, therefore, foments concerns of some countries within the CPTPP, despite China’s membership will benefit CPTPP's other members. 

According to research conducted by the Peterson Institute for International Economics, by 2030, cooperation in the CPTPP will generate a profit of 147 billion US$ annually and will be 617 billion US$ if China can join the CPTPP (Petri & Plummer, 2019). Furthermore, China's joining the CPTPP will make the CPTPP a trade cooperation agreement that is slightly larger, in terms of market than the RCEP. Market access and ease of trade with China can improve cost efficiency in CPTPP trade cooperation.

Amid considerable economic potential for both China and other CPTPP member states, it will be difficult for China to join in seeing Beijing's relations with Tokyo, Canberra, and Ottawa that have in recent years become increasingly hostile. Arguably, the three countries will pay more attention especially when Beijing uses aspects of trade in achieving national interests in other aspects such as security and geopolitics.

It will be interesting then to see China's entry into the CPTPP in the coming years. Obviously from the aspect of international trade, China's accession to the CPTPP is a very lucrative opportunity, especially to expand the market in cooperation agreements. Meanwhile, at the same time, the process of China's entry into the CPTPP is also inseparable from the tension factor between several Western countries and China in recent years, especially those with close ties to the United States.  

Instead of paying attention to the advantages of the international economy and trade, the discussion of China's proposals for CPTPP membership revolves around political competition and the balance of power between countries that have close ties to the United States vis-à-vis China. Accordingly, the dominance of strategic calculations of various countries is much more discussed than the calculation of the potential for economic cooperation, particularly to gain benefit from China's membership in CPTPP.

References 

Akita, H. (2021, October 30). Can the CPTPP change China, or will China change it? Nikkei Asia.https://asia.nikkei.com/Spotlight/Comment/Can-the-CPTPP-change-China-or-will-China-change-it 

Hopewell, K. (2021, September 27). Analysis | Would China’s move to join this transpacific trade pact push the U.S. to rejoin? It’s complicated. Washington Post. 

Jiang, H., & Yu, M. (2021). Understanding RCEP and CPTPP: From the perspective China’s dual circulation economic strategy. China Economic Journal, 14(2), 144–161. https://doi.org/10.1080/17538963.2021.1933055 

Narine, S. (2018). US Domestic Politics and America’s Withdrawal from the Trans-Pacific Partnership: Implications for Southeast Asia. Contemporary Southeast Asia, 40(1), 50–76.

Petri, P. A., & Plummer, M. G. (2019, January 30). China Should Join the New Trans-Pacific Partnership. PIIE. https://www.piie.com/publications/policy-briefs/china-should-join-new-trans-pacific-partnership 

Solís, M. (2021, September 23). China moves to join the CPTPP, but don’t expect a fast pass. Brookings.https://www.brookings.edu/blog/order-from-chaos/2021/09/23/china-moves-to-join-the-cptpp-but-dont-expect-a-fast-pass/ 

Recently, the public got thunderstruck by a report that went viral about a cargo ship that got stranded in the Chesapeake Bay. On March 13, 2022, the Ever Forward ship, a fleet member of the Evergreen Marine Corp. reportedly got stuck in the shallow waters of Chesapeake Bay. According to NPR, Ever Forward was departing from Baltimore after loading their cargo when the crew miscalculated the ship’s navigation. Eventually, the Ever Forward arrived in Chesapeake Bay and was stuck in shallow waters near the beach for four weeks. Various efforts have been made to set this cargo ship free so that it will be able to sail as per normal in accordance with the trade routes. However, until this exact day, the ship still shows no avail of going back on the sail and still remains stranded in the Chesapeake Bay.

Although it did not cause any loss and damages to other cargo ships, this incident caused delays in the supply of raw materials and products of essential commodities for life due to the time-consuming ship rescuing attempts. As reported by CBS News, the Ever Forward ship currently wields 5000 containers on the deck and by being stuck in the same position for a month, they have caused a loss of 1 billion USD per day. In order to avoid a greater amount of loss, the crew and the Chesapeake Bay coastal guards took the initiative to evacuate the containers using another ship for immediate distribution to respective recipients.

The incident that happened to Ever Forward again made the public aware that maritime transportation is crucial in supporting export and import activities in trade. Export and import activities are essential processes in international trade to channel the produced commodities to consumers in order to meet their daily needs. To make the whole process more efficient, transportation facilities are required, especially sea transportation which has been deemed to be the most efficient transportation for various types of products at the same time.

Quoted from a press release on the UN's official website, Former UN Secretary General, Ban Ki Moon conveyed the importance of maritime transportation in the realm of international trade in his speech on September 29, 2016, coinciding with World Maritime Day. Ban Ki Moon stated that maritime transportation is the backbone of global trade activities. Maritime transportation helps ensure that the benefits of trade are more evenly distributed due to its large capacity and relatively lower costs compared to other types of transport. In addition, the shipping industry has also played an important role in the improvement of global living standards that have brought millions of people out of acute poverty in recent years. This article will discuss further about the importance of maritime transportation in the world of international trade.

Importance of Maritime Transport in Trade

Barely any economic activity and industrial sector in the world can last for an eternity without the involvement of maritime transport in their export and import activities. This statement was reinforced by the International Chamber of Shipping (ICS) which explained that the international maritime transportation industry is responsible for the transportation of around 90% of commodities produced from world trade activities. In this figure, 80% of them are commodities destined for export and import activities. The statement implies that trading activities are completely dependent on sea transportation which is an important component to drive their economic activities.

ICS also stated that among the 90%, there are 11 billion tons of commodities transported by cargo ships every year, of which 1.5 tons represent the necessities of life for every single person in the world per year. Every year, the shipping industry transports nearly 2 billion tons of crude oil, 1 billion tons of iron ore, and 350 million tons of wheat, where these raw materials are the basic ingredients of almost all basic human needs such as clothing, food, and shelter. This proves that a person's survival is highly dependent on world trade activities, especially on the process of export and import through maritime transportation.

In addition, ICS also mentioned that currently, there are more than 50,000 international cargo ships that carry every type of commodity in their cargo capacity. There are 150 countries in the world that have a fleet of registered cargo ships as a means of distributing commodities in the economy. In addition, each existing fleet employs more than one million human resources from almost every country. The statement elaborates that the maritime transportation industry in expedition activities is strongly supported by its existence to keep world trade activities alive.

What Happened the Year Before

During this year, the world of commerce and the general public was shocked by news about cargo ships that got stuck in the waters where they sailed. Prior to the stranded incident of the Ever Forward ship in the Chesapeake Bay, there was an incident that happened to another Evergreen ship, where this incident was considered far more fatal. Reporting from The Washington Post, at the end of March 2021, one of the Evergreen Marine Corp. ships, Ever Given, was reportedly caught in the Suez Canal which caused a blockade of the canal for 6 full days. The blockade caused by the snagging of the giant carrier managed to disrupt the shipping activities of more than 300 ships, so that some ships were forced to take alternative routes, requiring them to circle the African continent to reach Asia and increase their sailing time by three weeks.

Reporting from CNBC, the amount of losses borne by Evergreen Marine Corp. After experiencing this incident, of course, not a few, because not only their companies suffered losses, but also the economy around the world. Despite paying a fine that includes compensation for damage and loss of revenue for the Suez Canal, as well as rescue costs totaling $916 million, Evergreen Marine Corp. cannot immediately restore the state of world trade as before. The losses caused by the entanglement of Ever Given to the world economy did not only last a day or a week after that, but the impact was felt for months.

According to Business Insider, the losses caused after the Ever Given snagged were estimated at 400 million USD per hour. Lloyd's List, a shipping news journal based in London, estimates the value of cargo goods passing through the canal daily at an average of 9.7 billion USD, with a total of 5.1 billion USD moving into the western hemisphere and 4.6 billion USD moving into the western hemisphere. moving to the eastern hemisphere. Multiplied by more than 300 other cargo ships, of course this number of losses is not something trivial. This event affects global supply chains that have been struggling with shortages and delivery delays since the pandemic began in 2020.

Maritime transportation is the best transportation option for distribution activities in world trade in terms of its function. As the main driver of commodity distribution activities in international trade, human needs are almost entirely dependent on the smooth running of the process. However, if trading activities involving maritime transportation are disrupted while carrying out their functions, the losses incurred will be fantastic. In the future, maritime transportation companies must be better prepared to face situations that can endanger international trade flows.

Friday (8/4/22), the Center for World Trade Studies (CWTS) Universitas Gadjah Mada held an online writing workshop which was attended by UGM PSPD interns from various departments. On this occasion, PSPD UGM invited Raras Cahyafitri, M.Sc as the head of the Research Division of PSPD UGM who is experienced in journalism and writing as a speaker. This workshop aims to improve the writing skills of interns and PSPD UGM staff to be able to produce quality and trustworthy writing. The material presented includes discussions related to techniques and how to write for various outcomes.

The workshop was opened with a discussion regarding the important and main steps in starting a writing, namely writing the main sentence. In her presentation, Raras said that there are two types of placement of the main sentence, namely inductive (placed at the end of writing) and deductive (placed at the beginning of writing). To make writing more interesting, writing with comprehensive and coherent paragraphs is needed. Raras introduced three ways of composing paragraphs known as SMS––sort, match, and structure, namely sorting information, grouping, and determining the writing structure.

At the end of the session, the workshop participants were taught how to process data in a text and put it into a written framework to be developed into paragraphs by providing space for the workshop participants to practice this. In this session, participants learn how to present scientific statistical data into an informative and easy-to-understand reading. Some workshop participants had difficulty putting this into practice because the participants had to understand well the data presented and practice drawing general conclusions. However, these skills are important for interns to have, especially in terms of presenting data-based information in various outputs at CWTS UGM.

The workshop activities were enthusiastically followed by the participants, which was shown by the active participation of the participants in the question and answer sessions and practice sessions. In the presentation session on material related to processing data into writing, the intern on average had difficulty putting the material into practice. Thus, reflecting on this activity, it is expected that in the future there will be similar programs that can help improve the ability of writers.