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Coleman Nee is senior economist at the Economic Research and Statistics Division of the World Trade Organization (WTO), where he has worked since 2004. Kamal Dev Bhattarai of ApEx spoke with him about global trade, problems faced by LDCs, and how geopolitics is affecting global trade.

How do you see the prospects of global trade in 2024?

We expect a gradual rebound in global trade volume for goods throughout 2024 and 2025, following a decline in 2023 primarily due to the persistent impact of elevated energy costs and inflation in developed economies, notably in Europe. Specifically, we project a 2.6 percent increase in merchandise trade for 2024 and a further 3.3 percent growth in 2025, following a 1.2 percent dip in 2023. Nevertheless, the presence of various downside risks has contributed to the uncertainty inherent in all economic predictions, particularly those concerning trade. These risks encompass regional conflicts, geopolitical tensions, and uncertainty in economic policies.

It seems we are making progress towards global trade recovery, what are the reasons behind it?

Inflation diminished real household earnings and reduced net earnings of businesses in 2023, leading to a decline in the demand for manufactured goods, which play a significant role in global trade. Conversely, as inflationary pressures diminish and policy interest rates eventually decrease, this should have a contrasting effect this year and the following, progressively boosting consumption and increasing the demand for imports.

What are the downside risks?

Geopolitical tensions and policy uncertainty could limit the scope of any trade rebound. While export growth should improve in many economies as external demand for goods picks up, food and energy prices could again be subject to price spikes linked to geopolitical events. Choosing an appropriate pace of interest rate cuts will also be challenging for central banks in advanced economies, and any miscalculation could lead to financial volatility later in 2024. The resilience of global trade is also being tested by disruptions on two of the world’s main shipping routes: the Panama Canal and the Suez Canal. 

The Panama Canal handles six percent of global trade, with over 70 percent of traffic destined for or originating from the United States. It is currently operating at partial capacity due to freshwater shortages, with restrictions likely to remain in place for some time. Meanwhile, the Suez Canal handles about 12 percent of global trade, and roughly one-third of container shipping between Asia and Europe. The diversion of traffic away from the Red Sea and around the Cape of Good Hope has added around 10 days to Asia-Europe journeys while boosting fuel costs.

Overall, risks are tilted to the downside, although there is some upside potential if trade in the European Union recovers faster than expected.

How does geopolitics affect global trade?

The global economy has been hit by several economic shocks in recent years while geopolitical tensions have been rising. In response to these and other concerns, some governments have become more skeptical about the benefits of trade and have taken steps aimed at re-shoring production and shifting trade towards friendly nations. These actions have had some impact on trade patterns, but evidence of a sustained trend toward deglobalization remains scant. One early sign of changing trade patterns is bilateral trade between the United States and China. Despite a record high in 2022, total bilateral trade between the world’s two largest economies grew 30 percent more slowly since 2018 than their trade with the rest of the world. 

In services, there are early indications also as data from the United States appear for example to show evidence of recent ‘friendshoring’ in information and communication technology (ICT) services. US imports of ICT services by region from 2018 to 2023. During this period, US imports from North American trading partners (mostly Canada) increased from 15.7 percent of total ICT imports to 23 percent. At the same time, US imports from Asian trading partners (mostly India) fell from 45.1 percent to 32.6 percent. 

Regarding the regional aspects, what are the prospects of growth in Asia?

In 2023, weak demand reduced export volumes in Europe and prevented a stronger recovery in Asia, while the picture in other regions was mixed. If the WTO’s trade forecast for 2024 is realized, Asia will contribute more to merchandise trade growth than it did over the last two years. The region is expected to add around 1.3 percent points to the projected 2.9 percent growth in world exports this year, or around 45. On the imports side it should add 1.9 percentage points to the anticipated 2.3 percent growth in world imports, or around 81 percent. Asia’s exports will grow 3.4 percent in 2024 and 3.4 percent in 2025. Asia’s imports meanwhile will grow 5.6 percent in 2024 and 4.7 percent in 2025. 

What are the key problems faced by LDCs countries in the global trade?

The impact of the 2023 trade slump on least developed countries (LDCs) is a matter of concern since these countries have limited resources to deal with global economic shocks. The drop in merchandise exports of LDCs last year was in line with the decline at the world level, but the contraction on the import side was larger, limiting consumption possibilities for LDCs. Merchandise exports of LDCs fell from $269bn in 2022 to $256bn in 2023, corresponding to an annual percentage change of -4.6 percent. This was roughly equal to the decline at the world level, leaving the share of LDCs in world exports stable at 1.1 percent. Meanwhile, merchandise imports of LDCs fell from $355bn in 2022 to $316bn in 2023. The -11 percent decline was roughly twice as large as the decline in world imports. As a result, the share of LDCs in world imports fell from 1.4 percent in 2022 to 1.3 percent in 2023.

LDC oil exporters recorded large merchandise trade surpluses in both 2022 ($24bn) and 2023 ($14bn). Other groups of LDCs experienced trade deficits last year, ranging from $36bn for countries that mostly export agricultural products to $4bn for ones that primarily export non-fuel minerals. According to preliminary WTO estimates for 2023, the US dollar value of LDC exports of fuels and mining products fell 16.5 percent in 2023. Their exports of agricultural products were also down 8.7 percent while shipments of manufactured goods dropped 12.6 percent. Exports of other products (including non-monetary gold) increased by four percent. These developments in value were influenced by corresponding price changes (for example, an eight percent rise in gold prices) as well as trade volume developments.

Paul Staniland is a professor of political science at the University of Chicago. He is non-resident scholar, South Asia Program Carnegie Endowment for International Peace. Kamal Dev Bhattarai of ApEx talked with him about US South Asia policy, particularly focusing on Nepal. 

How do you see the broader US South Asia policy?

The US is aiming to align with India, reduce or manage Chinese influence in the smaller states of South Asia, and access the rapidly growing markets in the region. It keeps an eye on Pakistan, which is a source of concern regarding potential escalation from tensions with India and terrorism, but has clearly downgraded that relationship compared to the post-9/11 period.

It has been two years since the Joe Biden administration came up with the Indo-Pacific Strategy, how is it playing out in South Asia?

The Indo-Pacific Strategy seems to have been reasonably well-received in India as a signal of US commitment to competing in Asia. It's less popular and desirable in other states in the region, which are quite worried about getting sucked into US-China rivalry and have interests that often do not tightly align with that competition. 

What are the key US interests in South Asia?

As noted above, the US wants to keep China out, work with India, and have access to markets in the region.

How does the US see China’s growing interests in this region?

Chinese influence is certainly an area of concern as it is seen as rapidly expanding and increasingly able to deploy massive resources, though my sense is that there may be a growing recognition that it has been very difficult for China to convert its economic power into enduring political influence. The CPEC in Pakistan has not been especially successful, BRI is often contested in ‘host’ countries (like Nepal), and Sri Lanka’s economic crisis was not prevented or solved by Chinese involvement.

What are the latest trends in US-Nepal relations?

The US is definitely interested in Nepal as a case where it can provide economic and governance benefits in the context of growing Chinese influence. That said, I don’t think the US public or most of its policy community think about Nepal a lot as a major site of strategic competition—there has been an American presence since the 1950s, so it’s not wholly new. Nevertheless, there is a growing interest and some learning about how to best approach Nepal; for instance, it’s been noticeable that the US has tempered the use of Indo-Pacific Strategy framing around Nepal and is ideally hoping to provide opportunities that complement, rather than necessarily direct take on or denounce, Chinese efforts. 

What are key US interests in Nepal? 

The US wants a growing, democratic Nepal that is on reasonably cordial terms with the US and India.

Manoj Acharya is the founder principal of Kathmandu Global School. He was awarded Best Principal (2017) by National Power News. “Kathmandu Global School is a friendly, vibrant, community-minded school, whose decisions always prioritize students,” he says. “We are excited about all the things we will do and learn this year.” Here are the excerpts from an interview with Acharya.

Why should parents choose Kathmandu Global School for their child’s education?

At Kathmandu Global School, we offer a comprehensive educational experience that goes beyond academics. Our curriculum is designed to foster critical thinking, creativity, and global awareness, preparing students for success in an increasingly interconnected world. With a dedicated faculty, state-of-the-art facilities, and a focus on holistic development, parents can trust that their child will receive a well-rounded education that equips them with the skills and knowledge to thrive in a competitive world.

What initiatives has Kathmandu Global School undertaken to enhance the educational standards in the community?

Kathmandu Global School is committed to contributing positively to the educational landscape of our community. We regularly organize teacher training programs, workshops, and seminars to enhance the professional development of educators not only within our school but also in collaboration with other educational institutions in the region. We actively engage in community outreach programs, such as free tutoring sessions, educational fairs, and awareness campaigns, to promote the importance of education and support students from all backgrounds.

How can private and community schools work together to address the challenges in the education sector?

Private and community schools can play complementary roles in addressing the challenges in the education sector by fostering collaboration and sharing resources. By leveraging each other’s strengths and expertise, these institutions can create innovative solutions to common challenges such as access to quality education, teacher training, and infrastructure development. Through partnerships, mentorship programs, and joint initiatives, private and community schools can work hand-in-hand to ensure that every child has access to high-quality education.

What strategies can Kathmandu Global School implement to ensure its competitiveness in the international educational landscape?

Kathmandu Global School is committed to continuous improvement and innovation. We prioritize staying abreast of global educational trends and practices, integrating international perspectives into our curriculum, and fostering partnerships with international educational organizations. We offer language immersion programs, exchange opportunities, and participation in international competitions to provide our students with global exposure and perspectives. By embracing innovation, collaboration, and a forward-thinking approach, we are confident in our ability to prepare our students to excel on the international stage.

Monish Tourangbam is a New Delhi-based strategic analyst and the honorary director at the Kalinga Institute of Indo-Pacific Studies (KIIPS). He holds an MPhil and PhD from the School of International Studies, JNU, and has taught geopolitics and international relations at Manipal Academy of Higher Education, Manipal, and Amity University, Noida. Tourangbam has also been a visiting faculty at the University of Cincinnati, Ohio, a SAV visiting fellow at the Stimson Center, Washington DC, and associate editor of the Indian Foreign Affairs Journal. He has been an Indian delegate at a number of high-level Track II Dialogues and regular commentator on US foreign policy, India’s foreign policy, geopolitics of the Indo-Pacific and South Asia besides other pertinent issues of international relations. Kamal Dev Bhattarai of ApEx talked with him about the Indo-Pacific Strategy and its implications for Nepal. 

How do you see the implementation of US Indo-Pacific Strategy 2022 in the Indo-Pacific region?

The US Indo-Pacific Strategy (IPS) more than anything else affirms the prevailing view in America’s policymaking community that the People’s Republic of China’s (PRC’s) comprehensive rise is the most prominent strategic challenge to US primacy in the international system, and more particularly in the Indo-Pacific region. “The PRC’s coercion and aggression spans the globe, but it is most acute in the Indo-Pacific,” the IPS says. Although it does mention a host of global issues including the pandemic and the climate change that require renewed American leadership, the focus of this strategy on the strategic challenges posed by China is quite apparent: That the United States needs to face such challenges squarely, and build a “free and open Indo-Pacific that is more connected, prosperous, secure, and resilient,” in concert with allies and like-minded partners is what this strategy contends. The economic, political, and military balance that was heavily tilted toward the United States and its allies in the post-Cold War era has been rapidly shifting to a much more complex environment. 

The IPS is emphatic in pronouncing the Indo-Pacific region as the most consequential in terms of its impact on the world, and one that will require the US to deliver more than ever. The cornerstone of implementing the IPS quite clearly lies in how well the United States is able to diagnose the 21st century problems that the region confronts, and devising the solutions to the range of issues traversing the military plus non-military areas.

How do South Asian countries perceive the IPS and how are they responding to it?

It will not be easy to put all the South Asian countries under one particular bracket or category, while assessing how they perceive and respond to the US Indo-Pacific Strategy. Despite being grouped under South Asia, the countries in this region possess peculiar geography and interests that shape their perceptions and responses to the IPS. Each country depending on their maritime or continental features, and their terms of engagements with the US perceive and navigate the politics, economics and security of the evolving Indo-Pacific region. For instance, the imperatives of development and security in each of the eight South Asian countries shape their strategic behaviors as well as tactical responses. 

Quite evidently, the exponential growth that India’s partnership with the US has seen in the last two decades, despite its own history of “estrangement”, is something that continues to and will overwhelmingly shape how South Asia features in US Indo-Pacific Strategy. Moreover, in deciphering the perception and responses of South Asian countries to the IPS, the China factor will loom large, because of Beijing’s growing strategic footprints in the region. While the US-China strategic competition is an overriding factor in the Indo-Pacific strategy and the military implications are quite apparent, the IPS is much more comprehensive in its scope and its non-military dimensions that are development oriented or human-centric are equally significant for the South Asian countries.

What are its implications in this region?

The looming shadow of the Indo-Pacific increasingly hovers over the politics, economics and security of South Asia. Whether South Asia occupies a pivotal position in terms of shaping the contours of the US Indo-Pacific Strategy can still be debated. The way Washington perceives the Indo-Pacific as a geopolitical region, and implements it still reflects a bias towards the maritime aspects, more particularly the Western Pacific, and the contestation with China’s growing ambitions in the South China Sea plus the Taiwan Straits. 

Moreover, South Asia does not have any treaty ally of the United States, and hence its security commitments in the region are quite different compared to those in the East Asian theater. The withdrawal from Afghanistan portends a new era in Washington’s South Asia strategy, that calls for greater resources devoted and policy attention to build an “open and free” Indo-Pacific amidst challenges posed by an assertive China. The downward slide in India-China relations, the growing US-China rivalry and the burgeoning India-US strategic cooperation, are leading to a complex competition-cooperation-confrontation dynamic affecting the dependent and independent agency of South Asian countries. 

In South Asia, the US is a distant power in terms of geography but not as far as strategy and influence are concerned. While South Asian countries seem to hedge their bets between India and China, the role of the US cannot be discounted. The US’ strategy in South Asia has largely focused on the triangular axis of India, Afghanistan and Pakistan, but its Indo-Pacific strategy has been widening the menu of military and non-military engagements in the subcontinent. As far as hardcore security implications are concerned, how South Asian countries perceive and respond to America’s evolving concept of integrated deterrence will be significant.

Compared to other countries, there has been much discussion in Nepal about IPS, how do you see such debates in Kathmandu?

The evolving debates in Nepal on the IPS and the Indo-Pacific as a geopolitical plus geo-economic region expectedly reflects the permutations and combinations resulting from Nepal’s own perception of its core development needs and security imperatives. With the Nepalese parliament ratifying the US engineered Millennium Challenge Corporation (MCC), Beijing smells a brewing concoction of American infringement on its growing strategic footprints in South Asia and the Himalayas, in particular. While the Himalayas witnessed US-China power tussle during the Cold War as well, it has traversed a long way from ideological rivalry through rapprochement to the new great power competition of the 21st century. 

Lately, the US is attempting to re-engage a mountainous Nepal in need for development aid and assistance, at a time when a proximate power like China looms large with its plans under the Belt and Road Initiative (BRI). At the same time, Nepal by dint of history and geography cannot ignore the overwhelming influence of India. The varying political views within Nepal and the pressures from Washington and Beijing witnessed during the negotiations leading to the ratification of the MCC is symptomatic of US-China competition trends witnessed across the larger Indo-Pacific region. How Kathmandu maximizes its gains and minimizes its losses amidst the Indo-Pacific geopolitics and geo-economics will be the test of Nepal’s diplomatic toolkit and the practice of its relative autonomy.