European Strategy towards Asian Countries - Essay Example

European Strategy towards Asian Countries Introduction Asia is one of the rapidly developing regions in the world at present. Even though huge population was a big problem for the Asian countries earlier, most of the Asian countries succeeded in utilizing their huge population size in a productive manner so that Americans and Europeans are currently looking for Asia to cater their manpower needs. The recent global recession underlined the economic strength of Asian countries. While most of the American and European countries struggled to survive, Asian countries escaped from the severe onslaughts of recent financial crisis. Political instability and ethnic problems were earlier forced the European countries from establishing strong economic and trade tie ups with the Asian countries. However, globalization has changed the whole scenario drastically. Hoskisson, et al (2000) has classified emerging economies into two groups; developing countries in Asia, Latin America, Africa, and the Middle East and transition economies in the former Soviet Union and China (Hoskisson, et al, 2000). Currently, most of the European countries and companies are competing each other to establish or strengthen their cooperation with the Asian countries and companies. European market became saturated for many of the big organizations which forced them to look for options in the emerging markets like India, China, and Middle East etc. Europe is blessed with lot of developed countries such as Britain, France Germany etc. Traditionally or historically, Europe has had close ties with Asian countries during the ancient periods. However, the current relationships are much more meaningful than the relationships during the ancient periods. Europeans tried to exploit the resources of the weaker Asian regions earlier whereas at present they are trying to establish relationships with the Asian region for mutual benefits. This paper briefly analyses the European strategy towards Asian countries especially towards, India, China and Middle East. Europe’s relation with China and India Even though EU has established relations with China in 1975 itself, these relations never prospered into a bigger canvas because of the political differences between China and European countries. Earlier, most of the Eastern European countries were under communist regime which helped China and Europe to establish relationships. However, the destruction of communism from the Eastern European countries brought almost the entire Europe under the democratic platform. This radical transformation of Europe into a democratic region affected their relations with communist China. However, China succeeded in giving more liberal look to their approaches under the leadership of Deng in the 80’s and 90’s and they are currently the most rapidly developing economies in the world. China is now a global power: decisions taken in Beijing are central to virtually all the EU’s pressing global concerns, whether climate change, nuclear proliferation, or rebuilding economic stability. China’s tightly controlled economic and industrial policies strongly affect the EU’s economic wellbeing. China’s policies in Africa are transforming parts of a neighbouring continent whose development is important to Europe. Yet the EU continues to treat China as the emerging power it used to be, rather than the global force it has become (A power audit of EU-China relations, 2009, p.1) China is one country which causing threats not only to the Americans, but also to the Europeans. It is difficult for Europe to isolate China, only because of political reasons. America, the strong critic of China, has already established good business relations with China. The strategic business relation with China is necessary not only for America, but also for Europe. Because of the above awareness, EU resumed its efforts to strengthen their relations with China during the latter part of 90’s. Hardly a week before, the “European Union officially launched a EUR 25 million trade and investment technical assistance program to the People’s Republic of China expected to make goods and services traded better quality, safer and greener” (Ceremonial launch of EU-China trade project (25/3/2011), 2011). Many people are of the view that the EU-China Trade project will boost the trade tie ups between these two regions immensely. Apart from trade tie ups, EU and China are expanding their cooperation in other areas also at present. The official launch of the EU blogs "EU in China" has taken place recently in order to; introduce Chinese readers to European lifestyle issues, including food and drink, art and culture, fashion and technology, sport and travel, study and environment (EU Delegation launches EU in China blog for Chinese netizens (29/03/2011), 2011) As per the article Global Europe meets India Inc (2006), EU is India’s largest trading partner, accounting for a full one-fifth of India’s exports (Global Europe meets India Inc, 2006). India’s prominence in global political and economical arena is growing day by day. Many people believe that India may become a superpower in the near future itself. The current economic growth rate in India is one among the bests in the world. At the4 same time India is facing some problems in the energy sector in which the European countries can contribute a lot. Earlier, nuclear embargo was put on India because of India’s earlier nuclear experiments. However, it has been removed now and the European nuclear powers or countries like France, Britain and Germany have many opportunities in India. India would increase nuclear energy generation from 4,000 MW at present to 20,000 MW by 2020 according to Meera Shankar, the Indian Ambassador to the United States (Indo-US nuclear deal to boost economic ties, 2010). France and Britain already signed agreements with India in order to strengthen their cooperation in the energy sector. Gupta, (n. d) has mentioned that the growth in Indian manufacturing industry (textile, food products, real estate, consumer goods, automobile industry, biotechnology, entertainment, handicrafts etc) and Service industry (telecom, business process outsourcing, information technology, medical science/hospitals, hospitality industry/tourism, Engineering, securities, transport etc), in order to establish India’s credentials as an emerging economy (Gupta, n. d, p.3). As part of the globalization strategies, India has opened their economies very much and it is easy for the European companies to establish businesses in India. For example, British telecommunication giant Vodafone has entered the India market recently and they are currently one of the prominent telecommunication companies in India. BusinessWeek (Aug 22, 2005) has reported that Motorola, Hewlett-Packard, Cisco Systems and Google like big companies now rely on their Indian teams to devise software platforms and dazzling multimedia features for next-generation devices (BusinessWeek, 2005). India is a country which consists of immense educated talents whereas Europe is a region which is struggling to find enough manpower resources for executing their works. The tie up with India will definitely help Europe to sort out their manpower shortage, apart from increasing the trade ties with India. The integration of European countries into European Union (EU) helped European countries to establish tie up with the Asian countries under a common platform. “Indian companies have invested more than $ 10 billion in Europe since 2000. The bid for Arcelor and the subsequent acquisition of Arcelor by Mittal steel is cited as a better example for the involvement and investments of Indian companies in Europe” (Global Europe meets India Inc., 2006). Many of the big India companies are currently expanding their business to European region. These companies make use of merger and acquisition like business strategies to expand their wings to European territories. Apart from Mittal, India’s prestigious automobile manufacturer, TATA group recently acquired Britain’s prestigious automobile manufacturers; Jaguar and Land Rover. Foreign direct investments are necessary for the development of European region and the entry of Indian companies in European market and that of the European countries in Indian market are clear indications of how well the mutual relationships between India and European region are developing. The region wise India Export Import Trade Statistics (2009) has shown that India’s export to Europe has recorded around $ 22.88 million growth in 2007 whereas the import from Europe has gone up by a margin of $ 20.44 million during the same period (India Export Import Trade Statistics - Region Wise, 2009) (See appendices 1 and 2 for more details) “An MOU on the Indo-EC Economic cross-cultural program, has been signed recently between EC and India” (India's Foreign Policy: Western Europe, n. d). Apart from trade and economical cooperation, India and Europe are keener in increasing their social and cultural tie ups. Most of the European countries are currently under the democratic regime and India is one of the largest democracies in the world. The above fact helps both India and Europe to interact more freely and also to respond to international problems in one voice. Education, science and technology are some of the other areas in which both India and Europe extended their cooperation. “EUMIND, a platform for networking between schools in India and Europe to promote interaction and understanding between students and teachers, has started in 2008” (EUmind, 2010). Moreover, “INDIGO is a consortium of European and Indian Science and Technology organizations for promoting research cooperation between Europe and India” (Science brings Europe and India closer through New INDIGO, 2009). In short, both Europe and India are currently extending their tie ups to much broader areas. Europe and Middle East Historically, Middle East is good trading partners of Europe. Many of the gulf countries are engaged in more trade activities with the Europe than with any other countries or regions in the world. Even though Middle East is dominated by Muslim population and Europe is dominated by Christians, religious beliefs or considerations never came as a hurdle or barrier in between the relationships of Europe with Middle East. In fact America’s biased foreign policies motivated the Middle Eastern countries further to strengthen their relationships with EU. EU exploited this situation very much to their advantage. Thus most of the Middle Eastern countries took the EU as their best friend in trade activities. Relations between the European Union and the GCC date back to the mid-1980s. In 1989, the two organizations signed a cooperation agreement, which included a wide range of sectors: agriculture, fisheries, industry, energy, sciences, technology, investment, environment, and trade. Over the years, dialogue between the EU and GCC has been characterized by ups and downs and has mainly focused on trade cooperation. During the 1990s, trade flows between the two blocks were actually very low, and only since 2001 they have began to intensify, thanks to the increase in oil prices rather than to the intensification of trade volumes (Talbot, p.13) Lot of up and downs were witnessed in the relationships between GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates) and EU. “All these six GCC countries currently benefit from preferential access to the EU market under the EU's Generalized System of Preferences (GSP)”(Gulf region 2010). Gulf countries have only oil resources and their major revenue is from oil resources. They do not have enough technology or infrastructure facilities to exploit their oil resources. In fact majority of the Middle Eastern countries rely on European technologies in oil drilling process. Europe provides the machinery and transport materials like power generation plants, railway locomotives, aircraft, electrical machinery and mechanical appliances to Gulf countries. In response, gulf countries provide oil fuels to Europe. More than 70% of oil imports of Europe are from Gulf countries. Since 2003, EU policymakers have been sharing their experience of economic unification with policymakers from the Gulf; topics that have included were common trade policy, fiscal aspects of a single currency and moving from customs union to a single market. EU exports of goods to the Gulf region in 2009 was €57,8 billion whereas EU imports of goods from the Gulf region in 2009was €21,8 billion. Moreover EU trade with the Gulf Cooperation Council (GCC) has been increasing since the 1980s and in 2009 it amounts to €79.7 billion (Gulf region, 2010) The importance of gulf countries in the development of European region is well recognized by EU. None of the EU countries have enough oil resources to meet their energy requirements whereas none of the GCC countries or Middle Eastern countries has enough technological advancement to develop properly. Thus the complementary relationships between these two regions are essential for the growth of both EU and Middle East. EU’s close relationship with America, quiet often creates problems to the relationship between EU and Middle East. During the Gulf war, many of the EU members forced to take part in that because of their strong relations with America. Gulf war was unacceptable for most of the Middle Eastern countries and they witnessed the involvement of EU in this war with lot of concerns. The difference in stands with respect to Gulf war has created lot of problems in the trade developments between EU and GCC countries. However after the war, EU and GCC were able to settle their issues and disputes in an amicable manner so that the mutual trade activities have been restarted. “A free trade agreement would enable economic operators on both sides to develop cross-investments, pursue vertical integration and conclude industrial alliances” (Improving relations between the EU and the countries of the Gulf Cooperation Council, 2007) One of the major obstacles in strengthening the mutual relationships between EU and Middle East is the differences in political ideologies. Most of the EU countries are ruled by democratic administrations whereas the Middle Easter countries are ruled by Islamic dictators. Recently Egyptian dictator Hosni Mubarak forced to step down because of public agitation. Libya, Bahrain, Syria etc like Middle Eastern countries are facing public agitation at present against their administration. The contrasting ideologies with respect to human right issues caused lot of problems in the trade ties between EU and GCC. Gulf countries are generally believed to be fertile soil for the terrorists. Bin Laden was actually born and brought up in Saudi Arabia. UAE and Saudi Arabia are believed to be the prominent shelter places for terrorists because of these administration’s soft approaches towards terrorism. In short, religious fundamentalism and differences in political ideologies are the major obstacles in front of EU and Gulf countries in strengthening their mutual relationships. A free trade agreement between EU and Middle Eastern countries would have strengthened their relationships. However, both the parties are accusing each other for their failure in signing a free trade agreement. GCC countries feel that they have given lot of concessions already and sacrificed many things to sign a free trade agreement with Europe. “With no clear end in sight, the GCC decided in the latter part of 2008 to suspend the trade talks and the FTA negotiations are now halted” (Gulf research meeting, 2010). The failure of the free trade negotiations affected other areas of cooperation also. Oil price fluctuations are affecting EU more than any other regions in the world. GCC countries are prominent members of OPEC and they have important roles in the policy making of OPEC. Free Trade Agreement between EU and GCC would have given EU more roles in the policy matters of OPEC. Abdul Rahim Hassan Naqi, Secretary-General of the Dammam-based Federation of GCC Chambers of Commerce and Industry (FGCCI), said that the “GCC countries have invested nearly $542 billion (Dh1.98 trillion) in the EU during 2002-2006, while the EU’s investments in the Gulf are estimated at only $13bn” (Kawach) References 1. A power audit of EU-China relations, (2009) [Online] Available at: http://ecfr.3cdn.net/532cd91d0b5c9699ad_ozm6b9bz4.pdf [Accessed on 01 April 2011] 2. BusinessWeek, (Aug 22, 2005), CHINA AND INDIA -- THE CHALLENGE, [Online] Available at: ttp://www.businessweek.com/magazine/content/05_34/b3948401.htm [Accessed on 01 April 2011] 3. Ceremonial launch of EU-China trade project (25/3/2011), (2011) [Online] Available at: http://eeas.europa.eu/delegations/china/press_corner/all_news/news/2011/20110324_01_en.htm[Accessed on 01 April 2011] 4. EUmind, (2010), Educational and ecological initiatives between Europe and India, [Online] Available at:http://www.eumind.net/ [Accessed on 01 April 2011] 5. EU Delegation launches EU in China blog for Chinese netizens (29/03/2011) (2011). [Online] Available at: http://eeas.europa.eu/delegations/china/press_corner/all_news/news/2011/20110329_01_en.htm [Accessed on 01 April 2011] 6. Gupta Aditi, (n. d), Emerging Economies: India, [Online] Available at: http://www.docstoc.com/docs/2265263/emerging-economies-india [Accessed on 01 April 2011] 7. Global Europe meets India Inc.(2006), [Online] Available at: http://trade.ec.europa.eu/doclib/docs/2006/october/tradoc_130601.pdf [Accessed on 01 April 2011] 8. Gulf region. (2010). [Online] Available at: http://ec.europa.eu/trade/creating- opportunities/bilateral-relations/regions/gulf-region/ [Accessed on 01 April 2011] 9. Gulf Research Meeting.” 2010. [Online] Available at: http://grcevent.net/cambridge/index.php?page=workshop&wname=2[Accessed on 01 April 2011] 1. Indo-US nuclear deal to boost economic ties’, (2010), [Online] Available at:http://www.zeenews.com/news605860.html [Accessed on 01 April 2011] 2. India Export Import Trade Statistics - Region Wise, (2009), [Online] Available at: http://www.infodriveindia.com/Export-Import/Trade-Statistics/Region-Wise.aspx [Accessed on 01 April 2011] 3. India's Foreign Policy: Western Europe, (n. d), [Online] Available at: http://www.indianembassy.org/policy/Foreign_Policy/weuro.htm [Accessed on 01 April 2011] 4. Improving relations between the EU and the countries of the Gulf Cooperation Council.”2007. [Online] Available at: http://europa.eu/legislation_summaries/external_relations/relations_with_third_countries/middle_east/r16002_en.htm[Accessed on 01 April 2011] 5. Kawach, N. (2009) EU urged to sign free trade deal with Gulf states Emirates Business (Tuesday, September 29, 2009). [Online] Available at: http://www.bilaterals.org/spip.php?article15986 [Accessed on 01 April 2011] 6. Talbot, V. (2010). GCC ECONOMIC PRESENCE IN THE MEDITERRANEAN AND THE OUTLOOK FOR EU-GCC COOPERATION [Online] Available at: http://www.iai.it/pdf/mediterraneo/GMF-IAI/Mediterranean-paper_09.pdf [Accessed on 01 April 2011] Appendix 1 Indian Export to Europe Apr 2005 - Feb 2006 Apr 2006 - Feb 2007 Export Value of Goods Export Values of Goods %Growth % Growth % Share % Share Values (INR in Crores) Values (US$ in Millions Values (INR in Crores) Values (US$ in Millions  Values (INR in Crores) Values (US$ in Millions) Values (INR in Crores) Values (US$ in Millions) India Export To Europe 98,754.23 22,315.02 116,780.74 25,721.55 18.25 15.27 22.88 22.88 EU Countries (25) 91,708.13 20,722.85 107,899.80 23,765.48 17.66 14.68 21.14 21.14 (India Export Import Trade Statistics - Region Wise, 2009) Appendix 2 Indian Import from Europe Apr 2005 - Feb 2006 Apr 2006 - Feb 2007 Import Value of Goods Import Values of Goods %Growth % Growth % Share % Share Values (INR in Crores) Values (US$ in Millions Values (INR in Crores) Values (US$ in Millions  Values (INR in Crores) Values (US$ in Millions) Values (INR in Crores) Values (US$ in Millions) India Import from Europe 121,473.57 27,448.80 150,659.64 33,183.56 24.03 20.89 20.44 20.44 EU Countries (25) 92,466.48 20,894.21 108,846.32 23,973.96 17.71 14.74 14.77 14.77 (India Export Import Trade Statistics - Region Wise, 2009) Read More