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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
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THE VALUE OF REGIONALISM IN A NEW GLOBAL ARCHITECTURE
Reflections on the relations between South American countries and the European Union

by Félix Peña
October 2009

English translation: Isabel Romero Carranza


 

Is the so-called Group of Twenty (G20) the institutional space that will lead to collective answers for global problems that have already become evident such as climatic change and its relation to world trade?

Still standing, after the Pittsburg Summit, is the issue of knowing which are the countries that, if acting together, can provide a sufficient critical mass of power to generate agreements that nurture a new world order to replace the one that has already collapsed. The number to be appended to the letter G remains an unanswered question, in order to create an international political space that enables to translate collective decisions into effective courses of action. Some countries which currently form part of the G20 have sufficient relative power by themselves. Others may increase their presence in the measure that they are able to reflect the interests of their corresponding regional spaces.

In any case, it would seem timely to reflect on the role of organized regions in the creation of an effective global architecture - in terms of being able to contribute collective solutions to problems that are global in nature and that, due to their significance, may even compromise world order or trigger tendencies towards international anarchy - such as is the aim of the G20.

It is within this perspective that we should view the relation between two regions which, if they could harmonize their positions, could contribute a great deal in terms of relative power and thus in their ability to cooperate towards en effective new world order. The two regions we are referring to will meet again at the upcoming EU-LAC Summit, to be held in Madrid in April 2010.

Several recent events enable to thread together a path towards a future scheme of bi-regional relations between the EU and the LAC - including Mercosur - that is functional to the strategic idea of strengthening regionalism as a means of ensuring a reasonable set of rules for global governance


President Barak Obama clearly stated the value that the fact that the different countries assume their global and regional responsibilities has for the US in his recent UN General Assembly speech of September 23. In its October 11 edition, the Madrid newspaper El País summed up perfectly his main messages by highlighting the following paragraphs: "Those who used to chastise America for acting alone in the world cannot now stand by and wait for America to solve the world's problems alone. We have sought - in word and deed - a new era of engagement with the world. Now is the time for all of us to take our share of responsibility for a global response to global
challenges. (…) No one nation can or should try to dominate other nation. No world order that elevates one nation or group of people over another will succeed. The traditional divisions between nations of the south and the north make no sense..."

In the same manner, years ago, another US President, John F.Kennedy, in his speech before the Irish Parliament during his 1963 visit to Dublin, pointed out that "The problems of the world cannot possibly be solved by skeptics or cynics, whose horizons are limited by the obvious realities. We need men who can dream of things that never were, and ask why not."

The fact that Barak Obama merges in practice the approach presented in his speech together with a similar attitude to that expressed by Kennedy may possibly explain the decision of granting him the Noble Peace Prize. As some analysts have observed, with a mixture of critical spirit and positive vision, such decision is more a prize for the hope of peace than for peace as an actual result (see on this respect the commentary by Gideon Rachman "A triumph of hope over achievement" in the Financial Times of October 9, at www.ft.com). It is precisely in the attitude of hope of a ruler and in the soundness of the abovementioned messages where one can find the common thread for the difficult task of achieving the guidelines for a sensible global governance, that enables us to move along the current process of redistribution of world power in relative peace.

This poses the following question: is the so-called G20 the institutional space that will lead towards collective answers for global problems that have already become evident, such as climate change and its relation to world trade? (The latter was the central issue at the Multi-Stakeholder Dialogu,e organized at the IMD in Lausanne by the Evian Group and the Friedrich Ebert Foundation, on September 24-26). After the Pittsburgh Summit of September 26, there are still doubts on this respect (see the complete text of the Summit's Final Declaration at http://www.g20.org/). The fact that no concrete steps have been taken to conclude the Doha Round (on the current state of negotiations within the WTO and the results of Pittsburgh, see the Bridge Weekly Review of the International Centre for Trade and Sustainable Development, volume 13, number 33 of September 30 at http://www.ictsd.com and the information provided on the WTO webpage http://www.wto.org) or to guide the next Copenhagen Conference on climate change (see the information on December's conference at http://es.cop15.dk/), contribute to feed such doubts.

Still standing after this last Summit is the issue of knowing which are the countries that, if acting together, can provide a sufficient critical mass of power to generate agreements that nurture a new world order to replace the one that has already collapsed. The number to be appended to the letter G remains an unanswered question, so as to create an international political space that enables to translate collective decisions into effective courses of action.

One of the limitations of the current G20 may be precisely the heterogeneity of the participating countries in terms of real power. Some of the countries reflect their own endowment of relative power, such the case of the US and China, maybe even Russia and India. Others may rightfully speak on behalf of their own region with the certainty that it has sufficient relative power. Beyond the differences of interests and visions that exist among them, this is the case of the members of the European Union (EU) - such as Germany, France and the United Kingdom- which is also represented by the President of the European Commission. Other countries, even when they are relevant in terms of relative power (at times more potential than actual), can't necessarily uphold that they represent the opinion that prevails in their corresponding region. Such is the case, for example, of Argentina and Brazil, but also of Indonesia and South Africa.

Such situation leads to reflect on the role of organized regions in the creation of an effective global architecture - in terms of being able to contribute collective solutions to problems that are global in nature and that, due to their significance, may even compromise world order or trigger tendencies towards international anarchy -such as is the aim of the G20. .

It is within this perspective that we should view the relation between two regions which, if they eventually harmonized positions, could contribute a great deal in terms of relative power - at least in some relevant issues of the global agenda- and thus in their ability to cooperate towards en effective new world order. In fact, its is in connection to this possibility that we need to regard the relation between Latin America and the Caribbean (LAC) - and maybe more specifically South America - and the European Union (EU). Both regions will meet again next April at the upcoming Madrid Summit. Will a strategic outlook that is attuned to the challenges faced by both regions in relation to the relevant issues of the global agenda, and not just the bilateral relation, result from this meeting? There are still several months left to come up with a credible answer for this question.

Three different facts would need to be highlighted in the search of an answer to this question. The first of them is that the objectives pursued by ten years of strategic association are far from being achieved (on this respect see the June edition of this Newsletter). The network of bi-regional agreements that contribute at the same time to the regional integration of the LAC and to the development of an effective multilateralism has yet to be achieved. A key link of such network, the agreement between EU and Mercosur, still cannot get past the realm of good intentions, which are periodically renewed - they will meet again in Lisbon from November 4 to November 6 - apparently due to the fact that the Doha Round has not been concluded (on this subject see the articles by Raúl Roccatagliata, "A consensus to continue growing" published in Clarín newspaper of October 11 and also "Dialogue between Mercosur and EU", published in the Economy Section of La Nación newspaper of October 11, as well as the video of our September 21 presentation at the Institute of International and European Affairs in Dublin, http://www.iiea.com:80/events/eu-mercosur-prospects). As was previously mentioned, the conclusion of the Doha Round is still a pending issue and the forecasts are not necessarily optimistic ones, even after the informal ministerial meeting of New Delhi and the Pittsburgh Summit.

The European Commission document on the strategy with regards to the LAC, presented on September 30, opens a window to a renewed vision of the bi-regional relations. This is the second recent event to take into account. It is interesting to note that the Commission's proposal seems to move away from the negotiation of bi-regional preferential agreements as the main instrument of the relation with LAC. In fact, it places the stress on new issues of the bi-regional agenda which not necessarily require agreements that are compatible with article XXIV of the GATT, that is to say OMC-plus (see the full text of the European Commission communication to the European Parliament and Council under the title "The European Union and Latin America: Global Players in Partnership" at http://ec.europa.eu/).

The third recent fact is the EU-Brazil Summit, held at the highest level in Stockholm on October 6, within the frame of the strategic alliance devised by the two parties (see the text of the final Declaration under note nº 503 of October 5 on the Itamaraty webpage, http://www.mre.gov.br). Simultaneously, a third Brazil-EU business meeting was held in Stockholm and its agenda can be found at http://www.medefinternational.fr/. A final declaration was approved as a result of this business meeting under the title "Building cooperation for the post-crisis world" (see http://www.cni.org.br/).

In practice, both meetings seem to have favored the European relation with Brazil vis-à-vis what was proposed by the 1995 Treaty of Madrid as a space for cooperation between Mercosur and the EU which, even when still valid and with an extensive agenda, has not been developed until the present day.

The following paragraph of the business declaration is worth mentioning since it denotes the intention of moving forward on a bilateral path on issues that supposedly belonged in the bi-regional arena: "Sectoral dialogues under the Strategic Partnership need now to move forward and begin to deliver trade and investment opportunities for companies: The EU Brazil Strategic Partnership is an important milestone in our economic relations, recognizing the pre-eminent role of the bilateral relationship in Latin America and acknowledging the shared economic objectives for both parties. EU and Brazilian companies note with approval that steps have been taken toward the establishment of regulatory dialogues on important industrial sectors (steel, non-ferrous metals and minerals; forest products; and textiles and clothing). Industry is ready to work with the Brazilian government and the European Commission to tackle the problems of their sectors. Companies now call for a recommitment to taking action on both sides. In time other dialogues can be envisaged, particularly on intellectual property rights, customs policy and regulations on climate change affecting trade in goods and services".

One of the assumptions of this strategic partnership is Brazil's potential for regional leadership, especially in the South American space. One consideration should be made on this respect. It is a fact that Brazil -undoubtedly a relevant country- has achieved regional and global prominence and a certain prestige based mostly on its economic dimension - greatly improved by an unquestionable success of its economic policies during the last ten years and by its recent discovery of an enormous wealth of oil reserves - and by a growing institutional quality whose origins can be traced back to what was achieved during the governments of presidents Fernando Henrique Cardoso and Luiz Inácio Lula da Silva- (on this issue refer to the notes included in the Business supplement of the Madrid newspaper El País of October 11 under the title "Brazil jumps. The South American country rises as an economic power while facing the challenge of eliminating poverty"). With all the positive aspects that this fact entails, even for Argentina and the South American region, this does not necessarily imply that, as a consequence of its relative power and its growing prestige, Brazil can legitimately claim that it speaks on behalf of South America, nor that it can wield an undisputed regional leadership. A recent article by Julio María Sanguinetti, published in La Nación newspaper on October 2 under the eloquent title "Brasil and triumphalism", rightfully warns about the risks of a "triumphalism" that leads to assume such leadership. Taking for granted the future quality of Brazil's relations with its South American partners, even with Argentina, is not advisable because it could lead to serious errors of the strategic type (on the relations between Argentina and Brazil see the analysis by Roberto Bouzas in his article "Argentina, Brazil and the challenge of finding the lost path", published in the Enfoques section of La Nación newspaper of October 11).

Added together, the three facts that were mentioned previously enable to thread together the paths for a future scheme of bi-regional relations between LAC and the EU - including Mercosur - that is functional to the strategic idea of strengthening regionalism as a means of ensuring reasonable guidelines for global governance. This should start by acknowledging that regional governance, particularly in the South American space, will require joint leaderships that can precisely be threaded together - among other things - by the leading role that Brazil is in condition to play. At the same time, such acknowledgement implies the strengthening of the institutionalization of regional cooperation based on a network of common rules that are in effect applied, particularly in the realm of UNASUR and Mercosur. This institutionalization may be promoted by the actions developed by the EU within the framework of its new strategic approach and by the joint action of Mercosur members and of other relevant countries of the region, especially Chile. Within such perspective, it would be convenient that action is supported by the strategic partnership EU-Brazil in order to actively resume the relations with Mercosur by making use of the full potential of the EU-Mercosur framework agreement, signed in Madrid in 1995, without injury to the attempts to conclude the pending preferential commercial negotiation.

If meetings such as the recent Stockholm one contributed to this, the South American region would be in better condition to assume its responsibilities, in line with what was called for by President Obama in his aforementioned speech at the United Nations. In this sense, the strategic partnership between the EU and Brazil might have a positive irradiation effect on the advancement not only of the bi-regional alliance but also of the very same South American regional governance.


Recommended Readings of Recent Publication:

  • Aikins, Kingsley; Sands, Anita; White, Nicola, "The Global Irish Making a Difference Together. A comparative review of international diaspora strategies", The Ireland Funds, Dublin 2009, at http://www.irlfunds.org.
  • Amorín, Carlos, "Inserción internacional de Uruguay en una época de crisis", Consejo Uruguayo para las Relaciones Internacionales, Análisis del CURI nº 09/09, September 16, 2009, at http://www.curi.org.uy.
  • Campbell, Malcolm, "Ireland's New Worlds. Immigrants, Politics, and Society in the United States and Australia, 1815-1922", The University of Wisconsin Press, Madison Wisconsin 2008.
  • Casanova, Lourdes, "Global Latinas. Latin America's emerging multinationals", INSEAD Business Press - Palgrave Macmillan, 2009.
  • CELARE, "10 Años de la Asociación Estratégica ALC-UE", EUR-LAT Revista de Relaciones Eurolatinoamericanas del Centro Latinoamericano para las Relaciones con Europa, nº 80 - Year 16 - Vol.3 - Santiago de Chile, October 2009.
  • Coogan, Tim Pat, "Wherever Green is Worn. The Story of the Irish Diaspora", Arrow Books, London 2002.
  • Cordón, Carlos; Vollmann, Thomas E., "The Power of Two. How smart companies create win-win customer-supplier partnerships that outperform the competition", Palgrave MacMillan, New York 2009.
  • Enterprise Ireland, "Global Irish Economic Forum. Enterprise Ireland Briefing", Dublin 2009, at http://www.enterprise-ireland.com.
  • Estevadeordal, Antoni; Suominen, Kati; Teh, Robert (editors), "Regional Rules in the Global Trading System", IDB-WTO, Cambridge University Press, New York 2009.
  • Evenett, Simon J. (ed.), "Broken Promises: A G-20 Summit Report by Global Trade Alert", Centre for Economic Policy Research (CEPR), London 2009.
  • Evenett, Simon, "What can be learned from crisis-era protectionism? An initial assessment", University of St.Gallen and CEPR, 30 September 2009, forthcoming in Business & Politics, October 2009.
  • Government of Ireland, "Building Ireland's Smart Economy. A Framework for Sustainable Economic Renewal", Department of the Taoiseach, Dublin 2008, at http://www.taoiseach.gov.ie.
  • Gray, Peter, "The Irish Famine", Thames & Hudson, London 2007.
  • Grevi, Giovanni, "The interpolar world: a new scenario", European Union Institute for Security Studies, Occasional Paper, number 79, June 2009, at www.iss.europa.eu.
  • Henry, William, "Coffin Ship. The Wreck of the Brig St.John", Mercier Press, Dublin 2009.
  • Michel, Serge; Beuret, Michel, "La Chinafrique. Pékin à la conquête du continent noir", Hachette Littératures, Paris 2009.
  • Murphy, David; Devlin, Martina, "Banksters. How a Powerful Elite Squandered Ireland's Wealth", Hachette Books Ireland, Dublin 2009.
  • Murphy, Ignatius, "Before the Famine Struck. Life in West Clare 1834-1845", Irish Academic Press, Dublin 2008.
  • O'Donnell, Rúan, "The Irish Famine", Pocket History, The O'Brien Press, Dublin 2008.
  • Ó Tuathaigh, Gearóid, "Ireland Before the Famine, 1798-1848", Gill & Macmillan, Dublin 2007.
  • Póirtéir, Cathal, "Famine Echoes", RTÊ Radio 1, Gill & Macmillan, Dublin 2008.
  • Reynolds, David, "Summits. Six Meetings that Shaped the Twentieth Century", Penguin Books, London 2007.
  • Saner, Raymond; Michalun M.Varinia (editors), "Negotiations Between State Actors and Non-State Actors: Case Analyses from Different Parts of the World", Republic of Letters Publishing, Dordrecht 2009.
  • Schropp, Simon A.B., "Trade Policy Flexibility and Enforcement in the WTO. A Law and Economics Analysis", Cambridge University Press, New York 2009.
  • Tóibin, Colm; Ferriter, Diarmaid, "The Irish Famine. A Documentary", Profile Books in association with London Review of Books, London 2004.
  • Valdez, Gabriel, "Sueños y memorias", Taurus, Aguilar Chilena de Ediciones, Santiago de Chile 2009.
  • Wihbey, Paul Michael, "The Rise of the New Oil Order", Academy & Finance, Geneva 2009.

Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information.

http://www.felixpena.com.ar | info@felixpena.com.ar


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