inicio | contacto | buscador | imprimir   
 
· Presentación
· Trayectoria
· Artículos y notas
· Newsletter (español)
· Newsletter (english)
· Radar Internacional
· Tesis de posgrado
· Programas de clase
· Sitios recomendados

Publicaciones
· Las crisis en el multilateralismo y en los acuerdos regionales
· Argentina y Brasil en
el sistema de relaciones internacionales
· Momentos y Perspectivas


  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
NATIONAL INTEREST, SOVEREIGNTY AND INTERNATIONAL RULES:
A tension that becomes more evident in times of economic crisis.

by Félix Peña
March 2012

English translation: Isabel Romero Carranza


 

During periods where turbulence and uncertainty affect the growth of the international economy, such as the one experienced in recent years, there is a dilemma that, in one way or the other, is usually present at the moment of approaching the foreign trade policies of a country. This is a dilemma that results from having to choose between what a government considers that needs to be done in the area of foreign trade and what it can actually do in accordance with the commitments undertaken with other countries, or even with what is established by its own domestic laws.

This issue arises due to the fact that, sometimes, the measures that are considered necessary -as a consequence of the interpretation of the economic or political situation or, more frequently, a combination of both- are in contradiction with the formal commitments agreed with other nations, either through international trade agreements or regional integration ones. This means that they collide with what has been established by freely agreed international rules which, in general, presuppose the reciprocity of the benefits derived from them.

In real life the difference between what is desirable and necessary and what is possible, as an eventual dilemma at the time of applying trade policies that may be considered protectionist or against the convened rules, requires to take into consideration the balance of relative power between a country and those others who may consider themselves affected by the measures applied. The more relative power a country hold, the greater the trend to view the interpretation of the international commitments in the light of its own sovereign interests.

In a growingly interdependent world, with asymmetries of relative power, multiple crossed interests and complex transnational productive networks, the majority of the countries attempt to, at least, appear as faithful adherents of the agreed rules. However they assume that, in reality and in the measure that is possible, when the circumstances call for it they will exert their national sovereign power. In such cases it will be the task of government experts to present such exercise of national sovereignty as consistent with the agreed international commitments.


In international trade relations of recent decades there has always been a tension between the countries' national interests and sovereignty, on the one hand, and the commitments entered into within the framework of international agreements, either global or regional, on the other. This is a tension that becomes still more evident when the world economy experiences periods of strong systemic crisis.

In fact, it is during those times when turbulence and uncertainty affect the growth of international economy, such as has been the case of recent years, that the dilemma tends to sharpen and, in one way or the other, is often present at the moment of approaching the foreign trade relations of a country. It is made worse precisely because every economic crisis has its bearing on the definition of winners and losers, among the countries that participate in global economic competition and among those competing within local economies as businessmen, workers or consumers.

It is a dilemma that results from having to choose between what a government considers needs to be done in the area of foreign trade and what it is supposed to do in order to comply with the commitments assumed with other countries, or even with what is prescribed by its own domestic laws.

The effect of an international crisis on the behavior of a national economy and, in particular, on the level of employment -and thus, on the morale of citizens- sometimes leads to the need to restrict the flows of imported goods. It can also lead to adopt different kinds of measures, even imaginative ones and inconspicuous in the measure that is possible, that in practice help administer the density and, eventually, the origin of the foreign trade flows.

Such need can be caused by a number of reasons, among which is the pressure from those whose interests are apparently affected, such as businessmen and workers who demand protection. It can also be induced by the difficulties to finance eventual foreign trade imbalances. These are reasons that that can lead to many controversies, whose origin can be found in different values and interests, ideologies or the requirements of the domestic political game. The latter holds especially true when an election process is under way.

The problem that usually arises is that sometimes the measures that a government considers necessary -in relation to its own interpretation of the economic or political realities or, more frequently, a combination of both- are in obvious contradiction with the formal commitments assumed with other nations, either within the sphere of international trade agreements (such as the GATT-WTO) or in that of regional integration agreements (for e.g.: Mercosur). This means that they clash with the regulations of freely agreed international legal rules and that, in general, presuppose the reciprocity of he benefits derived from them. Moreover, these are regulations that not always have the necessary flexibility required to contemplate situations of economic emergency. For example, they lack safety valves that can be easily applied under certain circumstances.

As a consequence, the respective measures can give way to complaints, for example within the framework of the mechanisms for dispute settlement, such as the ones that exist in the WTO and Mercosur, among many others. Sure enough, the time needed for the application of a dispute settlement mechanism and of its eventual results could be longer than those of the practical necessities that lead to the application of the measures that may be the object of eventual complaints.

This is the reason why sometimes governments tend to apply measures that can be considered restrictive, even knowing beforehand that they may be subjected to future claims in relation to the international legal commitments. (See, for example, the article by Sergio Leo entitled "Liçôes de una guerra cambial", in Valor Econômico of 5 March, 2012, where he points out that "in the case of trade policies, there are members of government who, in private. admit that they are ready to impose barriers on imports even if these are in contradiction with the international commitments assumed by the country, such as the WTO -this was evident in the case of the increase of the Industrialized Products Tax(IPI) applied on imported cars" -translation is ours-. Sergio Leo is a thoroughly informed journalist. What he claims in this article in the case of Brazil could probably be applicable to members of governments in other countries).

Additionally, the measures that are implemented can also give room for commercial retaliation. This is the type of scenario where "if the other protects itself, I must do likewise". This has been very frequent in the past, even in the spiraling path towards some relevant political conflicts which have ended in war.

In real life, the difference between "want or need to do" and "can do" as an eventual dilemma at the moment of implementing trade policies that may be perceived as protectionist or contrary to what was agreed, requires to consider the balance of relative power between a country and that or those who may consider themselves affected by the measures being applied.

This is something that can be measured in terms of how expendable the trade and investments flows coming from the respective countries are for both parties affected by the trade restriction. Eventually, the degree of commercial expendability may be compensated by the geopolitical value that the country which adopts the restrictive measures has for the country that considers to be affected. This would explain certain policies of "strategic patience" that are normally followed in these cases

The more relative power a country has, the greater the tendency to place the international commitments in the frame of the respective national sovereignty. Thus, the limits of an institutionalized international trading system, either global or regional, are made evident. Not long ago, in Buenos Aires, when Lula was still President he candidly illustrated this point. When referring to Mercosur -and in the improvised section of a speech full of analysis and proposals on the regional undertaking within the scenario of world economy- he held that: "If we pair together the interests of Argentina and Brazil, plus the interests of emerging countries such as ours, the interests of South America, -we have to build consensus in the measure that is possible in order to face the world together, defending the same flag- we could make a difference in international negotiations.

Obviously, without giving up each country's sovereignty and signing the bilateral agreements that each country thinks best. That we will not discuss, because the sovereignty of countries is not to be touched, the sovereign interests of each State are off limits, but we can build many things together" -translation is ours-. It was a clear message for Argentine businessmen on what, in his opinion, were the limits of the commitment between Mercosur countries: national sovereignty is out of bounds. (For the full text of the speech given at a bi-national meeting of Argentine and Brazilian businessmen on 4 August 2008, on http://www.itamaraty.gov.br/).
One of the advantages of presidential diplomacy is that it sometimes allows Heads of State to express frankly what sometimes is not explicitly acknowledged. Specifically, in a time when there are many countries that resort to restrictive measures of world trade, it is quite difficult that the competent government authorities openly recognize that, above the legal commitments assumed, for example, within the WTO or Mercosur, lie the national interests such as they are interpreted in a given moment by the corresponding government in power.

On the contrary, what would be reasonable would be that foreign trade policies and any measures that impact foreign trade are formally presented as being consistent with the ground rules agreed at the international level. Even the respective measures are designed in a way that makes it very difficult to point out any inconsistency with what has been agreed. The norm could be expressed as "its bite is worse than its bark". This is the reason why governments often have the best specialists in international trade rules among their ranks of officers and consultants.

In a growingly interdependent world, with asymmetries of relative power, multiple crossed interests and complex transnational productive networks, the majority of the countries attempt to, at least, appear as faithful adherents of the agreed rules. They presuppose that, in real life and in the measure that is possible, when circumstances call for it national sovereignty will prevail. In this case, it will be the task of government experts to present such exercise of national sovereignty as consistent with the agreed international commitments.

A recent initiative by the government of President Obama shows the growing sensitivity to the "unevenness of the playing field" in world trade. We are referring to the creation of the Interagency Trade Enforcement Center for the coordination of those agencies with competence to monitor and enforce the U.S. rights under international trade agreements, as well as domestic laws. (For the full text of the executive order and its rationale, go to http://www.whitehouse.gov/).

The creation of this agency has been interpreted as a decision aimed at taking action when those who compete against the United States do not "play by the rules". The measure comes at a time when there are clear signs of an increased tension in trade relations between China and the US, in particular due to a recent Congress bill that has a bearing on the defensive trading measures applied to products coming from China. (On this regard refer to the articles of the Bridges Weekly Trade News Digest: "White House Trade Momentum Builds as Election Heats Up", , Volume 16 - Number 8 - 29th February 2012, on http://ictsd.org/ and "US Congress Takes Aim at Beijing, Preserves Anti-Subsidy Tariffs", Volume 16 - Number 9 -7th March 2012, on http://ictsd.org/. For a version from the Chinese side on the measures adopted by the American Congress in relation to the subsidies granted in an economy that is not considered necessarily to be a market economy see "Chinese lawmakers slam U.S. trade bill as protectionism" in Xinhua News - 8th March 2012, on http://news.xinhuanet.com/. On trade defensive measures in relation with imports from China and the difficulties that show up in practice, see the article by Assis Moreira, "Países reforçam defesa comercial contra importaçâo da China", in Valor Econômico from 5 March 2012).

The fact is that the importance of two key points is becoming more increasingly evident: on the one hand, the strengthening of the institutional frameworks of international trade - global, regional and, increasingly, inter-regional- and their adaptation to the current realities; on the other hand, the introduction of flexible criteria and mechanisms that allow to take in consideration the economic emergencies of countries and, in particular, of those who could be most affected by the asymmetries in relative power and level of development. (On this regard refer to the previous editions of this Newsletter of January, May and August of 2009; June, August and October of 2011 and January of 2012 on www.felixpena.com.ar). It also shows the need to address those policies and measures that configure what has been called the "currency wars", especially within the WTO. An initial approach to this issue will take place at a WTO seminar in late March.


Recommended Reading:


  • Altman, Roger, "The Global Economic, Financial and Political Outlook for 2012", Chatham House, Transcript, London, 8 February 2012, en http://www.chathamhouse.org/.
  • Appiah, Kwame Anthony, "The Honor Code. How Moral Revolutions Happen", W.W. Norton & Company, New York-London 2010.
  • Ascúa, Rubén; Beltrán, Carlos, "Exportaciones argentinas. Una mirada desde Santa Fe", con prólogo de Bernardo Kosacoff, Universidad Nacional del Litoral, Santa Fe 2006.
  • Briceño Ruiz, José (editor), "El Mercosur y las complejidades de la integración regional", Editorial Teseo, Buenos Aires 2011.
  • Condliffe, J.B., "The Reconstruction of World Trade", George Allen & Unwin Ltd, London 1941.
  • Deutsche Post DHL, "Delivering Tomorrow. Logistics 2050. A Scenario Study", Deutsche Post Ag, Bonn, February 2012, en: http://www.dp-dhl.com/.
  • ECLAC-OECD, "Latin American Economic Outlook 2012. Transforming the State for Development", Overview, en http://www.oecd.org/.
  • European Commission, "Trade and Investment Barriers. Report 2012", COM(2012)70, Brussels 2012.
  • Ikenberry, G.John, "After Victory. Institutions, strategic restraint, and the rebuilding of order after major wars", Princeton University Press, Princeton-Oxford 2001.
  • IRI, "Relaciones Internacionales - 1991-20 años de la Revista-2011", Instituto de Relaciones Internacionales, Universidad Nacional de La Plata, Año 20, N° 41, La Plata, Junio-Diciembre 2011.
  • Kempt, Geoffrey, "The East Moves West. India, China, and Asia's Growing Presence in the Middle East", Brookings Institution Press, Washington D.C. 2010.
  • Lamy, Pascal, "Global governance requires localising global issues", speech at the Oxford Martin School, Oxford University, March 8, 2012: http://www.wto.org/.
  • Laplantine, Francois; Alexis Nous, "Mestizajes. De Arcimboldo a zombie", Fondo de Cultura Económica, Buenos Aires 2007.
  • Lindner, Evelin, "Making Enemies. Humiliation and International Conflicts", Praeger Security International, Westport, Connecticut-London, 2006.
  • Lindner, Evelin, "Emotion and Conflict. How Human Rights Can Dignify Emotion and Help Us Wage Good Conflict", Praeger, Westport, Connecticut-London 2009.
  • Naïr, Sami, "La Europa mestiza. Inmigración, ciudadanía, codesarrollo", Galaxia Gutenberg, Barcelona 2010.
  • Pennetta, Piero, "Integración e integraciones. Europa, América Latina y el Caribe", Universitá Degli Studi di Salerno-Universidad Católica de Colombia-Editorial Planeta, Bogotá 2011.
  • Peña, Félix, "Adaptación a las nuevas realidades: un desafío para las instituciones globales y regionales del comercio internacional", Revista del IRI, N° 41, La Plata, Junio-Diciembre 2011, páginas 149 a 157.
  • Pomfret, Richard, "Lecture Notes on International Trade and Policy", World Scientific, Singapore 2008.
  • The Evian Group, "Equitable and Sustainable Globalisation. Principles for Global Governance", Evian Group Taskforce Meeting, Summary Report, IMD, Lausanne, February 09, 2012, en http://www.imd.org/.
  • UN-Habitat, "The Challenges of Slums. Global Report on Human Settlements 2003", United Nations Settlements Programme, Nairobi 2003, en: http://www.unhabitat.org/.
  • Velazco, Julio Cesar y otros, "La crisis mundial vista desde Bolivia. Lecturas Económica y Política (2008-2011), Fundaciones Vicente Pazos Kanki, Konrad Adenauer y Milenio, La Paz, Diciembre 2011, en http://www.ibce.org.bo/.

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


Subscribe to our newsletter to receive a monthly e-mail with the
latest articles published on this site.


 

Regresar a la página anterior | Top de la página | Imprimir artículo

 
Diseño y producción: Rodrigo Silvosa