| DIVERSITY, DINAMISM, COMPLEXITY:
Three key features of the international environment of countries and businesses
by Félix Peña
English translation: Isabel Romero Carranza
In at least three levels it would seem advisable for
a country and its businesses to draw operational conclusions on how to
navigate a world marked by multiple diversities, dynamics of continuous
change and notorious complexities.
The first level is that of the development of synergies
between the government, business and academic sectors (national and local)
to generate a flow of diagnostics on the evolution of the international
context in view of their common interests and of each sector, activity
or specific product. Helping to understand the events and trends in the
external environment of a country and its businesses would enable to maximize
the installed capacity of the academic sector, establishing for that purpose
close cooperation modalities with the public, productive and trade sectors.
A second level is that of joint action strategies
with other countries or companies within the region or at a global scale.
This may require innovative and sometimes unorthodox approaches -taking
advantage for example of the embedded flexibilities within the existing
global and regional institutional frameworks, as well as in their respective
ground rules - both to address international trade negotiations and to
ensure the effective development of productive integration schemes through
multiple variants of transnational value chains.
The third level is that of the national strategy for
international economic integration to help articulate the interests of
the social sectors and generate agreements with other nations and regions,
which are both flexible and predictable and have an actual impact on productive
investments, and on the ability to project to the world what a country
has to offer in terms of goods and services that are attractive for other
International trade negotiations among a group of countries that, due
to their economic dimension, are relevant players in global economic competition
if concluded successfully -and this is not always the case as demonstrated
by the experience of the FTAA and perhaps also the attempted strategic
partnership between the EU and Mercosur- can have a strong impact on the
design of the map of international trade and perhaps also in the map of
This is the reason why they need to be followed closely by other countries
and companies with active integration in world markets, even while not
directly involved in a specific negotiation. This is so because it is
a known fact that the design of the ground rules of the global trade of
tomorrow defines who the winners and losers are, with all the political
implications this entails when competing for access or the presence in
those markets that are the most attractive. And since it is also a fact
that in an era of proliferating global value chains the trade of tomorrow
begins with the productive investments of today, the effects of the international
trade negotiations in progress on a country and its businesses, even when
not participating directly in them, can be noticed in the very short term.
As was noted in the March edition of this Newsletter, the above considerations
become ever more relevant today due to two concurrent facts: on the one
hand, the relative stagnation that dominates the front of multilateral
trade negotiations within the WTO and, on the other hand, the size of
the economies involved in the current negotiations of mega interregional
preferential trade agreements, such as the Trans-Pacific Partnership (TPP)
and the Transatlantic Trade and Investment Partnership (TATIP), or agreements
that are being promoted by the countries of the Asia-Pacific region -the
Regional Comprehensive Economic Partnership (RECEP)- and the EU itself,
especially with India, Canada and Japan. Both events evoke conflicting
diagnoses. In some cases these focus on the need to preserve and even
strengthen the multilateral trading system of the WTO. In others, on the
contrary, they lead to recommend a new organization with participation
limited to a restricted group of countries, a hypothetical WTO 2.0 as
stated by Richard Baldwin in his article, included in the Recommended
Reading Section of this Newsletter.
On the side of the WTO, until now there are no promising prospects with
regards to the results to be expected from the Ministerial Conference,
to be held in Bali in December of this year, either in its three priority
issues (trade facilitation, agriculture and issues related to developing
and least developed countries) or in relation to what is already known
as the "post-Bali agenda", which would involve definitions on
the future of the Doha Round. In his latest speech at the informal meeting
of the Trade Negotiations Committee of the WTO, the Director General Pascal
Lamy warned of the difficulties in the development of the preparatory
work for the next ministerial meeting. This warning concluded with references
to the credibility of the multilateral trading system (see http://wto.org/)
and can be linked with his allusions to the risks of a rising protectionism
that could be promoted by the more pessimistic perceptions about the evolution
of world economy and of global trade. Even when, according to the latest
data published by the WTO, world trade is expected to grow this year more
than last year (3.3% instead of 2%), it is still below the average growth
rate of 6% of the period 1990-2008, prior to the current international
crisis. (See the press report at http://wto.org/).
On the side of the mega interregional trade agreements currently under
negotiation, what is important to note is the fact that a process has
started that can conclude with the incorporation of Japan to the TTP and
eventually also Korea, the Philippines and Thailand. Expanding the number
of countries and the diversity of situations and interests at stake may
nevertheless accentuate the doubts regarding the possibility of effectively
reaching the deadline to conclude the negotiations, still set for October
of this year. The other front where, at the time of writing this Newsletter,
the negotiation of the corresponding preferential trade agreement was
expected to conclude before the end of April is that of the EU and India.
However, difficulties persisted in some of the sectors that are precisely
the most sensitive in the majority of the trade agreements currently under
negotiation, especially the automotive, agriculture, intellectual property
and government procurement.
Understanding the evolution of the various fronts of international trade
negotiations implies, moreover, to be able to interpret the major trends
that are affecting the definition of the new map of global power and even
of the different regions. In order to do this we must acknowledge that,
as noted by Pascal Lamy himself in one of his recent presentations (http://wto.org/)
-true masterly lectures on global trade and the forces that influence
its current evolution- geopolitics has returned to the international trade
negotiating table. On the same note, Zaki Laidi (see his article published
in the Financial Times listed in the Recommended Reading section of this
Newsletter) has referred to the fact that these negotiations of interregional
preferential trade mega-agreements highlight the fact that power politics
has come back to influence the strategies of the major players in world
trade. Perhaps this was always the case. But until recently there was
a tendency to consider that economic factors were what really mattered,
sometimes nuanced in certain analysis by the influence that the political
factors could have on them. But it was only a nuance, given that the political
was not viewed by many analysts as the central aspect.
If we attempt to diagnose the possible -and uncertain- evolution of the
current international scenario in the perspective of the future of global
trade and the main fronts of multilateral and preferential trade negotiations,
three features seem relevant. The first is the diversity of actors. Today
there are many countries with the capacity to have a significant impact
at international level. Some of them -for example China and India- have
centuries of accumulated experiences. Understanding the multiple options
they have in their respective international insertion strategies and,
in particular, the cultural differences and perceptions of their interests
and values is now something of increasing importance. The second feature
is the strong dynamics of change. Being able to grasp in a timely manner
those events loaded with future implications and the major trends that
are manifesting in the international arena is also something necessary,
difficult and relevant for each country and their businesses. The third
feature is complexity. It implies the ability to take on the existing
differences and to resist any tendency to simplify reality. The least
advisable in order to understand the world of today and its future development
would be to pretend that what is happening is only similar to what has
been happening since, for example, the creation of GATT or even the WTO.
In at least three levels it would seem advisable for a country and its
businesses to draw operational conclusions on how to navigate a world
marked by multiple diversities, dynamics of continuous change and notorious
The first is the development of synergies between the government, business
and academic sectors (national and local) for a continuous assessment
of the evolution of the international context in view of their common
interests and of each sector, activity or specific product. This in particular
makes it more necessary to fully harness the diagnostic capabilities that
may be developed in academic institutions, provided that they interact
closely with government institutions and production sectors. Understanding
the international context and its evolution within each concrete perspective,
is then a key requirement for a successful integration of countries and
businesses in the world of today and of the future.
A second level is that of joint action strategies with other countries
and with other companies within the same region and at global scale. This
involves innovative and sometimes unorthodox approaches -for example taking
advantage of the embedded flexibilities of the existing institutional
frameworks and ground rules- both to address international trade negotiations
and to ensure an effective development of productive integration schemes
across the multiple variants of transnational value chains. Both the development
of Mercosur as its negotiations with the EU would require a strong capacity
for innovation that would enable, additionally, to capitalize on the experiences
and assets accumulated since they were initially outlined. A careful rereading
of the Framework Agreement signed in Madrid, in 1995 and still in effect
(see the text with the Future Developments Clause in Article 23 at http://eur-lex.europa.eu/),
is recommended when rethinking the future of the bi-regional negotiations
that have yet to be concluded. A thorough reading may find more potential
than the one that has been tapped to date. It would also avoid resorting
to bi-lateral options with the EU through different forms of agreements
that, even when not including tariff preferences, could significantly
affect the idea of integration that Mercosur still represents despite
all its limitations and shortcomings. In this case, the effects on the
integration in the south of America would be the opposite of what the
European side apparently sought when the idea of a bi-regional partnership
was originally raised.
And the third level is that of a national strategy for the international
economic integration that, while articulating the interests of all the
sectors of society, leads to generate viable agreements with other nations
and regions which are both flexible and predictable. This would help aspire
to have an actual impact on productive investment and on the ability to
project to the world what the country can offer in terms of goods and
services that are attractive for other countries.
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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