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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
DIVERSITY, DINAMISM, COMPLEXITY:
Three key features of the international environment of countries and businesses

by Félix Peña
April 2013

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 countries.


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 world power.

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 complexities.

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.


Recommended Reading:


  • Agatiello, Osvaldo R.; Fliess, Barbara, "Export Restrictions: Benefits of Transparency and Good Practices", OECD Trade Policy Paper n° 146, TAD/TC/WP(2012)22/FINAL, Paris, March 20, 2013, at http://search.oecd.org/.
  • APEC, "SMEs' Participation in Global Production Chains", APEC Policy Support Unit, Issues Paper n° 3, February 2013, at http://publications.apec.org/.
  • Ashraf, Sajjad, "The rise of China and India: a global game changer", East Asia Forum, March 13th. 2013, at http://www.eastasiaforum.org/.
  • Andreas, Peter, "Smuggler Nation. How Illicit Trade Made America", Oxford University Press, Oxford-New York 2013.
  • Baldwin, Richard, "WTO 2.0: Global governance of supply-chain trade", Centre for Economic Policy Research (CEPR), Policy Insight N° 64, London, December 2012, at http://www.cepr.org/.
  • Castro, Jorge, "Un buen momento para la causa Malvinas", article published in La Nación, Tuesday 2 April, 2013.
  • Desker, Barry, "It's time to return to the WTO", East Asia Forum, April 12th. 2013, at http://www.eastasiaforum.org/.
  • Diener, Alexander C; Hagen, Joshua, "Borders. A Very Short Introduction", Oxford University Press, Oxford-New York 2012.
  • Donner Abreu, "Preferential Rules of Origin in Regional Trade Agreements", WTO, Economic Research and Statistics Division, Staff Working Paper ERSD-2013-05, Geneva, 22 March 2013, at http://www.wto.org/.
  • Dyer, Geoff, "China's chair left unoccupied at Obama's free trade party", article published in The Financial Times, April 2, 2013.
  • Emerson, Michael, "Europe's continental regionalism", CEPS Working Document, n° 375, Brussels, February 2013, at http://www.ceps.eu/.
  • Gros, Daniel; Alcidi, Cinzia; Giovannini, Alessandro, "Brazil and the EU in the Global Economy", CEPS Working Document, n° 371, Brussels, February 2013, at http://www.ceps.eu/.
  • ICTSD, "Global Challenges and the Future of the WTO", edited by Ricardo Meléndez-Ortiz, Geneva, April 8, 2013, at http://www.ictsd.org/.
  • Lim, C.L.; Elms, Deborah K.; Low, Patrick, "The Trans-Pacific Partnership. A Quest for a Twenty-first Century Trade Agreement", Cambridge University Press, Cambridge-New York 2012.
  • Laidi, Zaki, "La mort programmée du multilatéralisme commercial", article published in Les Echos, February 27, 2013, at http://www.lesechos.fr/.
  • Laidi, Zaki, "Free-trade deals show that power politics is back", article published in The Financial Times, April 1st, 2013, at http://www.laidi.com/
  • Lamy, Pascal, "Emerging Economies: "shapers and makers" in changing landscape", Speech of the WTO Director General at the Bigli University, Istambul, March 14, 2013, at http://wto.org/.
  • Lamy, Pascal, "China should be more active in global economic governance", Speech of the WTO Director General at the China Development Forum, Beijing, March 24, 2013, at http://wto.org/.
  • Leo, Sergio, "A importância da China para os Brics", article published in Valor Econômico, 01/04/2013.
  • Luce, Edward, "Time to Start Thinking. America in the Age of Descent", Atlantic Monthly Press, New York 2012.
  • Malamud, Carlos, "La reforma del sistema iberoamericano", Real Instituto Elcano, ARI 9/2013, Madrid 19 March 2013, at http://www.realinstitutoelcano.org/.
  • Meloni Nassar, André, "A onda das cadeias globais", en O Estado de S.Paulo, 20-03-2013, at http://clippingmp.planejamento.gov.br/ y at http://biblioteca.fstandardbank.edu.ar/.
  • Moreira, Assis, "La UE y Brasil negocian una reducción de trabas comerciales", article published in El Cronista, 4 April, 2013.
  • Said, Edward W., "Orientalismo", presentación de Juan Goytisolo, Debolsillo, Barcelona 2010.
  • Sweig, Stefan, "Brasil. País del Futuro", Introduction byVolker Michels, Capitán Swing, Madrid 2012.
  • Tagore, Rabindranath, "Nacionalismo. Todas las grandes naciones de Europa tienen sus víctimas en otras partes del mundo", Taurus-Santillana, Buenos Aires 2013.
  • Thorstensen, Vera; Marcal, Emerson; Ferraz, Lucas, "EU-Mercosur Trade Relations: Impact of Exchange Rates Misalignment on Tariff", CEPS Working Document, n° 372, Brussels, February 2013, at http://www.ceps.eu/.
  • Valladâo, Alfredo G.A., "Emergent Brazil and the Course of the "Hen's Flight"", CEPS Working Document, n° 379, Brussels, February 2013, at http://www.ceps.eu/.
  • Wolfe, Robert, "Letting the sun shine in at the WTO: How transparency brings the trading system to life", WTO, Economic Research and Statistics Division, Staff Working Paper ERSD-2013-03, Geneva, 06 March 2013, at http://wto.org/.
  • WTO, "Argentina: Trade Policy Review. Report by the Secretariat", WT/TPR/S/277, 13 February 2013, at https://docs.wto.org/.
  • Zoellick, Robert, "Five questions for the world next trade chief", nota en Financial Times, April 2, 2013, at http://www.ft.com/.

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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