| A CHANGE OF ERA IN INTERNATIONAL TRADE GOVERNANCE
Considerations on some potential effects of Article 30.4 of the TPP
by Félix Peña
English translation: Isabel Romero Carranza
An epochal change in world order is leading to the
redesign of the governance of the international trading system. Understood
as the set of institutions and ground rules that provide certain order
to the exchange of goods and services in the world and its regions, the
governance that has prevailed in recent decades originates mostly from
the results of the negotiations which led first to the creation of the
GATT and then the WTO. Nowadays, the difficulties for the redesign of
said governance can be found in at least three closely interlinked fronts.
The first of these is the global multilateral front,
previously institutionalized in the GATT and now in the WTO. After the
Ministerial Conferences of Bali (2013) and Nairobi (2015) very few observers
dare express optimism about the future of the Doha Round. This is so partly
because real objective difficulties to advance and conclude a complex
multilateral negotiation, even if only as a consequence of the number
and diversity of the participating countries, can be perceived. Also,
no true interest in achieving significant advances in global multilateral
negotiations can be perceived, especially on the side of those countries
whose energy is more focused on promoting the so-called mega-interregional
agreements such as the TPP and TTIP.
The second front is that of the eventual convergence
of the multiple regional and interregional scenarios where preferential
trade agreements have been developing and which, regardless of their names
and format, are like "private clubs" of world trade. That means
that they discriminate against goods, services, individuals and capitals
hailing from non-member countries, especially when they attempt to enter
the markets of the member countries of a particular club or to operate
And the third front is the "mood" of the
citizens of many countries regarding the way the rules of international
trade are negotiated, whether globally, regionally or inter-regionally,
i.e.: what is considered a lack of transparency in the information that
is needed in order to follow and understand the respective negotiations.
The negotiations for the TPP were not transparent,
if we take this term to mean that the relevant information on the texts
and concessions is disclosed beyond the most restricted circle of those
directly involved in the process, either on the side of governments or
of the so-called "rooms next door". Now that the full texts
have become available some articles call our attention due to the potential
effects of erosion that they would have in the global multilateral trading
There is a growing consensus in the sense that the world has been undergoing
a change of era the last several years. A model of international order
-whatever its defects and limitations- originated in the events that occurred
between 1914 and 1945 is coming to an end. Institutions and paradigms
that were characteristic of this model are now in crisis. Uncertainty
prevails about the future of the international order, which usually translates
into the bewilderment and anguish of citizenships. In turn, this can lead
to systemic crises at the internal level of nations.
History teaches that during epochal changes of the international world
order frequently force prevails over reason. Emotions and passions are
unleashed. The approaches of Dominique Moisi ("The Geopolitics of
Emotions" Grupo Editorial Norma, Bogotá 2009) and Bertrand
Badie ("Le Temps des Humiliés. Pathologie des Relations Internationales",
Odile Jacob, Paris 2014) acquire thus enormous relevance.
The idea of changing times seems implicit in a recent and suggestive
article that Larry Summers-Treasury Secretary during the Clinton administration
and currently professor at Harvard University-published in the Financial
Times on April 10, 2016, entitled "Global trade should be remade
from the bottom up". It begins by noting that, since the Second World
War, a pillar of the international order has been the existence of a broad
consensus in support of global economic integration as a factor for peace
and prosperity. But, according to him, today it is clear that such consensus
has been eroded. In the countries that promoted it, meaning the Western
world, a turn against the idea of global economic integration is becoming
This is a backlash that can make it very difficult to obtain the necessary
parliamentary approval for all the agreements that are negotiated and
signed. In our opinion, such could be the case, for example, of the Trans-Pacific
Partnership (TPP). After being signed last February, doubts have kept
mounting as to whether the agreement will indeed be ratified by the minimum
number of countries required by Article 30-5. (For the full text of the
TPP go to https://www.direcon.gob.cl/).The
United States is one of the countries in which such doubts are beginning
to become manifest. They can even be seen reflected in the statements
of candidates running for Presidency on the November elections.
According to Summers, resistance and doubt can be attributed to a lack
of knowledge. In such case, he understands that there would be an opportunity
to explain to the citizens the positive effects of the globalization of
world trade. However, he believes that at the core of this reaction is
the idea that globalization is a project of elites, represented by large
companies, for the benefit of a select group and thus with little regard
for the interests of ordinary people. Hence the importance of having strong
global institutions in order to prevent the occurrence of something similar
to what happened in the twenties, which led to the disasters of the following
Summers' concrete proposal is that global economic integration should
be addressed more with projects that arise from the bottom up than from
the top down. This would involve deriving the priority of the negotiation
of international trade agreements, toward harmonization agreements at
the level of relevant issues such as labor rights and environmental protection.
That is, it would mean placing more emphasis on negotiating measures related
to the effects of trade integration in the social sphere and in the economic
development of countries.
In any case, it is evident that this change of era is leading to the
redesign of the governance of the international trading system. Understood
as the set of institutions and rules that provide certain order in the
exchange of goods and services in the world and its regions, the modality
that has prevailed in recent decades arose mainly from the negotiations
that led first to the creation of the GATT and then of the WTO.
The difficulties for the redesign of this governance can now be evinced
in at least three closely interlinked fronts.
The first of these is the global multilateral front, formerly institutionalized
in the GATT and currently in the WTO. After the Ministerial Conferences
of Bali (2013) and Nairobi (2015), very few observers dare to express
optimism about the future of the Doha Round. This is so partly because
real objective difficulties to advance and conclude a complex multilateral
negotiation, even if only because of the number and diversity of the participating
countries, can be perceived. But also because no true interest in achieving
significant advances in global multilateral negotiations can be perceived,
especially on the side of those countries whose energy is more focused
on promoting the so-called mega-interregional agreements, such as the
TPP and the Trans-Atlantic Trade and Investment Partnership (TTIP).
The second front is that of the eventual convergence of the multiple
regional and interregional scenarios where preferential trade agreements
have been developing and which, regardless of their names and format,
are like "private clubs" of world trade. That means that, in
one way or another, they discriminate against goods, services, individuals
and capitals hailing from non-member countries, especially when these
are attempting to enter the markets of the member countries of a particular
"club" or to operate within them.
And the third front is the "mood" of the citizens of many countries
regarding the way the rules of international trade are negotiated, whether
globally, regionally or inter-regionally, i.e.: what is considered a lack
of transparency in the information that is needed in order to follow and
understand the corresponding negotiations.
This is one of the most frequent complaints regarding the negotiation
of the TPP, but also of other inter-regional negotiations such as those
of the EU with Mercosur and with India.
It has been held, especially by institutions representing social sectors,
that the negotiations for the TPP were not transparent, if by this term
we understand that the relevant information on texts and concessions is
provided willingly beyond the restricted circle of those directly involved,
either on the side of governments and their negotiators, or the so-called
"rooms next door".
Now that the full texts have been disclosed, some articles call our attention
due to their potential erosion effects on the multilateral global trading
system. This is particularly the case of Article 30-4 which establishes
who can adhere to the TPP. Its first paragraph reads as follows: "This
Agreement is open to accession by: (a) any State or separate customs territory
that is a member of APEC; and (b) any other State or separate customs
territory as the Parties may agree, that is prepared to comply with the
obligations in this Agreement, subject to such terms and conditions as
may be agreed between the State or separate customs territory and the
Parties, and following approval in accordance with the applicable legal
procedures of each Party and acceding State or separate customs territory
(accession candidate)" (https://www.direcon.gob.cl/).
Further on, in paragraph b, it opens the possibility for other countries
that are not members of the APEC and with no physical connection to the
Pacific Ocean, to apply to join the TPP. Would it be possible for those
countries of the Atlantic coast of South America, Africa or other geographical
regions distant from the Pacific to adhere to the Treaty?
If that were the intention of Article 30-4, one might then wonder about
the real scope of the TPP and its impact on the effectiveness of the multilateral
trading system. The idea that it could have a long term disruptive impact
on the current WTO and the effects sought in the GATT through the interplay
of Articles I and XXIV, would then have a greater incidence on the debate
on the governance of the international trading system and on the consequences
of the different forms of erosion of its institutions and rules.
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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