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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
A CHANGE OF ERA IN INTERNATIONAL TRADE GOVERNANCE
Considerations on some potential effects of Article 30.4 of the TPP

by Félix Peña
April 2016

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 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 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 system.


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 evident.

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 years.

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.


Recommended Reading:


  • APEC, "Workshop Report: Facilitating Trade through Updates on Food Safety Regulatory Standards of APEC Economies", APEC-Sub-Committee on Standards and Conformance, Singapore, February 2016, en: http://publications.apec.org/.
  • Bartesaghi, Ignacio, "Las relaciones entre Japón y América Latina", Observatorio América Latina - Asia Pacífico, 2016, en http://www.observatorioasiapacifico.com/.
  • Brown, Chad, "The WTO, Safeguards, and Temporary Protection form Imports", For inclusion in the "Critical Perspectives on the Global Trading System and the WTO" series Edited by Kym Anderson and Bernard Hoekman Edward Elgar Publishing, 27 May 2005, en: http://citeseerx.ist.psu.edu/.
  • CIGI, "The Road To a Reinvigorated North American Partnership. Special Report", Centre for International Governance Innovation (CIGI), Waterloo, Ontario, 2016, en: https://www.cigionline.org/.
  • Estevadeordal, Antoni, "What TPP means for Latin America and the Caribbean", Brookings, Opinion, March 9, 2016, en: http://www.brookings.edu/research/.
  • FAO-ALADI, "Seguridad Alimentaria y Comercio Intrarregional de Alimentos en la ALADI", Documento conjunto FAO-ALADI, Montevideo, Octubre 2012, en: http://www.aladi.org/.
  • FAO-ALADI, "Desarrollo del Comercio Intrarregional de Alimentos y Fortalecimiento de la Seguridad Alimentaria en América Latina y el Caribe", Documento conjunto FAO-ALADI, Santiago de Chile 2015, en: http://www.fao.org/.
  • Giddens, Anthony, "Beyond Left and Right. The Future of Radical Politics", Polity Press, Cambridge - Malden, 1994.
  • Goldberg, Jeffrey, "The Obama Doctrine. The U.S. president talks through his hardest decisions about America's role in the world", The Atlantic, April 2016 Issue, en: http://www.theatlantic.com/magazine/.
  • Grossman, Gene N., "The Purpose of Trade Agreements", NBER Working Papers Series, Working Paper 22070, Cambridge M.A. March 2016, en: http://www.nber.org/papers/w22070.
  • Guillain, Robert, "Dans 30 ans la Chine", Editions du Seuil, Paris 1965.
  • Kaldor, Mary, "New & Old Wars. Organized violence in a global era", Polity Press, Cambridge - Malden, 2012.
  • LeoGrande, William M.; Kornbluh, "Black Channel to Cuba. The Hidden History of Negotiations Between Washington and Havana", The University of North Carolina Press - Chapel Hill, 2015.
  • Meneses, Juan Pablo, "Una vuelta al tercer mundo", Debate, Buenos Aires 2016.
  • Merke, Federico, "Época de cambios o cambio de época", Diario "La Nación", 13 de marzo 2016, en: http://www.lanacion.com.ar/1878593-epoca-de-cambios-o-cambio-de-epoca.
  • Mouffe, Chantal, "Agonistics. Thinking the World Politicaly", Verso, London - New York, 2013.
  • Observatorio América Latina - Asia Pacífico, "Explorando espacios para la integración productiva entre América Latina y Asia Pacífico", publicación del Observatorio América Latina - Asia Pacífico, compilada y editada por Ignacio Bartesaghi, Montevideo, Marzo 2016, en: http://www.observatorioasiapacifico.com/.
  • Tabakis, Chrysostomos, "Managing Trade during the Formation of Customs Unions", Universidade Nova de Lisboa, February 15, 2007, en: http://www.eea-esem.com/.
  • The Brookings Institution, "Reporters Roundtable. Foreign Policy" Washington D.C. Tuesday, March 15, 2016, en: The Brookings Institution, "Reporters Roundtable Foreign Policy" Washington D.C. Tuesday, March 15, 2016.

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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