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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
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TIME FOR A REVIEW OF INTERNATIONAL TRADE NEGOTIATIONS?
The necessity of renewing approaches at the global and regional levels

by Félix Peña
November 2016

English translation: Isabel Romero Carranza


 

In the light of changes that are becoming increasingly evident in the international scenarios, three are the relevant questions that will require special attention from analysts and protagonists alike. This, without overlooking other relevant questions that will need to be addressed when the turmoil caused by recent events, such as the American presidential election on November 8th and the still uncertain Brexit process in the European Union, weathers down.

Such questions are the following:

  • What impact can be anticipated in the national strategies aimed at developing mega interregional trade agreements, such as the Trans-Pacific Partnership (TTP) or the Trans-Atlantic Trade and Investment Partnership (TTIP), which aspire to promote rules that go beyond what is possible to agree within the WTO?

  • How will the changes taking place in international scenarios and their ensuing impact on the distribution of world power affect the evolution of the institutionalized global multilateral trading system, first in the GATT and then in the WTO

  • What can be expected from the impact of the afore mentioned changes in international scenarios, on the future evolution of the main processes of economic and political integration taking place in different regions of the world and, especially, in Europe and Latin America?

Regarding these three questions and others that may arise, it seems advisable to deepen the discussions aimed at proposing courses of action that are viable and effective. The participation of the various sectors of civil society in such debates, together with the political, business, trade union and academic sectors would enable the courses of action that could be proposed to have a greater potential to penetrate reality and, at the same time, to have social legitimacy.


Given their unforeseen results, at least from the perspective of what had been anticipated, the presidential elections in the US and the Brexit before them, have produced strong impacts that transcend the global level.

Such results would be reflecting, among other things, the ill mood and disorientation that prevail in some sectors of the involved societies. As Enrique V. Iglesias has pointed out, a key element to understand politics in many countries, especially in the US and in some countries of the EU, is that "societies are angry". (Regarding this, refer to the September 2016 edition of this newsletter on www.felixpena.com.ar).

Such results would confirm what began to become manifest with the fall of the Berlin Wall: the global order that emerged after the Second World War in 1945 is undergoing a period of profound changes that affect the development of international relations, including the economic, the financial and the commercial. It does not seem advisable to hold any doubts as to whether these changes will accentuate in the future.

The mutations observed in the international scenarios will take some time to display all their consequences fully, even very long periods. It is possible that the uncertainty about the future evolution of such scenarios dominates, in the short term, the daily life of many nations and, thus, of their people, businesses, and institutions. Trying to understand the world and the behavior of those who are currently the main protagonists of international relations with the same theoretical approaches, paradigms and concepts that have been used since the end of World War II would not seem recommendable. In some cases, this obsolescence can be quite notorious.

This will have implications for the activities of analysis and academic training on the evolution of contemporary international relations, their impact on peace and political stability and on the social and economic development of nations. To the extent that such activities effectively help understand dynamic and complex realities, and outline alternatives for viable courses of action, the role of action-oriented spaces for thought and analysis will become increasingly relevant for those who aspire to approach, from the perspective of government, business and social institutions, the many challenges that are becoming more evident. (See the December 2015 issue of this newsletter on http://www.felixpena.com.ar/).

Regarding international trade negotiations, be they global, regional, or interregional, the changes and uncertainties that are being observed will affect the multiple institutional frameworks and ground rules that originated in a period of the international system which is now showing signs of exhaustion. This should be considered when considering national strategies for international integration and for the necessary redesign of the institutions and rules of the international trading system.

Considering the changes in international scenarios that are now becoming evident, three relevant questions will require special attention from analysts and protagonists. This without overlooking other questions that will need to be addressed when the turmoil produced by recent events, such as the American presidential election of November 8 and the still uncertain process of the Brexit in the EU, wears down. (In this regard, see the July 2016 edition of this newsletter on http://www.felixpena.com.ar/).

In our opinion, such questions are:

  • What impact can be anticipated in the national strategies aimed at developing mega interregional trade agreements, such as the Trans-Pacific Partnership (TTP) or the Trans-Atlantic Trade and Investment Partnership (TTIP), which aspire to promote standards and rules that go beyond what it would be possible to agree within the WTO?

  • How will the changes taking place in international scenarios and their ensuing impact on the distribution of world power affect the evolution of the institutionalized global multilateral trading system, first in the GATT and then in the WTO; and

  • What can be expected from the impact of the afore mentioned changes in international scenarios on the future evolution of the main processes of economic and political integration that are taking place in different regions of the world, especially in Europe and Latin America?

These are just some of the main questions that should now be asked in the perspective of our country and its Mercosur partners, as well as in the broader perspective of Latin American regional integration and, in particular, of the strategy called "convergence in diversity ", which aims to develop a network of agreements and actions to overcome what was considered an inconvenient tendency to view two contradictory regional spaces, one of the Atlantic and the other of the Pacific, in potential geopolitical and ideological confrontation. (See the December 2014 edition of this newsletter on http://www.felixpena.com.ar/).

The first question relates to the strong uncertainty surrounding the future of the two-major mega regional agreements -the TPP and TTIP- promoted mainly by the US and by business interests and specialists inclined to imagine the advantages of a so-called WTO 2.0. (See, among others, the article by Professor Richard Baldwin, published in 2012, on http://www.cepr.org/).

The TPP has been signed but is not yet in force. The TTIP has not even been concluded. During the recent American election campaign, the idea that the president elect is not in favor of such agreements has been established. There are still strong doubts whether President Obama will seek ratification of the TPP before handing over power to Donald Trump. In any case, it seems difficult to imagine that both agreements will penetrate reality. The TPP could have the fate of the treaty that created the International Trade Organization, which was never sent to the US Congress for approval and that, in practice, was replaced by the "provisional" GATT. The TTIP may follow the fate of the FTAA, whose negotiation was never concluded.

Both were conceived as agreements that would set normative standards for international trade, especially, among other issues, in intellectual property and the settlement of disputes with investors, something that has been considered too complex or impossible to obtain with the WTO. The idea is that, once such standards have been agreed upon through these mega agreements, it would be difficult for them to be rejected by other members of the multilateral global system, especially by those interested in participating in transnational value chains, whose development would be favored by rules settled in these same agreements. Even in the case of the TPP, the provision in Chapter 30 of Article 4 opens the door for its transformation into a new multilateral system of global scope by explicitly including the possibility that any country in the world may request to be accepted as a member. (In this regard, see the April 2016 edition of this newsletter on http://www.felixpena.com.ar/, and the September 2016 edition on http://www.felixpena.com.ar/).

The second question has to do with the relative standstill of the WTO's multilateral global trading system, which, despite the efforts of its Director-General and the results of the Ministerial Conferences of Bali (2013) and Nairobi (2015), has gradually diminished its relevance as a generator of new ground rules for international trade. The survival of the Doha Round has even been questioned by some relevant developed countries. Those who believe in the possibility of advancing through mega interregional trade agreements with WTO-plus commitments, especially in the US and in European countries, have been losing their enthusiasm for the multilateral global trading system. This has prompted the emergence of tendencies towards the fragmentation of the international trading system, with potential and complex geopolitical effects and, therefore, consequences for global governance. (On this topic, see the October 2016 edition of this newsletter on www.felixpena.com.ar).

Finally, the third question relates to the need to rethink the methodologies of joint and voluntary work between sovereign nations that share a regional geographic space. These are methodological changes that will require capitalizing on the relative obsolescence of many theoretical approaches and concepts -sometimes converted into dogmas- that influenced the way in which the integration processes have been addressed so far. It is possible that the need to deal more pragmatically with process roadmaps, such as those of the EU and of Mercosur, is increasingly recognized. Achieving a balance between the diversity of interests and realities of the different participating countries that is reflected in the ground rules and the sometimes-contradictory requirements for flexibility and predictability will be a growing demand. This demand will come especially from those expected to make productive investments of transnational scope because of the processes of economic integration. (In this regard, see the March, June and August 2016 editions of this newsletter on www.felixpena.com.ar.

Regarding these three questions and others that may arise, it would seem advisable to deepen discussions aimed at proposing courses of action that may be viable and effective. In this sense, the active participation of the various sectors of civil society in the corresponding debates together with the political, business, trade union and academic sectors would enable the proposed courses of action to have greater potential to penetrate reality and, at the same time, to gain social legitimacy.


Recommended Reading:


  • Acharya, Amitav (editor), "Why Govern?Rethinking Demand and Progress in Global Governance", Cambridge University Press, Cambridge 2016.
  • Acharya, Amitav, "US primacy in a multiplex world", The National Interest, Washington D.C., September 26, 2016, en http://nationalinterest.org/.
  • Baker Sr., Darryl B., "Prosperity Road. America, Save the Middle Class!", Victoria, Ca. 2016.
  • Barone, Barbara, "El debate sobre la condición de economía de mercado de China cobra intensidad", Dirección General de Políticas Exteriores - Departamento Técnico - Parlamento Europeo, Diciembre 2015, en http://www.europarl.europa.eu/.
  • Bittner, Jochen, "What do Trump and Marx have in common", diario "The New York Times", The Opinion Pages, October 25, 2016, en http://www.nytimes.com/.
  • Baru, Sanjaya; Dogra, Suvi (editors), "Power Shifts and New Blocs in the Global Trading System", The International Institute for Strategic Studies (IISS), Routledge, New York 2015.
  • Centro de Comercio Internacional, "Perspectivas de Competitividad de las Pymes 2016 - Resumen Ejecutivo: Cumplir con las normas para fomentar el comercio", CCI - ITC, Ginebra, Octubre 2016, en http://www.intracen.org/.
  • Chomsky, Noamm "Quién domina el mundo?", B - Grupo Zeta, Barcelona-Buenos Aires 2016.
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  • Gelb, Leslie H, "The Future of U.S. Primacy: Power to Lead, But no Longer to Command", The National Interest, Washington D.C., July 27, 2016, en http://nationalinterest.org/.
  • Jaffe, Adam B.; Lerner, Josh, "Innovation and Its Discontents. How our broken patent system is endangering innovation and progress, and what to do about it", Princeton University Press, Princeton and Oxford 2004.
  • Judis, John B., "The Populist Explosion. How the Great Recession Transformed America and European Politics", Columbia Global Reports, New York 2016.
  • Lee, Yong-Shik, "Reclaiming Development in the World Trading System" (Second Edition), International Trade and Economic Law, Cambridge University Press, Cambridge 2016.
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  • Levin, Yuval, "The Great Debate. Edmund Burke, Thomas Paine, and the Birth of Right and Left", Basic Books, New York 2014.
  • Levin, Yuval, "The Fractured Republic. Renewing America's Social Contract in the Age of Individualism", Basic Books, New York 2016.
  • Lowe, Keith, "Continente salvaje. Europa después de la Segunda Guerra Mundial", Galaxia Gutenberg, Barcelona 2013.
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  • OCDE,"Participation in Global Value Chains in Latin America: Implications for Trad and Trade-Related Policy", OECD - Trade and Agriculture Directorate, Working Party of the Trade Committee, TAD/TC/WP(2015)28/FINAL, 30 September 2016, en http://www.oecd.org/.
  • Padilla Pérez, Ramón; Oddone, Nahuel, "Manual para el Fortalecimiento de Cadenas de Valor", FIDA - CEPAL, México 2016, en http://repositorio.cepal.org/.
  • Peña, Félix, "Una mirada hacia el futuro: posibles escenarios en las negociaciones comerciales internacionales", en Delich, Valentina; López, Dorotea; Muñoz, Felipe (editores), "20 Años de la OMC. Una perspectiva desde Latinoamérica", FLACSO Argentina - Programa Cátedras OMC - Universidad de Chile, 2016, ps. 337-347, en http://flacso.org.ar/.
  • Picabea, Facundo; Thomas, Hernán, "Autonomía Tecnológica y Desarrollo Nacional. Historia del diseño y producción del Rastrojero y la moto Puma", con prólogo de Eduardo M. Basualdo, Centro Cultural de la Cooperación, Floreal Gorini - Universidad Nacional de Quilmes - Colección Cara o Ceca, Editorial Atuel, Buenos Aires 2015.
  • Renn, Liam, "Trans-Pacific Partnership. USA-Secret Negotiations", Liam Renn 2016.
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  • Vargas Llosa, Mario, "El ciudadano rabioso", diario "El País", Sección Opinión, Domingo 30 de Octubre de 2016, en http://elpais.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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