| A COMPLEX AND INEVITABLE TRANSITION:
Towards a new stage in international commercial relations?
by Félix Peña
English translation: Isabel Romero Carranza
The fact that the Buenos Aires Conference was unable
to achieve significant decisions to address some of the main problems
that are affecting the development of world trade, confirms the widespread
impression that the current stage of the international trading system
is coming to an end. This started at the end of the Second World War and
gave rise, with the creation of the GATT and later the WTO, to the current
multilateral institutions and ground rules of global scope.
At least three factors explain the transition to a new stage in the
international system of world trade. One is related to demographics. Another
is the connectivity between nations and markets. And a third factor is
that all the protagonists - nations and regions, consumers and producers,
companies and citizens - have multiple options to achieve the objectives
that are set in their strategies for insertion in world trade.
It is possible to foresee that the world of the coming years will
be dynamic, complex and unpredictable. This will have an impact on international
trade relations. All countries will need to have the ability to identify
and assess all feasible options for their international trade strategies.
The year 2018 poses at least three challenges for Argentina's international
trade strategy. They will require improving the efficiency and quality
of the diagnoses on the profound changes, and not only the conjuncture
ones, that are operating in the different countries that participate in
global economic competition.
The first challenge is at the level of the multilateral system of
world trade. The existing institutions and rules - which come from initiatives
promoted at the time by the US and that some consider outdated- will require
a redesign effort that will not be easy to achieve. This difficulty was
evident at the XI WTO Ministerial Conference of Buenos Aires. Another
challenge appears at the inter-regional level. In the stage that has started
to develop, the assertive insertion in the growing network of inter-regional
agreements will be fundamental for the projection to the world of what
Argentina can offer to other markets. Finally, the third challenge is
at the Latin American regional level. After sixty years of attempts at
economic integration, physical connection and productive articulation
between the countries of the region, it has become evident that different
work approaches and methods than those used until now will be needed in
The WTO Ministerial Conference held in December 2017 in Buenos Aires
has confirmed the impression that we are moving into a new stage of the
international system of world trade. It is difficult today to predict
how much time this transition will require or what its results will be.
The fact that the Buenos Aires Conference was not able to adopt significant
decisions to address some of the main problems that are affecting the
development of world trade, confirms the already widespread impression
that the current stage of the international trading system is coming to
This stage started at the end of the Second World War and gave rise,
with the creation of the GATT and later the WTO, to the current multilateral
institutions and ground rules of global scope. This stage also began with
different modalities of regional experiences that had an impact on transnational
trade and investment, such as those of European and Latin American integration,
At least three factors explain the current transition towards a new stage
in the international system of world trade. One is related to demographics.
Not only has population increased, but also demographic growth and the
age pyramids have generated a population mapping quite different from
that of the past.
This is clear in the case of Asia, but also of Africa and Latin America.
These three regions tend to acquire a growing role in international commercial
relations. They stand out due to a phenomenon with incidence in social
behaviors, life expectancies, and levels of consumption. We are referring
to the growth of the urban middle classes, with a consumption capacity,
a level of information about their options and, therefore, a relative
empowerment that are impossible to ignore in the strategies for world
insertion of any country, whatever their size and degree of development.
Another factor is the connectivity between nations and markets. Due to
technological changes the world is more connected. This connection is
physical and digital, but also economic and cultural. Goods and services,
ideas and values, customs and consumption patterns, tend to assimilate
but, at the same time, to differentiate. The present is a world that has
become more similar in many aspects and more differentiated in priorities
and expectations. Understanding it has become a growing need for those
attempting to compete for world markets.
A third factor is that all the protagonists -nations and regions, consumers
and producers, companies and citizens-have multiple options to achieve
the objectives that are set in their strategies for insertion in world
Understanding the dynamics of such options will henceforth be a necessary
condition to compete and negotiate successfully. It implies knowing what
a country wants to achieve in its commercial insertion in the world but,
above all, knowing what it can obtain. This will depend on the knowledge
that a country has of its relative value for those with whom it intends
It is possible to foresee that the world of the upcoming years will be
dynamic, complex and unpredictable. Maybe much more so than in recent
years. This will have an impact on international trade relations. All
countries, including Argentina, will need to have the ability to identify
and assess all feasible options for their international trade insertion
strategy. It will require something that has not always abounded in our
way of imagining the country's international insertion. That is, the need
to reconcile, simultaneously, short-term visions and interests with those
of the very long term.
Moreover, it will require the ability to foresee and grasp in time what
will probably be continuous displacements of competitive advantages between
nations and companies, originated in technological changes, in shifts
of relative power of the protagonists, or in cultural transformations
that affect the values and priorities of consumers.
The year 2018 poses at least three challenges for Argentina's international
trade strategy. These challenges will require improving the efficiency
and quality of the diagnoses on the profound changes, and not only the
conjuncture ones, that operate in the different countries that participate
in global economic competition.
One of these challenges is at the level of the multilateral system of
world trade. The existing institutions and rules -which originated from
initiatives promoted at the time by the US and that some consider outdated-will
require a redesign effort that will not be easy to achieve.
That this is not an easy task was made clear precisely at the XI WTO
Ministerial Conference of Buenos Aires. Since Argentina will preside the
G20 as of December of this year-with its Summit scheduled for November
of 2018- it will have the opportunity and the responsibility to facilitate
the coordination of interests and visions, at times divergent, among those
countries capable of influencing the design of the rules of global trade
governance that seek to have effectiveness and legitimacy.
A second challenge can be found at the inter-regional level. In the stage
that has started to develop in the trade relations between nations, the
assertive insertion in the growing network of inter-regional agreements
will be fundamental for the projection to the world of what Argentina
can offer to other markets.
What has been observed this year in some of the main nodes of this network
indicates the need to address, with an assertive and effective strategy,
the issue of inter-regional negotiations that, starting with Mercosur,
can be developed with other countries and with other regional agreements.
In this regard, it should be borne in mind that both NAFTA and the EU
-especially as a consequence of Brexit- face methodological crises, which
at times would appear to be existential. They are thus undergoing a transition
to something new that will probably be different from what has existed
The third challenge is at the Latin American regional level. After sixty
years of diverse initiatives aimed at achieving economic integration,
physical connection and productive articulation between the countries
of the region, it has become evident that different work approaches and
methods than those that have been used until now will be required in the
Mercosur itself is in need of updating, which may involve significant
methodological changes, without prejudice to preserving the fundamental
reasons that led its founding members to choose to work together towards
their economic and social development objectives, in a context of peace
and political stability within the "neighborhood".
Relations with the countries of the Pacific Alliance, which in some cases
are intense and in all very necessary, and with the other countries of
the region will require, in 2018, to continue promoting the initiative
of the previous Secretary General, Chacho Álvarez, to gain the
maximum benefit from the mostly untapped institutional framework of LAIA
(ALADI), in order to increase commercial and economic connectivity among
its member countries, or at least among the most interested ones. Cuba
and Panama are already members of LAIA and other Central American and
Caribbean countries may have the opportunity to join in the future. This
fact enhances the value that LAIA may have in order to fulfill the dreams
that Latin American leaders, such as Arturo Frondizi, had in the past
about joint work between the countries of the region.
A recent event that helps envision the future illustrates the changes
that are taking place in the trade of goods and services. We are referring
to what happened in the celebration of "Singles' Day" in China.
Last November 11, in just 24 hours, the online purchases of Chinese consumers
amounted to roughly 23 billion dollars. Digital commerce, strategies of
"niche internationalization", generalization of "simple
exports", direct cross-border connection between producers and consumers,
are all concepts that this event shows are feasible and that an intelligent
Argentine strategy for international insertion should take into account
This will imply accentuating the efforts to renew the concepts, paradigms,
diagnoses and instruments with which Argentina can strive to increase
and diversify the projection to the world of what it can offer, among
other things, due to its creativity, endowment of resources and regional
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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