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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009

THE G20 SUMMIT IN BUENOS AIRES:
An opportunity to redirect the multilateral global trading system?


by Félix Peña
July 2018

English translation: Isabel Romero Carranza


 

Building consensus, understood as the result of bridging the gap between the often divergent interests and perspectives of the G20 countries, is the main challenge that explains the origin of the G20 Summits. This is still valid in the period of the Argentine presidency during 2018.

In the light of recent events, it seems clear that this objective remains central to the successful functioning of the G20. Today, the issue of global trade governance is perhaps as important as the issue of financial governance was at the origin of the Summits.

The relevance of the so-called "commercial war" has grown in the last month. It involves, in particular, the United States on the one hand and China and the European Union, on the other. It threatens to continue growing in its scope and potential ramifications.

In a world of marked uncertainties like the present one, it is difficult to make predictions about the evolution of a complex issue such as the one that is now affecting the governance of the international trading system. This situation may be reflecting factors that could lead to a generalized global crisis. Or, on the contrary, it could just be the consequence of tactical movements that form part of a deeper negotiation of a clear geopolitical and commercial scope.

For our country and not only for its President, Mauricio Macri, the G20 Summit will thus pose a challenge. In this meeting of 20 leaders from relevant countries, attention will be focused on the real capacity they have to build consensus. Precisely in the agenda of the Argentine presidency of the G20 Summit, the focus was placed on its function of generating dialogues aimed at building consensus. That is, consensus on relevant issues that are effective and efficient. The ability to help build consensus will then be the real challenge of the Summit for the Argentine presidency.


The "vision" of the period of the Argentine presidency in the G20:

In his "vision" about the period of his presidency of the G20 for the year 2018, the President of Argentina, Mauricio Macri, placed the focus on three priorities: the future of work; the infrastructure needed for development, and the sustainability of the food supply. However, the main focus of the proposal that has been made relates to the objective which originated the objective of the G20 Summits and that, twenty years later, is still the main challenge.

This objective is, above all, methodological. It has to do with the idea of "consensual construction". That is, how to build consensus as the main challenge behind the origin of the Summits, an idea that is still valid in the presidential period of Argentina. The construction of consensus as the result of building bridges between the often diverging interests and perspectives of the G20 countries.

At the beginning of the G20 Summits it was noted that the institutions of global governance originated in the post-war world order were no longer able to build the necessary consensus in a context in which power was dispersed among multiple players. There were diversity of interests and perspectives but no mechanisms to facilitate their convergence. The financial level was, at that moment, the most obvious but in no way the only one. The absence of an effective international order evoked once again the ghost of chaos as a byproduct of the fragmentation of world power, without institutions that had the capacity to articulate diverse interests.

The "vision" of the Argentine presidency recognizes in the G20 "an ambit for leaders to engage in a permanent and constructive dialogue on the most pressing global issues of the 21st Century." These are global issues that, by their very nature, cannot be addressed just by a few countries. The issue of climate change is an example, but not the only one. It requires building consensus, at least among the most relevant countries in the distribution of world power and, therefore, with the capacity to articulate the interests of many others.

The document of the Argentine presidency (see its text on: https://back-g20.argentina.gob.ar/) also expresses the need for our country to reflect the position of the Latin American region as a contribution to the construction of global consensus. It then adds that an important value of the G20 is "to provide a mechanism to seek consensus and strive collectively in the pursuit of our shared objectives." It also points out that "we will address the issues on the current G20 agenda in a way that will emphasize the continuity of the dialogue and the search for common ground." This explains the methodology used in the annual development of the G20: sector wide dialogues that are expected to lead to global consensus within the scope of the yearly Summit.

In the abovementioned document stating the Argentine vision, the three key questions are: What is dialogue without consensus? What is power without equity? What is development without sustainability? It later states that the theme proposed for this year's G20 "Building a consensus for equitable and sustainable development" aims to "generate a global conversation about how to achieve this objective". Consensus and how to achieve it becomes thus the essence of the annual G20 debates. These are debates geared towards collective action.

In light of recent events, especially at the G7 Summit in Quebec (see https://g7.gc.ca/en/), it is clear that this objective is still key to the successful functioning of the G20. The issue of global trade governance is perhaps as important as financial governance was when the Summits originated.

How to reach everybody is another question that is asked when concluding the document with the "Argentine vision". The text stresses that, in order to achieve this goal, it would be necessary to have "the commitment not only of governments but of all sectors of society ". For this purpose it is stated that "we will promote a comprehensive and plural dialogue". Think20, which will have its meeting in September in Buenos Aires, is mentioned among other relevant ambits for such dialogue.

This leads to a key question to be asked by those involved in the T20: To what extent do their dialogues contribute to build consensus on how to address relevant issues of the G20 agenda? And also: What are the relevant issues to be addressed and what would be the contributions needed for such approach to be successful?

The context of the global trading system during the Argentine presidency of the G20:

The importance of the so-called "commercial war" has grown in the last month. It involves, in particular, the United States, on the one hand, and China and also the European Union, on the other. It threatens to continue growing in its dimensions (trade flows involved) and in its potential ramifications (impacts on other areas including the international financial and political, security and, ultimately, the peace between nations).

In a world of marked uncertainties like the present one, it is difficult to make forecasts about the evolution of such a complex issue as the one that is affecting the governance of the international trading system. All interpretations are valid. It could be reflecting factors that may lead to a generalized global crisis or, on the contrary, tactical movements as part of a deeper negotiation –especially between the US and China–of a clear geopolitical and commercial scope, from which the progress towards the denuclearization of the Korean Peninsula should not be excluded.

In any case, the current "commercial war" is an issue whose immediate origin – albeit not the only one– dates back to the questioning by the current American government of the multilateral trading system institutionalized in the WTO, originated precisely at the initiative of Washington when the GATT was negotiated at the end of the Second World War. Today, the US government considers it obsolete, at least in terms of the rules referring to three of its main elements: the principle of commercial non-discrimination, embodied in the unconditional clause of the most-favored nation that comes from the old GATT; the commitments in matters of commercial defense, and the mechanism for the settlement of commercial disputes. Hence, the shift of the current American trade policy towards bilateralism, which implies placing the particular interests of the US above the multilateral rules, expressed in the idea of "America First".

One of the consequences of the current trends would be the fragmentation of the commercial system in several preferential clubs limited to groups of countries not necessarily belonging to the same region. One example of these is the Transpacific Partnership (TPP). Despite its reference to the Pacific region, it is open to any country in the world–as stated by its Article 4, Chapter 30–which would explain why, recently, a Minister of the government of Teresa May pointed out that the United Kingdom could eventually adhere to it once the Brexit was concluded. Nothing excludes the possibility that, in spite of all the noise, the US might return to the TPP even along with China, among other countries. Another "private club" of preferential trade would be the Regional Comprehensive Economic Partnership (RCEP), which would include sixteen Asia-Pacific countries -from ASEAN, China, India, Japan, Australia and New Zealand-, which together add up to a population of 3.5 billion. We do not know yet if it would also be open to countries from other regions. They have just held their last ministerial meeting in Tokyo at the beginning of July and they hope to conclude the negotiation by the end of this year.

The challenges of the G20 Summit in a relevant and complex global scenario:

The points mentioned above confirm our impression of the complexity and relevance of the global scenario in which the November G20 Summit of Buenos Aires will take place. And we are referring only to one of the many issues that the leaders of the twenty countries and their guests will have to address. Precisely on the subject of global trade governance, the previous Summit, held in Hamburg in 2017, could not produce any substantive agreement. Moreover, the recent G7 Summit, held in June of this year, could not even conclude with a final statement. In that opportunity the prevailing sulkiness was evident.

Thus, the G20 Summit will pose a challenge for our country, not only for its President Mauricio Macri. In this meeting of twenty leaders from relevant countries the attention will be focused on the real capacity they have to build consensus. Precisely in the agenda of the Argentine presidency for the G20 Summit the focus was placed on its role for generating dialogues aimed at building consensus. That is, consensus on relevant issues that prove to be effective and efficient. The ability to help build consensus will then be the real challenge for the Argentine presidency. The effects on the image of our country will transcend the Summit itself.

In this perspective, for our country and for the President acting as host, the relevance and the challenges of the Summit and of the entire process prior to its realization involve demonstrating that Argentina is a country where dialogue and consensus building are valued and where, as part of the Latin American region, there is capacity to seek conditions to enable "convergence in diversity" between nations, as was stated in 2014 by the former government of Chile. with the support of the countries of the region. (See the April 2014 issue of this newsletter on http://www.felixpena.com.ar/).

The presence of all the summoned leaders; the environment in which the November Summit takes place; the relevance and potential effectiveness of what is agreed, as reflected in the final statement, and the official words by President Macri in which he will state the Argentine position and, as far as possible, that of the other participating Latin American countries, will be other indicators that will help evaluate, in a national and regional perspective, the concrete results of the Summit.


Recommended Reading:


  • Almeyda, Mónica; López, Ana Karina, “El Séptimo Rafael”, Aperimus, Din-ediciones, Quito, 2017.
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  • Basu, Kaushik, “The Republic of Beleifs. A New Approach to Law and Economics”. Princeton University Press, Princeton & Oxford 2018.
  • Basu Das, Sanchita; Kawai, Masahiro (editors), “Trade Regionalism in the Asia-Pacific. Developments and Future Challenges”, ISEAS-Yusif Ishak Institute, Singapore, 2016.
  • Castro, Jorge, “China derrota a EEUU. en innovación”, newspaper “Clarín”, July 1, 2018, https://www.clarin.com/.
  • Cavallo, Domingo; Cavallo Runde, Sonia, “Historia Económica de la Argentina”, Editorial El Ateneo, Buenos Aires, 2018.
  • Chatwin. Bruce, “In Patagonia”, Penguin Classics, New York-London, 2003.
  • Cortina, Rubén, “Sindicalismo y Futuro del Trabajo. Cambio de época y sindicato global”, Prometeo Libros, Buenos Aires, 2018.
  • Eichengreen, Barry, “The Populist Temptation. Economic Grievance and Political Reaction in the Modern Era”, Oxford University Press, New York, 2018.
  • Espert, José Luis, “La Argentina Devorada”, with foreword by Ricardo López Murphy, Galerna, Buenos Aires 2018.
  • Gerchunoff, Pablo; LLach, Lucas, “El Ciclo de la Ilusión y el Desencanto. Políticas económicas argentinas de 1880 a nuestros días”, Crítica, Buenos Aires 2018.
  • Guelar, Diego, “Resuenan los tambores de guerra. Divergencias entre las potencias”, newspaper “La Nación”, June 28, 2018, p. 27.
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  • Peña, Félix, “La crisis en el multilateralismo y en los acuerdos regionales”, Acontecer Mundial, Centro de Pensamiento Global CEPEG), Bogotá 2017.
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  • Peña, Félix; Schelp, Andrés Matías, “A vision about regional contribution to a more effective global governance: the case of the multilateral international trade system”, CARI – CIPPEC, T20 Argentina 2018, “Social Cohesion, Global Governance and the Future of Politics”, June 2018.
  • Porretti, Eduardo, “Geografía Anímica. Relatos”, Editorial El Estilete C.A., 2016.
  • Riaboi, Jorge, “La confusa reinserción de Argentina en el mundo”, newspaper “El Economista”, July 3, 2018.
  • Runciman, David, “How Democracy Ends”, Basic Books, New York 2018.
  • Sanahuja, José Antonio; Comini, Nicolás, “Las nuevas derechas latinoamericanas frente a una globalización en crisis”, in Nueva Sociedad N°275, May-June 2018, http://www.nuso.org.
  • UNCTAD, “Investor-State Dispute Settlement: Review of Developments in 2017”, IIA Issues Note, Issue 2, Geneva, June 2018, http://investmentpolicyhub.unctad.org/.
  • Vieira Posada, Edgar, “Los actuales desafíos del proceso de globalización”, Acontecer Mundial, Centro de Pensamiento Global (CEPEG), Bogotá 2016.
  • Vuillard, Éric, “El Orden del Día”, Colección Andanzas, Tusquets Editores, Buenos Aires. 2018.
  • Weisbrot, Mark, “Failed. What the “Experts” Got Wrong About the Global Economy”, Oxford University Press, New York 2015.

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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