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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2021 | 2020 | 2020 | 2019 | 2018 | 2017 | 2016
2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009

INTERREGIONAL ALLIANCES AND GLOBAL TRADE
Their importance in the context of a renewed and strengthened WTO


by Félix Peña
May 2021

English translation: Isabel Romero Carranza


 

The redesign of the global multilateral system is just one of the concrete challenges that result from the new realities and trends that can be observed as a consequence of the Covid19 pandemic, among other factors.

In this opportunity, we will refer to the WTO and the regional agreements and interregional alliances with international trade commitments involving developing countries in Africa, Asia and Latin America.

We will consider the recent experience of Latin American countries in the WTO and provide a perspective on how the region could contribute to the development of a new era of multilateralism in world trade. In this regard, some institutional requirements that Latin American countries should bear in mind when designing their strategies for participation in the future global trade system will be taken into account.

A first requirement is related to the position of Latin American countries in relation to the necessary adaptation of the WTO system to the new international realities. The second requirement refers to the interaction between the different integration processes within the region, in order to increase their reciprocal connection and develop mechanisms to facilitate their effectiveness. The third requirement refers to the interregional aspect. It involves, in particular, the advantages that can be gained from a more intense and effective connection of the various joint work processes between Latin American countries and those of other developing regions in Asia and Africa, especially ASEAN and the African Union. It also comprises the association with the various existing regional agreements involving industrialized countries, such as the agreements with the EU and the new North American free trade agreement.

The idea of joint work between different regional and interregional processes, within the framework of the rules of a renewed and strengthened WTO, could have a positive effect on the necessary development of a new stage of the multilateral system of international trade.


The redesign of the multilateral global system is one of the concrete challenges derived from the new realities and trends that can be observed as a consequence of the Covid19 pandemic, among other factors. These new realities and trends, together with other forces, are an outcome of the redistribution of power among nations, which has become evident in recent years, especially at the highest level of the stratified international system.

In this opportunity, our observations will be related to the global multilateral system of international trade -the World Trade Organization- and its relationship to regional agreements and interregional alliances with international trade commitments involving developing countries in Africa, Asia and Latin America. We will also examine the progress that could be made in relation to the changes required in the international trading system, which in turn could have a positive impact on the efforts to reform the United Nations as a key component of the global system. (See the recent report edited by Ettore Greco, whose reference is included as recommended reading at the end of this newsletter, and the reports edited by Mario Teló, listed as recommended reading in the April issue of our newsletter).

Our perspective takes into account the experience of Latin American countries in the WTO and a vision of how the region could contribute to the development of a new era of multilateralism in world trade (see the January and June 2020 issues of our newsletter). We will take into account some institutional requirements that Latin American countries should bear in mind when outlining their strategies for participating in the future international trading system.

After the recent appointment and taking office of Ngozi OKonjo-Iweala as the new WTO Director General in charge of leading the organization, a first requirement is related to the position of Latin American countries regarding the adaptation of the WTO system to the new international realities in at least two relevant aspects (see Alan Wm Wolf in the recommended reading section of this newsletter). These involve, on the one hand, the rules referring to the principle of non-discrimination in international trade (especially those of article XXIV of the GATT and those of the Enabling Clause) and, on the other hand, the effectiveness of the dispute settlement mechanism, in order to ensure that it can truly be perceived as a guarantee of a multilateral system of global trade guided by rules that are in fact observed. These two issues have been of great relevance for many Latin American countries since the GATT era and continue to be so.

A second requirement refers to the interaction between the various Latin American integration processes within the region itself, in order to achieve their reciprocal interconnection and the development of mechanisms that enable their articulation and effectiveness. Above all, this would facilitate joint work among the member countries, both at the regional and global levels, including the different forms of possible interregional alliances, especially with the participation of other developing countries.

The idea of joint work among the countries of the region, especially in the cases of the Pacific Alliance and Mercosur, may make it possible to harness the full potential of the regional trade system institutionalized in the Latin American Integration Association (LAIA). Without the need for any modification of the 1980 Treaty of Montevideo, its mechanisms and rules have the potential, in many cases, to effectively connect the various sub regional processes currently in place in the Latin American region (see the October 2020 edition of our newsletter). The various possible modalities for the so-called partial scope agreements, as provided for in Articles 8 and 14 of the Treaty of Montevideo, are an example of the regulatory breadth of scope of LAIA, which has not always been fully used.

It would likewise allow Latin American countries to derive joint benefits from an eventually renewed WTO system and, at the same time, to develop interregional preferential trade networks with other regional agreements, especially those involving developing countries. In particular, they can be the framework for including other issues that are currently relevant to the relationship between trade and economic development, such as, among others, those related to sustainable development and, especially, climate change.

A third requirement refers precisely to the interregional level (see the November 2019 edition of our newsletter). It involves the mega-networks of trade preferences of trans-regional scope. It includes, in particular, the advantages that can be drawn from a more intense and effective connection of the several joint work processes between countries in the Latin American region and those of other developing regions in Asia and Africa, especially with ASEAN and the African Union, without excluding others.

At the same time, it also includes institutionalization through the existing regional agreements in which industrialized countries participate, such as the European Union and the new North American Free Trade Agreement (UMSCA, for its updated acronym in English, or CUSMA in Spanish). In the case of Mercosur, the agreement with the EU that was concluded in 2019 (more than twenty years after negotiations were initiated) is still at a standstill due to the present differences, especially among the EU member countries.

Latin American interest in ASEAN seems to have increased after the signing of the Regional Comprehensive Economic Partnership (RCEP) last year (see our newsletter from December 2020 and the report by Andrés Serbin listed as recommended reading below, among several others).

As for the African region, two recent publications help to remind us of the growing interest in relations with the African Union as an area of great potential for interacting with Latin American countries. We are referring to the work of Landry Signé and Carlos Lopes, both included as recommended reading of this newsletter. Both books help to develop a positive perspective on the huge potential that the African region has for the future, including those possibilities that open up for joint work with Latin American countries.

For many reasons, the EU would be in a position to play a truly positive role, especially with interregional agreements aimed at effectively strengthening trade and sustainable development with the main integration agreements in the developing world. However, it would be extremely useful to be able to support the above with concrete actions resulting, for example, from a rapid signing and implementation of the agreement already concluded with Mercosur.

In our opinion, the idea of joint work between different regional and interregional processes, within the framework of the rules of a renewed and strengthened WTO, could have a positive impact on the necessary development of a new stage of the multilateral system of international trade.


Recommended Reading:


  • Bacchus, James, "The Willing World. Shaping and Sharing a Sustainable Global Prosperity", Cambridge University Press, Cambridge - New York 2018.
  • Bacchus, James; Manak, Inu, "The Development Dimension. Special and Differential Treatment in Trade", Routledge, London and New York 2021.
  • Caballero-Anthony, Mely, "Towards a multipolar order post-pandemia", East Asia Forum, April 26, 2021, en www.eastasiaforum.org.
  • Caradonna, Jeremy L., "Sustainability. A History", Oxford University Press, Oxford - New York 2014.
  • Corrales, Javier, "Fixing Democracy. Why Constitutional Change Often Fails to Enhance Democracy in Latin America", Oxford University Press, New York 2018.
  • Corrales, Javier, "Nuevos caudillos. Los ex-presidentes de América Latina tienen demasiado poder", diario "La Nación", sección Ideas, página 4, 24 de abril 2021.
  • Dumont, Diego, "Trámites y requisitos para lograr la habilitación que permite importar y exportar", Suplemento Comercio Exterior del diario "La Nación", página 3, 25 de abril de 2021.
  • Easterly, William, "The Tyranny of Experts. Economists, Dictators, and the Forgotten Rights of the Poor", Basic Books, New York 2013.
  • González, Martín Abel, "La Génesis del Enfrentamiento por las Islas Malvinas. El Proceso de Descolonización y las Negociaciones Fallidas de 1964-1968", Editorial Lajouane, BsAs 2015.
  • Greco, Ettore (editor), "Renewing Multilateralism for the 21st Century. The role of the United Nations and of European Union", Foundation for European Progressive Studies (FEPS) - Instituto Affari Internazionali, FEPS, Brussels 21 september 2020 (www.feps-europe.eu).
  • Kausikan, Bilahari, "Can Asia reinvent global trade?", East Asia Forum, April 26, 2021, en http://www.eastasiaforum,org.
  • Kluka, Ján, "Regionalism in International Law", Routledge, New York and London 2018
  • Koh, Tommy; Hwee, Yeo Lay (editors), "ASEAN-EU Partnership. The Untold Story", World Scientific Publishing, Singapore - Hackensack, NJ - London, 2020.
  • Lopes, Carlos, "Africa in Transformation. Economic Development in the Age of Doubt", Palgrave Macmillan, 2019.
  • Manak, Inu, "A clear agenda to save the WTO", East Asia Forum, April 28, 2021, en http://www.eastasiaforum.org.
  • Origlia, Gabriela, "India. Un Mercado de 1.300 millones de habitantes con grandes oportunidades", Suplemento Comercio Exterior, diario "La Nación", 15 de abril 2021, páginas 4 y 5.
  • Qin, Yaqing, "A Relational Theory of World Politics", Cambridge University Press, Cambridge - New York Melbourne - New Delhi, 2018.
  • Qin, Yaqing (editor), "Globalizing IR Theory Citical Engagement. IR Theory and Practice in Asia", Routledge, London -New York 2020.
  • Restaino, Carlos, "El Mercosur cumple años en una situación inesperada", Revista Megatrade, Nro 337, páginas 28-31. Buenos Aires, abril 2021.
  • Ribeiro Hoffmann; van der Vieuten, Anna, "Closing or Widening the Gap. Legitimacy and Democracy in Regional Integration Organizations", Routledge, London - New York 2007.
  • Sachs, Jeffrey, "La Era del Desarrollo Sostenible", Deusto - Grupo Planeta, Barcelona 2015.
  • Sanguinetti, Julio María, "El desafío diplomático en su dimensión mayor. Estados Unidos y China", diario "La Nación", sección Opinión, página 35, 24 de abril 2021.
  • Serbin, Andrés, "El Indo-Pacífico y América Latina en el marco de la disputa geoestratégica entre Estados Unidos y China", Fundación Carolina, Documentos de Trabajo, Madrid abril 2021.
  • Shaw, Timothy M.; Grant, J.Andrew; Cornelissen, Scarlett (editors), "The Ashgate Research Companion to Regionalisms", Routledge, New York 2011.
  • Shiro, Amstrong, ""Digital trade integral to East Asia´s recovery and dynamism", East Asia Forum, April 18, 2021, en http://www.eastasiaforum.org.
  • Signé. Landry, "Unlocking Africa´s Business Potential, Trends, Opportunities, Risks, and Strategies", Brookings Institution Press, Washington DC 2020.
  • Söderbaum, Fredrik; Van Langenhove, Luk (editors), "The EU as a Global Player. The Politics of Interregionalism", Routledge, London - New York 2006.
  • Thiele, Leslie Paul, "Sustainability. Key Concepts", Polity Press, Cambridge - Malden MA, 2016.
  • Van Langenhove, Luk, "Regions. The Regionalization of the World Order", Ashgate Publishing Limited, Farnham, Surrey - Burlington, 2011.
  • Wolf, Alan Wm.,"The Future of the WTO", Event, Peterson Institute for International Economics (PIIE), Washington DC. April 29, 2021. Event materials: "Saving the WTO. A Roadmap to the Future", en http://www.piie.com/events/future-wto.
  • Zelicovich, Julieta, "Anatomía de las Instituciones de la Política Comercial Externa", Instituto para la Integración de América Latina (INTAL-Banco Interamericano de Desarrollo), Buenos Aires 2020.

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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