|
Abstract
It is too soon yet to make any serious appraisal of the impact that an
eventual Transatlantic Trade and Investment Partnership (TTIP)-as well
as the Trans-Pacific Partnership (TTP)-could have on the multilateral
global trading system and in those countries that are full members of
Mercosur, or that share the idea of a South American integration process.
To a great extent, the impact will depend on the situation of both the
WTO and Mercosur at the moment that the actual negotiations are concluded.
Also, it will depend on the results of the bi-regional EU-Mercosur negotiations.
What is clear is that, if concluded and effectively implemented, both
the TTIP and the TPP could eventually have a strong impact-even a negative
one-on the global multilateral trading system and that this impact should
be carefully appraised by Mercosur and other South American countries.
The impact will particularly depend on some of the chapters of the agreements
that could be concluded and especially of the commitments related, among
others, with agriculture and intellectual property. But for the time being
it is possible to sustain that the perception of a positive conclusion
of both negotiations will, without doubt, stimulate the current debate
about the future of Mercosur and of South American integration.
The multilateral trading system in the transition to a new global
economic order
There seems to be a certain consensus about the gradual erosion of the
global multilateral trading system institutionalized by the WTO that could
be the result, on the one hand, of the cumulative effects of the standstill
of the Doha Round (Evenett & Jara 2013) and, on the other hand, of
new initiatives that would lead to accentuate the proliferation of interregional
mega- preferential trade agreements such as the TPP and the TTIP.
Due to the eventual fragmentation effects on the institutional framework
of world trade, said erosion may not only affect the transnational flows
of goods, services and productive investments but may have geopolitical
connotations as well. The debate surrounding the geopolitical dimension
of the TPP is proof of this (Lim, Elms & Low 2012). If this were the
case, it could also affect the already compromised global governance in
terms of the prevalence of conditions for peace and stability in the world
and in the different regions. Global governance was, we must recall, one
of the main driving forces that accounted for the origin of the multilateral
global trading system through the creation of GATT and then of WTO (Van
Grasstek 2013).
This is the reason why the adaptation of the global multilateral trading
system to the profound transformations that are currently taking place
in world power and in global economic competition is regarded as one of
the main challenges for the international agenda of the upcoming years.
This adaptation could be even more necessary if we consider the perception
that many countries have-especially the emerging and re-emerging protagonists-that,
in great measure, the existing institutions and rules reflect a reality
of world power that is being rapidly overcome (Peña 2013c). Unlike
the world in which the global multilateral trading system was born, where
few countries had the sufficient power to adopt decisions and generate
rules that penetrated reality, the present one is much more diverse, complex
and dynamic. It is a world of many protagonists and clubs. However, there
is not a dominant club such as the 'oligarchic condominium' referred to
by some analysts in the sixties and seventies during last century.
It seems difficult to imagine that in the short or even in the medium
term it will be feasible to agree on re-founding schemes that entail an
in-depth revision of the WTO system, assuming that this were eventually
advisable. The difficulty of bringing together the sufficient critical
mass of world power that is needed to revise or to create new institutions
and relevant rules would indicate that the initiated transition will require
some time before we can enter a new stage of the global multilateral trading
system. Therefore, the idea of metamorphosis would seem more advisable.
It would imply opening a debate on the revision of some of the mechanisms
and instruments of the current multilateral trading system that, if introduced,
could help improve its effectiveness, efficiency and social legitimacy.
At the very least, this could help stop the current trend of gradual deterioration
of these three systemic qualities that are essential for the relevance
of those institutions and rules.
Among the relevant issues that have an impact on the systemic deterioration
that was mentioned above, there are two that deserve attention. First
is the issue of how WTO members can address trade emergency measures through
safety valves that imply greater flexibility than what is tolerated by
the present rules. Second, how to strengthen collective disciplines on
preferential trade agreements to prevent them from contributing to a greater
fragmentation of the world trading system and even to its fracture.
Given the potential of preferential trade agreements to fragment the
global multilateral trading system, especially those that involve several
countries from different regions, or that include commitments that transcend
those made within the WTO, it would seem advisable to analyze new collective
disciplines. These should ensure effective transparency regarding any
preferential measures-that could be discriminatory for those countries
that are not members of a particular agreement-and a periodic independent
technical assessment of their effects on trade and investment flows originating
in third countries and on the cohesiveness of the global multilateral
trading system.
Trends towards the fragmentation of the global multilateral trading
system
A common ground today is that all member countries agree that the global
multilateral trading system must be preserved and strengthened. But at
the same time all signs indicate that it will take time to articulate
the required consensus, either to conclude the current multilateral negotiations,
to suspend them for good-nobody seems to be interested in having the responsibility
of accounting for a failure in the inevitable blame game that would follow-,
or to agree new negotiation modalities that allow to soften the rigidity
of the single undertaking such as, for example, those that do not require
the participation of all member countries and that are agreed within the
WTO framework (different variations of plurilateral agreements). There
are certain factors that show an influence on this regard.
The first factor is the high number of participating countries, with
evident differences in relative power, cultural traditions and degree
of economic development. After the addition of Russia and other countries
the number of WTO members has currently grown to 159. It is quite a difficult
task to find an agreement among all of them regarding agendas that are
filled with the most diverse and sensitive issues, both for political
and economic reasons. The most relevant fact is that the scattering of
relative power among the relevant players in world trade has increased
since the creation of the WTO.
A second factor that anticipates a period of uncertainties in the WTO
is the low intensity of the present incentives to conclude the Doha Round.
This may be explained by the effects of the current international financial
and economic turbulence, which have accentuated political reflexes against
innovation in all the non-urgent issues. Concretely, if the domestic political
costs are high the tendency of the protagonists is to favor inertia, even
when this could mean risking eventual long term benefits.
A third factor is a growing trend towards favoring alternative paths
to those offered by the global multilateral trading system. The difficulties
to move forward in the successful conclusion of the Doha Round feed this
trend. It is then understandable that the alternatives proposed by different
types of restricted preferential mega-clubs might prove more functional
to the aim of facilitating the expansion of trade and investment flows
among the participating nations. Additionally, these allow for the creation
of WTO plus agreements. Said clubs are not limited to countries from neighboring
geographic spaces, where preferential agreements are regarded as instruments
of the strategies for regional governance and may have deep economic integration
purposes.
With the prospect of a weakening of the WTO multilateral framework the
proliferation of preferential agreements between large markets could contribute
to a fragmentation, even a chaotic one, of the world trading system. However,
the main problem could derive from the fact that the relevant players
of the world political scenario eventually perceive that some of these
agreements pursue geopolitical objectives that go far beyond trade and
investment flows. This could imply the beginning of a dangerous game that
may contribute to a greater fragmentation of the international political
system. The epicenter of such game could result from the competition between
great powers, both longstanding and re-emerging, in geopolitical spaces
with a high potential for conflict. On this regard, the perception that
countries such as China, the US and the EU (still trying to manage its
own identity crisis) may have of the intentions of each one of them at
the time of promoting preferential and WTO plus mega-agreements should
be watched closely.
Even after the Ninth Ministerial Conference of last December in Bali,
the WTO and especially the Doha Round still raise questions regarding
their future (Peña 2013e). However, certain positive events should
be highlighted, such as the acknowledgement that the Doha Round is at
an impasse that generates the need to explore different negotiation approaches
that are compatible with the principles of inclusion and transparency.
At the multilateral level, the non-discrimination principle expressed
by the most-favored-nation treatment of article I of the GATT is one of
the key elements of the trading system. Together with the consolidation
of what each country grants to all other countries, it provides the system,
at least in the regulatory aspect, with the expectation of a relative
potential for stability and a relevant insurance against discrimination
and protectionism. With the evolution experienced after the Uruguay Round
by the mechanism of dispute settlement within the WTO, the global multilateral
trading system has reinforced its tendency to be rule-oriented increasing
thus its political and economic value and its standing as an international
public asset.
The other level is that of the different preferential trade spaces. These
result either from regional governance strategies, as are the cases of
the EU and Mercosur among other relevant examples, or from strategies
for the international projection of the trade interests of nations or
groups of nations, such as the multiple existing preferential trade agreements
that are supposed to be consistent with the GATT and GATS principles and
rules.
The proliferation of such agreements of partial scope, in the sense that
they do not encompass all WTO members, has intensified during the last
years. It has given rise to the creation of different types of preferential
agreements. As mentioned previously, some are what can be called regional
agreements in the strictest sense, with a clear goal of contributing to
the governance of the corresponding regional geographic space. Others,
instead, have materialized between distant countries. Two common traits
can be noticed in all of them: they answer to explicit or implicit political
objectives and they are discriminatory in relation to the main principle
of the most-favored-nation treatment institutionalized by the GATT-WTO.
Increasingly, they also include non-preferential trade elements that do
not imply exceptions to the abovementioned principle of non-discrimination.
This proliferation of preferential agreements may even increase if the
Doha Round is not completed or if no reforms to the multilateral global
trading system are introduced.
Issues related with the dialectic tension between the global multilateral
and the preferential levels are currently relevant for the world trade
system and, in particular, for the GATT-WTO. The idea of the predominance
of one level-for example, the global-over the others may correspond with
theoretical and ideological views. In reality this is not the case and
it is unlikely for it to happen unless there is an effective centralization
of world power, something that seems highly improbable, at least from
what can be anticipated from the current international situation.
What is customary presented as a dichotomy between global multilateralism
and preferential regionalism is a relation viewed as complementary by
some analysts and as antagonist by others. In this regard, it is important
to identify the factors that can have the strongest impact, either positive
or negative, on the predominance of complementarily or antagonism in order
to achieve a reasonable balance between them.
Time is one of the main factors that could explain the trend to develop
preferential trade agreements, particularly when these are unrelated to
governance strategies of regional geographic spaces. In this sense, it
has been observed in the case of the Doha Round that the main costs at
the global multilateral level, especially the local political ones, are
incurred in the short term, whereas the benefits only begin to show in
the mid and long term. This fact has caused a growing number of countries
-and its businesses- to attempt to move forward through agreements of
partial scope, thus conforming at times preferential trading networks
in connection with a particular country.
But it is necessary to remember that, for most analysts, international
trade regimes are just one of the components that determine the dynamics
of world trade. Others are the transition from the industrial to the knowledge
society; technological developments in the areas of transportation, communication
and logistics; the intensification of the globalization of financial markets,
and the proliferation and strengthening of transnational productive chains.
Relevance of regional governance for stability at the global level
The attention of protagonists and analysts is increasingly focusing on
the impact of the global crisis on their corresponding regional geographic
areas. History reminds us that the scenarios for political collapse and
even for its most negative consequences in terms of armed confrontations
have, in general, started out as regional conflicts (MacMillan 2013).
Attention to the adjacent contexts is especially relevant in those integration
processes aiming to ensure reasonable governance conditions, such as peace
and stability, for the respective region. They also offer the potential
for strengthening the ability of each of the member countries to achieve
their own goals in terms of productive transformation and insertion in
the global economy. This is the case of the EU, ASEAN and Mercosur. These
processes usually have a political origin which, if the fundamental motivations
are preserved or renewed, may account for the long- term vitality of their
economic content.
It is well known that regional integration processes are constantly submitted
to the dialectic tension between factors that drive towards fragmentation
and those required as conditions for greater cooperation and integration,
at least among the respective economic systems. It is also a known fact
that there is not a unique model to preserve and strengthen the political
will of sovereign states to work together. This means that each regional
geographic space needs to develop its own methods to articulate national
interests. This task is often a complex one when trying to reconcile the
sometimes very deep differences in relative power, economic dimensions
and level of development among participating countries. As a result of
the current global crisis, such methods of regional integration are now
being tested in at least three fronts. The first is the protectionist
trend in the mutual relations of participating countries, the second relates
to the ability to articulate common positions in response to the effects
of the crisis and the third is the exercise of an effective collective
leadership in the corresponding regional space.
Ultimately, the issue of an effective collective leadership within Mercosur
or South America is reflected in the foreign perception of the role of
Brazil (Peña 2013d). Due to its economic dimensions and its increasing
institutional strength, Brazil is perceived as a country able to assume
the leadership of the South American region as well as of Mercosur. This
was previously shown in the strategic partnership that was agreed between
Brazil and the EU. However the experiences of other regional geographic
spaces indicate that efficient leaderships are those that result in the
creation of shared positions among different countries that are perceived
as having the capacity, at the same time, to be relevant protagonists
and leaders themselves.
Looking into the future the challenge for Mercosur countries and for
the South American region is still to achieve what other regions, in particular
Europe, have already accomplished: to provide an institutional framework
for collective leaderships based on mechanisms that may prove relatively
efficient to build consensus and coordinate positions in times such as
the current global economic crisis.
Toward an era of interregional mega-preferential trade agreements?
After the experience with the failure of the hemispheric FTAA negotiations,
it seems premature to venture a prediction on the possibility that the
negotiations of the TPP (Lim, Elms & Low 2012) and the TTIP (Madariaga
2013; Seshadri 2013) are concluded in a reasonable period of time. But
given the fact that it is difficult to imagine that the Doha Round will
be concluded anytime soon, it would seem advisable to work under the assumption
that we are entering an era of interregional mega-preferential trade agreements
with strong geopolitical connotations. This could be a period with multilateral
disciplines and large 'private clubs' of a discriminatory trade nature
towards the non-participating countries, not so much by means of tariffs
but through other measures affecting trade flows and investments, especially
those resulting from the various regulatory frameworks.
A vision of the future of the negotiations between Mercosur countries
and the EU with the aim of concluding a bi-regional association agreement
should be placed with such framework (Kegel & Amal 2012; Messerlin
2013; Peña 2013a). Years have passed since the idea of this interregional
preferential agreement was launched. Dreams were diluted. Negotiations
lost their dynamism. At times they stagnated. And one of the factors that
gave initial momentum disappeared after the explicit wreck of the FTAA
at the Summit of the Americas in Mar del Plata (2005). At the same time,
the fact that the Doha Round also entered a state of starvation contributed
to cool down the negotiating mood on both sides of the Atlantic. We should
keep in mind that the WTO negotiations were perceived as the ambit that
would eventually help untie one of the most complex knots in the bi-regional
Mercosur-EU relations which is agriculture, especially for the distorting
effects that are rightly attributed to the Community's agricultural policy.
In turn, in European eyes, Mercosur has been losing credibility and, therefore,
its appeal. Today, the changes in the global economic environment find
both protagonists of this relationship going through their own identity
crises (Van Middelaar 2013).
In Santiago de Chile, in January 2013, Mercosur and the EU reaffirmed
once again their political will to conclude a bi-regional association.
They had done this before on occasion of the Madrid Summit in 2010. They
have been negotiating for thirteen years now. Finally they agreed that
in the last quarter of last year 'at the latest' they would make the delayed
exchange of offers. They still seem to maintain the idea that such offers
should lead to the release of substantially all the trade, conceived from
a dogmatic interpretation but without a solid legal foundation in GATT-WTO
rules and according to which coverage of at least 90% of the bi-regional
trade should be ensured. At the beginning of 2014 (January) the exchange
of offers is still a commitment, not a fact. And the blame game is actively
promoted in both sides of the Atlantic.
The signs of life manifested in Santiago do not exclude the strong questioning
posed by the future of these negotiations. At times they lead to options
that are reflected in proposals aimed at materializing some form of agreement
of bi-lateral scope, for example, between the E.U. and individual Mercosur
countries. It has even been suggested that it could be within the framework
of a multi speed bi-regional agreement.
However the above scenario also has sensitive political rough edges.
It could weaken to a dangerous extent the distinction between 'us and
them' that since the Alfonsin-Sarney agreements in 1985-86 has been a
key feature of the strategic relation between Argentina and Brazil, with
all the unfoldings that it has had since its origins and that still has
today. These certainly transcend the bilateral political and economic
level. They contribute to something that is of great value for each of
the two countries and that can be called the 'quality of the neighborhood'
in terms of peace, democracy, political stability and social and economic
development of all South America. Most notably, this includes the existing
bilateral agreements in the nuclear field that are undoubtedly an example
of understanding between neighboring nations in a more than sensitive
issue which transcends the regional scope.
The foreign trade agenda of Mercosur: some requirements posed by future
international negotiations.
As with individuals, firms or institutions, a group of countries that
are linked together in an integration process, especially if it includes
a common external tariff as a central element of its collective disciplines,
must have an agenda of external trade relations. Or at least this would
be convenient. This agenda usually defines priorities, fronts of action,
steps to be taken and, when possible, a timetable. Nowadays it should
even be possible for such agenda to be consulted by citizens online. Of
course, this is not always the case. If it is an association of countries
such as Mercosur, the external agenda defines the roadmap for its possible,
necessary or desired trade insertion in the world and its region. This
implies sending signals to other countries, especially to those with which
it aspires to negotiate, regarding its preferences and priorities. It
is meant, above all, to provide a guide for local and foreign investors
of the future that it envisions for the trade of its goods and services
and for productive investments that create jobs and prosperity. It is
an element of predictability. This also is evident when we see that many
current and potential partners or competitors of Mercosur and its member
countries tend to rethink their own agendas of external trade negotiations,
especially as a result of international changes taking place at the following
three closely interrelated levels.
As we mentioned earlier, the first of these three levels is the global
multilateral trading system. On this regard, the standstill of the Doha
Round is a clear evidence of the difficulties in relation to one of the
WTO main roles which is precisely to facilitate trade negotiations comprising
all member countries.
The second level is that of the negotiations of mega preferential trade
agreements, including those of interregional scope such as the abovementioned
TTIP and TPP as well as the Regional Comprehensive Economic Partnership
(RECEP). Due to their size and commercial importance we should also include
those being developed by the EU with India and Mercosur, assuming that
in both cases the current uncertainties are eventually overcome. These
are trade negotiations which on the whole will mean that a substantial
part of the world's population, gross product and trade will be covered
under preferential rules.
It is still difficult to predict if these negotiations will culminate
in agreements signed and ratified by the participating countries. The
precedent of the failed FTAA negotiations proves that, beyond the expectations
that may be generated, even resorting to a good dose of 'media diplomacy'
with all kinds of 'special effects' they will not always conclude in the
signing of an agreement. And the precedent of the Havana Charter of 1948,
which originated the International Trade Organization (ITO), is also a
reminder that even when negotiations conclude successfully they may later
fail to pass the test of parliamentary approval and thus of ratification
and entry into force. The fact that, at least by the end of January 2014,
it was yet difficult to predict when the Trade Promotion Authority (TPA)
would be approved by the US Congress (if that effectively occurs within
a reasonable period of time) contributes to the doubts about the future
evolution of the TPP and TTIP interregional negotiations.
But if the corresponding agreements were finally concluded and took effect,
they could produce two types of results that could even be sequential.
One result would be the emptying of the global multilateral trading system,
with the possible consequences that this could have in terms of the erosion
of the WTO as a relevant institution for global governance. In this case,
the impact would transcend the more limited level of world trade. The
other possible result would be that these agreements generate commitment
standards in terms of the regulation of the global trade of goods and
services as well as, among others, investments, intellectual property
and government procurement, which could later be extended to the multilateral
level. In practice, it could imply excluding those countries not participating
in such agreements from the process of defining rules and institutions
which in the future could govern world trade. And it is hard to imagine
that the excluded countries, especially if they have or aspire to have
a relevant participation in global trade and in world power, will passively
accept such marginalization.
And the third level is that of the multiple forms of transnational production
chains of global, regional or inter-regional scope (Baumann 2013; Ferrando
2013; Valls Pereira 2013; Altenberg 2013; Gunnarsson Ljungkvist 2013;
Jenks & Persson 2013). In the glossary of current commercial diplomacy
they are encompassed under the concept of global value chains. Sometimes
they are the result of the fragmentation of the production processes of
large transnational corporations in different countries, with the ensuing
impact on investment flows, distribution services, transportation and
logistics. But they are also the result of the cross-border linkages of
groups of enterprises-often small and medium sized-with specialization
niches and strong complementation potential.
Recent developments in these three levels have had repercussions in Latin
America and particularly in the South American regional space. An example
of this is the debate installed in Mercosur countries on how to address
the new realities of trade and international trade negotiations. The fact
that the idea of Mercosur as a joint strategic project of a group of South
American countries has not been questioned yet becomes much more relevant
when we note the frequency with which different analysts and protagonists
suggest that countries such as Brazil should rethink their relation in
view of other approaches considered more appropriate. In particular, the
model which is in contrast with that of Mercosur is that of the Pacific
Alliance (Peña 2013b). In doing so, it is assumed that the partnership
has already produced the results announced by its four member countries.
But still it is difficult to determine the real practical extent of the
progress that would be taking place in its development.
Conclusion
In the near future the evolution of Mercosur and of the integration ideas
in Latin America and in the South American regional space will be strongly
influenced by the developments both at the multilateral level of the WTO
and at the interregional preferential level, particularly as a result,
among others, of the actual negotiations of TTIP and TPP. Both levels
are at this moment characterized by several uncertainties originated in
a highly dynamic and complex international environment and, particularly,
in the deep changes in the distribution of political and economic power
among the main protagonists of global economic competition. It is possible
to anticipate that these uncertainties will prevail for some years still.
What is clear is that, if concluded and effectively implemented, both
the TTIP and the TPP could eventually have a strong impact-even a negative
one-on the global multilateral trading system and that this impact should
be carefully evaluated by Mercosur and other South American countries.
The scope of the impact will depend, in particular, of some of the chapters
of the agreements that could be concluded and especially of the commitments
related, among others, with agriculture and intellectual property. But
for the moment it is possible to sustain that the perception of a positive
conclusion of both negotiations will, without doubt, stimulate the current
debate about the future of Mercosur and of South American integration.
|
