«Battle for Globalisations? BRICS and US Mega-Regional Trade Agreements in a Changing World Order MARKO JUUTINEN AND JYRKI KÄKÖNEN © 2016 Observer ...»
BRICS and US Mega-Regional
Trade Agreements in a
Changing World Order
MARKO JUUTINEN AND JYRKI KÄKÖNEN
© 2016 Observer Research Foundation. All rights reserved. No part of this publication may be reproduced or transmitted
in any form or by any means without permission in writing from ORF.
BRICS and US Mega-Regional
Trade Agreements in a
Changing World Order
MARKO JUUTINEN AND JYRKI KÄKÖNENContents About the Authors iii Acknowledgement iv I Introduction 1 II Describing the New Phenomenon 7 III The Debate on Change: General Outlines 13 IV Change from a Dominant Power Perspective 17 V BRICS in the Context of Global Governance 27 VI Mega-Regional Trade Deals 41 VII Battle for Globalisations? 57 References 65 Endnotes 75 i About the Authors Marko Juutinen is a Visiting Fellow at the Observer Research Foundation, New Delhi.
He is a Doctoral Researcher in politics at the School of Management, University of Tampere, Finland. He has done research and taught at the university on various subjects including international political economy, trade agreements, and political theory. He has authored reports on TTIP for Finnish think-tanks and civil society organisations, and written op-ed pieces for leading Finnish magazines.
Jyrki Käkönen is Emeritus Professor at the School of Management, University of Tampere. He was the Professor of International Relations and European Studies at the Institute of Political Science and Governance in Tallinn University, Estonia (2007and Jean Monnet Professor Emeritus in the Department of Political Science and International Relations, University of Tampere, Finland (1998-2007). He has served as the director of the Department of Political Science and International Relations (2002and the director of Tampere Peace Research Institute (1988-1998). His current research interest is in the changing international order and how this poses a challenge to Eurocentric IR approaches. Among his recent publications are: “Interpreting the Transforming World: Perspective from Peace Research”, New Global Studies 5(3) 2011;
the book, 'Euro-Asia' at the Crossroads: Geopolitics, Identities and Dialogues, SHIPRA: New Delhi 2011,co-authored with Sanjay Chaturvedi and Anita Sengupta;
the piece, “International Relations in the Finnish National Epos 'Kalevala'“(in Finnish) Kosmopolis 4, 2013; and a chapter, “BRICS as a new constellation in international relations?” in Kaarle Nordenstreng and Daya Kishan Thussu (eds.), Mapping BRICS Media, Routledge: London and New York 2015.
A first draft of this paper was prepared in Finland. For their valuable comments to the draft we stand in gratitude to Prof. Heikki Patomäki from the University of Helsinki, and Prof. Tapio Raunio and Dr. Saara Särmä from the University of Tampere. During Mr. Juutinen's stay at ORF, the first draft was heavily revised. We are extremely grateful to the research faculty at ORF in New Delhi, especially Vice President Samir Saran for his excellent comments and insightful elaborations on the draft, and Senior Fellow Jayshree Sengupta for the discussions and research environment that greatly contributed to rethinking the analytical framework of this work and to polish the resulting arguments.
We are also grateful to Ms. Britta Peterson from the ORF, Mr. Michele Merloni from the EU Delegation to India, Ms. Ritva Haukijärvi from the Embassy of Finland, Dr. Arpita Mukherjee from the Indian Council for Research on International Economic Relations (ICRIER), Prof. Abhijit Das from the Centre for WTO Studies, Mr. Pranav Kumar from the Confederation of Indian Industry, and Mr. Chad R. Norberg from the Embassy of United States of America, for sharing their experiences and knowledge.We also thank the anonymous referees for their comments that helped to bring further clarity to the text, and Vinia Datinguinoo-Mukherjee for her fine editing of this monograph.
(This paper is the result of extensive exchange of ideas, discussions and cooperation between the two authors. For actual writing, and polishing the arguments and analysis, as presented in this paper, Mr. Juutinen has the primary responsibility. ) iv Abstract V arious analysts consider BRICS (the association of Brazil, Russia, India, China and South Africa) as a manifestation of a changing world order, heralding the dawn of a 'Post-Western Age'. In the context of 21st-century regionalism—as presented in this paper—and global power shifts, the thesis of change would seem viable. Indeed, regional trade agreements and the diverse organisations in Asia, including the Shanghai Cooperation Organization, manifest an ongoing division of international cooperation into two centres of political, economic and military power: the transatlantic area, and Eurasia. This paper examines the two cases of BRICS, and the Transpacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), and tests the hypothesis of a 'battle for globalisations', understood in two conflicting ways: as a) battle for global dominance, i.e., singular globalisation led by either the West or the 'Rest', and
b) a battle for plural,'globalisations'.This paper endorses the idea of a more balanced and inclusive, and less 'western' governance, although within the global trade regime the thesis of singular globalisation can be maintained.
Introduction T his paper contributes to current literature on the BRICS association (Brazil, Russia, India, China and South Africa) and the West-led MegaRegional Trade Agreements in the changing world order. One characteristic of ongoing transitions in global geoeconomics is the shift of power from the West to the East, or from the Global North to the Global South.
Another feature is the rise of BRICS on the international stage. A third is related to the West-led trade blocs, which may be viewed as reactions both to power shifts and the rise of non-western alliances. By concentrating on the major powers—in particular, the three Asian giants and the two transatlantic powers—and their reactions to change, there can be an increase in the understanding of transitions towards a new global order. The task of this monograph is to provide an analysis of what the authors deem as key features of change, BRICS, and the Western MRTAs—and how these all relate to globalisation.
BRICS was originally BRIC, founded in 2009 between Brazil, Russia, India, and China. South Africa acceded in 2011 and BRICS was born. Some analysts regard BRICS as a key actor for a new international order. Emerging power relations and new global initiatives have led these observers to advance the thesis of a dawning 'Post-Western Age,' with China and India as the future global superpowers. Indeed, BRICS calls for the democratisation of the interstate system and opposes Western and US dominance of global governance.
The decline of Western and US economic power relative to Asian and other emerging countries lends substantial credibility and international legitimacy to the BRICS demands.2 As a result, BRICS seems to aspire for an increased plurality in the world order and indeed is increasingly becoming an agent for globalisations—the plural—as opposed to the old globalisation of the 1990s.
Battle for Globalisations?
At the same time, the US is still a global superpower. Despite the power transitions, the US remains what A.F.K. Organski called a 'competitive nation'. Thus, if the US' broader objectives on global leadership have not changed, then the strategies employed to maintain such leadership, must have. A key feature of new initiatives from the West are linked to trade. This paper examines US-led Mega-Regional Trade Agreements (MRTAs) as cases of US reaction and adjustment. For example, Daniel Hamilton and Ashley Tellis argue that the MRTAs can (and should) strengthen the liberal trade regime but also advance broader American objectives.6 The Trans-Pacific Partnership (TPP) was concluded in October 2015 between the US and 11 other AsiaPacific states, including all the members of NAFTA (North American Free Trade Association), four members of the ASEAN (Association of Southeast Asian Nations), and two Latin American countries. Negotiations between the EU and US for a Transatlantic Trade and Investment Partnership (TTIP) have been going on since July 2013.
The method of scientific enquiry employed in this paper is to form a hypothesis and test it against empirical evidence. The hypothesis is that the ongoing, multipolar power shifts is a 'battle for globalisations',as opposed to the singular globalisation that was a largely uncontested process. This broad hypothesis is divided into two conflicting hypotheses.
Hypothesis 1: Battle for singular 'globalisation' BRICS and the Western MRTAs are cases of great power struggle for world dominance. The Western MRTAs from this perspective are seen as dominant power strategies to maintain dominance, while the BRICS represents a contending power alternative. The two blocs would then be cases of conflicting and singular globalisations.
Hypothesis 2: Battle for plural 'globalisations' BRICS and the Western MRTAs are cases of increased plurality of globalising processes, dispersion of power, and the struggles of multiple actors to successfully contribute to global governance. The two initiatives would then represent a shift from the singular process of globalisation towards a plural globalisations.
Introduction Various empirical evidence are employed for this study, for instance, the BRICS Joint Statements, the TPP agreement, and other official BRICS and MRTA documents. The authors are also strongly relying on earlier literature on the various related subjects.
The paper is divided into seven sections:
Sections II, III, and IV provide the analytical framework for this paper.
Specifically, section II describes the changes in global order, or what seems to be a new phenomenon of regionalism. BRICS and MRTAs, the authors argue, are cases of this new phenomenon. Section II also contrasts the new phenomenon with the prevailing understanding of 'globalisation', a concept that is increasingly becoming obsolete. Section III then discusses the emerging phenomenon.
Sections II and III also explicate the knowledge gap that this paper aims to fill.
More specifically, these sections will show how few studies exist where MRTAs and the BRICS are treated as cases of a changing world order or a new phenomenon. Some research, however, have been conducted on the Western MRTAs and the BRICS, separately and without the contextualisation employed in this paper.
Section IV builds on the hypothesis from the state-centric perspective of power transition theory. In other words, this section focuses on Hypothesis 1. The military power and economic output of US and the BRICS are compared and contrasted, and literature on changes in financial dominance are reviewed.
The purpose of such comparisons is to emphasise the importance of the BRICS as a whole, or the necessity of the association to function as a unified bloc in order to provide a contending force for the US. Further, the authors wish to underline that given increasing cooperation amongst the BRICS countries, the US is likely to react to maintain its global status. Otherwise, in the long run, the US will yield its place as a global superpower to China and India, and eventually find itself amongst the regional powers.
Sections II, III and IV can be read as different and conflicting conceptualisations of change – reflected in the conflicting division of the overall hypothesis. They are necessary for the sake of understanding the
phenomena of which the BRICS and the MRTAs are both cases, and for the formulation of this paper's hypothesis.
The rest of the paper is divided into two case studies and analyses. Section V deals with BRICS in the context of globalisation. It presents an overview of BRICS' initial development, from a loose forum to an effective organisation for inter-state cooperation. The new initiative, New Development Bank, is then described, along with a perspective of BRICS' relation to economic globalisation and international relations. Section V is thus a case study into the emerging plurality of globalisations.
Section VI deals with the MRTAs. It opens with an overview and then provides an analysis of the change between the WTO framework and the new MRTAs.
Based on this work, the authors provide an analysis of the significance of BRICS as an answer to power transition, in terms of both economic power shift and stronger alliance formation.
The concluding section reviews the hypothesis against evidence on BRICS and MRTAs. This paper's chief contribution does not consist of an analysis of new data, but of bringing together current data in an attempt to interpret and conceptualise the changes in world order. This paper argues that the scholarly understanding of a changing globalisation is still nascent. There is a clear need to conceptualise the phenomenon, localise its defining factors, estimate their significance, and build understanding of the new 'beast in the room', i.e., the contours of the coming global order. This monograph aims to contribute to this important task.
Describing the New Phenomenon T his section aims to introduce the reader to one dimension of the changing world order: the proliferation of regional and inter-regional cooperation, which appear to challenge the predominant understanding of the relations between regional processes and globalisation.
The phenomenon is not limited to regional economic integration but also relates to cooperation on various issues including financial, development policy, and security.