«Battle for Globalisations? BRICS and US Mega-Regional Trade Agreements in a Changing World Order MARKO JUUTINEN AND JYRKI KÄKÖNEN © 2016 Observer ...»
From the perspective of power transition theory, the MRTAs can be conceived of as means to create a stronger alliance system around the dominant power.
There are two dimensions to this perspective: economic rebalancing and political integration. From this perspective, the creation of a marketplace that accounts for about 60 percent of world trade can arguably be presented as such a measure.
The actual effects of rebalancing economic power shifts, however, seem to be of a minor scale. The mechanism is, firstly, the increased efficiency within the MRTAs and secondly, the rising cost of at least certain imports from the BRICS to the MRTA areas. Together, these mechanisms increase the comparative advantages of the MRTA members and, correspondingly, decrease the comparative advantages of outsiders. Secondly, because of the upgraded regulatory cooperation and founding of common institutions, the logic of economic integration as a foundation for further political cooperation seems to exist. This holds in particular for the EU and US whose bilateral relations have a clear federalist undercurrent.
Battle for Globalisations?
The power transition theory would also suggest that alliances are the means to provide incentives for outsiders and potential challengers to opt for cooperative strategies with the dominant group of states. China's reactions to TPP already provide evidence for this. However, this does not amount to dissolution of the BRICS. For intra-BRICS cooperation in various issues like agriculture and health, and also as far as the new financial institutions are concerned, TPP and TTIP do not have any direct effect on them.
Thus TPP and TTIP do not seem to provide any disincentives against furthering BRICS cooperation. Interestingly, this deepening cooperation does not preclude the likely effect of MRTAs on the global trade regime. It was said already in early stages of negotiations for both TPP and TTIP that these agreements provide a new gold standard for trade and there is nothing to suggest otherwise. Indeed, the overlap of RCEP and TPP memberships, China's willingness to join TPP and the sheer size of the MRTAs, leave little, space to contradict this interpretation. Some of the expert interviews after the Nairobi Ministerial Conference suggested that TPP is now going to set the stage for multilateral trade negotiations, too.
The authors' enquiry found evidence that the MRTAs do promote globalisation of a singular trade regime. In that limited sense the MRTAs provide support to the hypothesis of a battle for singular globalisations. This function can be seen as a battle because of the contestations of the similar (or less ambitious) agenda within the WTO. At the same time, the MRTAs do not stand out directly as tools or means for world dominance; rather, they do leave space for other initiatives on other dimensions of globalisations.
Despite promoting a globalisation of a singular trade regime, this effect of the MRTAs is by far certain. Exporters to the US and EU are already complying with their rules. While uniform trade rules would certainly be a means to make business easier, political concerns may provide enough disincentive for many outsiders in Asia against approaching the MRTA trade model. These concerns cover sovereignty, regulatory autonomy, Western dominance of global value chains, and varying cultural norms. BRICS strategy for economic partnership, the RCEP and Latin America's ALBA-TCP are all examples of initiatives which,, question the Western trade regime. If political will is strong enough, diversification of trade rules may also be an option. Indeed, forging stronger
economic integration among the non-western countries might also lead to the dissolution of the Western MRTAs in the long run.
While BRICS may not be an instrument for a new international order—as far as global trade regime is concerned—the evidence gathered for this paper suggest that in development and foreign policy, BRICS seems to have the potential to contribute to a more balanced, or even multipolar, world order.
Economic globalisation seems, however, to be on track for further integration after 15 long years of stalemate within the WTO framework. However, while TPP and TTIP are likely to set the direction of global trade regime, they cannot force developing countries to yield their development concerns. Instead, TPP and TTIP would seem likely to give an incentive to take steps for domestic reforms on the path of development, in order to be ready for the MRTAs in the future.
As a corollary, this paper rejects the hypothesis of a 'battle for globalisations', in the sense that the changing world order would be dispersed into conflicting processes. Contentions and power struggles do exist but they do not seem to be the defining features of the new phenomenon. Rather there is evidence pointing to the diversification of global finance, development, and politics. As for economic globalisation or the global trade regime, diversification may, however, be short-lived if the MRTAs become the new normal.
This present analysis of BRICS suggests that 21st-century regionalism also has a drive towards a multipolar and more inclusive governance of, at least, development policy and crisis management. It seems probable that BRICS, SCO and RIC all evolve into a more balanced global political, environmental and security-related cooperation. In this restricted yet nuanced sense, a new world order is emerging through a certain of type of battle for globalisations – driven for the first time in hundreds of years by the ancient civilisational powers.
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