«Battle for Globalisations? BRICS and US Mega-Regional Trade Agreements in a Changing World Order MARKO JUUTINEN AND JYRKI KÄKÖNEN © 2016 Observer ...»
The concept of '21st century regionalism' was launched by Richard Baldwin in 2011to account for some aspects of the new phenomenon. He referred to the rise of regional trade agreements which were emerging in response to a change in international trade: trade no longer is about producing at one site and selling at another but the production process is dispersed across countries and regions, specialised, and coordinated by lead firms at the top of the 'supply chain'.7 Baldwin's concept does not encapsulate the much broader underpinnings of regionalisation in the 21st century. Besides the rise of trade arrangements, the concept should also account for the rise of new initiatives of financial, developmental, political and security cooperation, where the leading Western powers—the US, EU and Japan—are either absent or in a minor position. In global supply chains the Western companies have dominant positions, but this does not hold for the other aspects of 21st century regionalism. In this broader sense the concept of '21st century regionalism' captures the fact that regional organisations have arrived at the centrestage. It does not provide much information as to the interrelations and implications of these.
Describing the New Phenomenon
With regard to trade, a Regional Comprehensive Economic Partnership (RCEP) is being negotiated between ASEAN, China, India, Japan, Australia, New Zealand and South Korea. The 16 member countries contribute to about onethird of global Gross National Product (GDP) and make up almost half of the world's population. It is regarded as a China-centric trade agreement, in contrast to TPP that was concluded in October 2015 between the US and 11 Pacific States. The Trans-Pacific Partnership also contributes about one-third to world GDP but its population is only about 10 percent of world population.
While neither China nor India are members of TPP—where the US is the great leading power—Japan, Australia, South Korea, New Zealand and four of the ten ASEAN members are. Thus there is overlapping membership but with regard to the great powers, TPP and RCEP are exclusive.
The membership basis is not the only difference; TPP and RCEP also differ in scope and quality. TPP is a WTO plus agreement covering all the WTO agreements, with a purpose to a) increase market access by eliminating existing tariff barriers, expanding services commitments and opening public procurement markets, b) streamline regulatory differences that WTO framework allows to persist by regulatory cooperation and further developing of standards like intellectual property rights and finally incorporating c) the contested Singapore issues and d) new non-trade issues like labour and environmental chapters.9 RCEP on the other hand, will likely be more limited, with regard to market access, regulatory cooperation, standards like IPprotection, and leave out the non-trade issues entirely. Other trade initiatives include the Russia-led Eurasian Economic Union (EAEU) and the Latin American Alianza Bolivariana para los Pueblos de Nuestra América - Tratado de Comercio de los Pueblos (ALBA-TCP).11 In the field of economy, security and politics, the Shanghai Cooperation Organization (SCO) is the most significant non-Western initiative. It was founded in 2001 between China, Russia and four minor states with Iran, Mongolia and Afghanistan as observers and Turkey, Belarus and Sri Lanka as dialogue partners.12 While the organisation's power arguably is less than the combined power of its members, it may as well be argued that potential exists for SCO to become an Eastern variant of NATO, as the former Indian diplomat M.K. Bhadrakumar13 argued as far back as in 2007. Indeed, SCO holds military drills on a regular basis. Now that India and Pakistan are also set to join14 in 2016, the bloc will cover most of the Eurasian military and economic powers.
Battle for Globalisations?
Along with BRICS, SCO is not the only organisation bringing together the major Eurasian powers. RIC, the ministerial level conference between Russia, India and China, coordinates member states' policies in multilateral and regional organisations. In the Communiqué of the 13th ministerial conference the RIC countries stated their commitment to 'democratization of international relations' and to a multipolar world. RIC are exploring cooperation in oil and natural gas production and transportation, besides building networks between their respective think-tanks, businesses and cooperating in agriculture, disaster mitigation and relief, medical services, and public health.15 With regard to the long-standing disputes between India and China and China and Russia, the SCO, RIC and the BRICS indicate the trio's ability and will to see beyond the disputes and work together in the regional and global setting.16 Financial initiatives include the Alba Bank in Latin America but, more importantly, the Asian Infrastructure and Investment Bank (AIIB) and New Development Bank (NDB) launched in 2015 under the leadership of China and BRICS, respectively. As international financial organisations, the AIIB and NDB can contribute to a reconfiguration or at least variegation of development finance – besides balancing the political power over development policy that has previously rested firmly with the developed countries within the Bretton Woods framework.
In consequence, the Eurasian trio is cooperating on multiple fronts and with different platforms which often also are open for other emerging and/or Eurasian powers. It is also notable that in none of the new initiatives—RCEP, BRICS, SCO, RIC, AIIB, NDB (or ALBA-TCP)—do the developed countries have positions of any remarkable influence. In most of these initiatives the developed Western countries are actually excluded and the declining aspirant of global leadership is absent from all of them. Thus there is a kind of realignment along the Eurasian axis of China in the East, Russia in the North and bordering the EU, and India controlling the economically vital and politically unstable region of the Indian Ocean.
A similar trend can be found among the Western countries of the US, Canada, European states, Australia and Japan. The Western initiatives include, most importantly, the TPP introduced above, the Transatlantic Trade and Investment Partnership (TTIP) between EU and US, Trade in Services Describing the New Phenomenon Agreement (TiSA) between 23 Western countries and their allies, and also the Comprehensive Trade and Economic Agreement (CETA) concluded between EU and Canada in 2014. In TPP the US is the single most powerful state and in, all others it is either the EU or both the US and EU. Some members of TiSA and TPP have overlapping membership, in case of TPP the ASEAN members and the Western Pacific states, who are also part of RCEP. None of the members of these West-led initiatives, however, are BRICS members, permanent members of the SCO, or the NDB. Overlapping membership is limited to AIIB and RCEP, both however centered on China.
What is seen then is a diversion of membership in new regional and megaregional initiatives along the two poles of the West and 'the Rest'—one led by the US and the other with China and RIC-countries. As the Eurasian trio maintains a commitment to international democracy and as neither Russia nor India accepts Chinese hegemony, one can indeed see the formation of an increasingly multipolar world. The question is: What do these changes indicate or what is the emerging new status quo? Moreover, is the world seeing only the beginning of global transformations? These questions depend on how the different factors of change relate to each other in the context of globalisation. Some interpretations on the change have already been made. In fact, interpretations were made as early as in the 1990s following the thawing of the Cold War. Fukuyama's thesis on The End of History and the Last Man elucidates the spirit of optimism: that world history had reached its final phase and that the future evolution of international relations would now take place along the institutions and principles of liberalism and free markets, guided by the world´s foremost democracy and the self-proclaimed leader of the 'free world'.
While cautious voices of some prominent American realists have warned against exaggerating the appeal of the liberal order for the future global powers, China, India and Russia, there has been little evidence to suggest otherwise.
Indeed, in January 2000 US President Bill Clinton20 expressed his belief that China was on track to be integrated with the world order: “Bringing China into the World Trade Organization (WTO) on the strong terms we negotiated will advance critical economic and national security goals. It will open a growing market to American workers, farmers, and businesses. And more than any other step we can take right now, it will draw China into a system of
international rules and thereby encourage the Chinese to choose reform at home and integration with the world.” 21st century regionalism in the above presented trade-plus sense implies that there was at least one crucial fault in the optimism of the 1990s. It is founded in US insistence on global leadership and its rejection of a multipolar world order. According to scholars like Samuel Huntington, Niall Fergusson, and Rajiv Malhotra, the Western optimism and US broader foreign policy goals are embedded in a sense of Western supremacy.21 Looking at the history of civilisations, this Western self-image can arguably be labelled as hubris.22 In addition to this academic perception of the fault of optimism, there is also a practical dimension to it. Joint declarations by the BRICS—legitimised through rising international leverage of particularly the Eurasian trio—indicate that critical perspectives to Western universalism are not limited to the academia. The rejection of Western supremacy and universalism seems also to be a manifest feature of the current change in global order. This begs the question: To what extent are the different processes of change actually competing processes of globalisations? In other words, is there a case for a battle for a different kind of globalisations?
Globalisation refers to the webs of global interdependencies, forms of social interactions, and power relations that cross territorial and physical boundaries. In this sense, globalisation is not a unitary process but consists of multiple different and overlapping processes. Global governance, meanwhile, refers to the institutions that direct the flows of global interactions in a certain manner. It also refers to the official and non-official forms of collective action and the complex thread of political authority resulting from them. With globalisation—in singular form—in contrast to globalisations, we thus refer to those forms of governance which provide structure and frame for the multiplicity. In terms of economic globalisation, the key structures are the Bretton Woods institutions, the WTO, Basel Committee, Financial Stability Board, and Bank for International Settlements.24 So far, economic globalisation has been closely linked to US and developed country dominance. Partly for this reason can economic globalisation be defined as a process with a certain set of values and premises, key institutions and organisations that give the economic globalisation a sort of systemic structure and form. Indeed, there seems to be an agreement on this point Describing the New Phenomenon among world systems theory, and theories of transnational capitalism and liberal institutionalism. Larry Summers, for example, wrote that even the regional trade agreements are conducive to the process of economic globalisation because they share the same basic premises of commerce and thus have a common framework upon which the global trade regime can be built.
The case is different in political globalisation. Nations have been unable to provide for a similar type of governance structure for political governance as within the realm of economy. However, US power, alliance networks, military presence, and strong economic ties, have created a stability where common action has failed. With the decline of US power and the assertiveness of Eurasian global powers, the US' ability to provide structure and form or stability within the field of global political governance is threatened. Similarly, the foundations of economic governance also seem to be subject to divergent conceptions – resulting also from the rise of non-Western powers. Does this imply the creation of a multipolar world or a competition for setting the rules of the world order?
The Debate on Change: General Outlines H ow well established is the idea of a new phenomenon and what kind of debates has it given rise to? This section reviews what has been said on the matter of change and the debates surrounding it.
Emphasis will be put on the multifaceted nature of change: pushing the boundaries of political science, economics, trade law, foreign policy, and cultural studies.
In July 2015 the seventh BRICS Summit was held along with the non-Western international conferences of the SCO and EAEU. Writing in BRICS Post, the Moscow-based researcher Mark Sleboda's28 interpretation was that “In Ufa, we are seeing the laying of the foundations of a truly multi-polar world order of independent powers – one that can and will deal with the West on its own terms.” Others, including Barma et al.,29 have also argued that deepening cooperation between the BRICS countries will diminish their connection to the West-led liberal world order while increasing BRICS' potential as a new, non-Western alternative. Barma et al. went on to observe that in constructing parallel institutions of governance with the IMF and the World Bank, BRICS will undermine the role of Western powers and, in particular, that of the US, in defining the trajectory of future globalisation. Jayshree Sengupta,31 for her part, argues that this leads to a reconfiguration of the world order. Finally, some researchers envision an 'Asia-centric global civilisation', spreading peace and prosperity throughout the world. The latter now stands for the most extreme interpretation of the future and emerging new status quo where the Eurasian trio are the pivotal actors on stage.