«Battle for Globalisations? BRICS and US Mega-Regional Trade Agreements in a Changing World Order MARKO JUUTINEN AND JYRKI KÄKÖNEN © 2016 Observer ...»
Trade is about economic integration. It can also conduce to political integration, which is the object of the following short examination. One way to approach integration is through state-market relations. New market access in services and procurement modifies these relations in favour of the markets.
Expanding competition to formerly state-dominated areas increases the tendency towards conformity in systems of political economy within the MRTAs. This widens the operational networks of capital, further accelerating the process of norm diffusion and socialisation. This process is generally linked to integration by Marxist and liberal analysts alike.184 The major reason for the thesis of political consolidation of a dominant bloc, however, relates to regulatory cooperation – specifically, to its inherent political dimension. The proposed instruments of regulatory cooperation include harmonisation, mutual recognition (i.e., treating other members' regulations as equivalent to national regulations), coordination among regulatory authorities, and a new institution to oversee the process. This proposed new institution will play the essential role of preventing new regulatory disconformities in national legislative processes.185 This level of cooperation qualifies as what Bela Balassa186 defined as 'positive integration' and what Daniel Elazar termed a 'confederate arrangement'.
According to Balassa, positive integration is not confined to issues of tariffs and trade but is open-ended, with potential for further evolution. The proposed new institution and the classification of the MRTAs by the negotiating parties as 'living agreements' imply just this. Depending on the scope and political impact of the new regulatory institution, the commonly acknowledged problem of democratic accountability in international governance may intensify. As strong federal democracies, citizens of EU and US may demand creation of new supranational institution of political governance, which indeed would echo the history of European integration.
Battle for Globalisations?
Transatlantic federalism is certainly not a new idea, with its roots going back to before the Second World War. Before the outbreak of WWII, Clarence Streit propagated for a union of North Atlantic democracies to balance the Nazi threat and the Communism of the USSR. The Atlantic Union Committee (the predecessor of the NATO Parliamentary Assembly) was founded in 1949, and the Atlantic Council of 1961. Atlantic union was also advocated by eminent statesmen such as Jean Monnet. In 1962, then US President J.F. Kennedy declared, I will say here and now, on this Day of Independence, that the United States will be ready for a Declaration of Interdependence, that we will be prepared to discuss with a united Europe the ways and means of forming a concrete Atlantic partnership, a mutually beneficial partnership between the new union now emerging in Europe and the old American Union founded here 175 years ago.
The TPP and TTIP can thus be considered as a means to promote deep economic integration and political consolidation of the West. In the context of 21st century regionalism this development is not insignificant. It may lend further political strength to other Western organisations like NATO and increase the unanimity of the Western powers in for example UN. In the worst case scenario a more unified West is less prone to cooperate with the 'Rest', to respect 'the other' in situations like the Ukrainian crisis, or to hear the legitimate demands and concerns of the developing world in, for example, climate negotiations. Shortly, a more unified West may be less of a negotiating party and more of a bully – with a false sense of power and influence.
This section ends with a final consideration: What would the extreme result of political consolidation of the West mean for the world order? In the hypothetical scenario that MRTAs will create a politically consolidated bloc, the West will without a question form the dominant bloc. From power transition perspective a politically consolidated bloc can effectively govern the combined economic (and other) resources of its member states. The Figures 5 and 6 provide an illustration of the GDP as a measure of power relations between two hypothetical blocs: the dominant bloc (the members of the Western MRTAs) and the contending bloc (the BRICS). Currently the 'dominant bloc' accounts for over 60 percent of world economic output. The share of 'contending bloc' is at about 20 percent.
Mega-Regional Trade Deals In this hypothetical case the West would have all the means to define world order as it pleases. The West would have all the means to subject the Rest, and to socialise and educate other great civilisations to cease to exist as others and great. The destiny of the Rest would be dying as part of the West. Luckily these considerations are too speculative that they can be considered material for science-fiction.
Battle for Globalisations?
Research Setting R esearch is always founded on certain premises, which relate to an understanding of the 'what is out there' and 'what can be known of it', i.e., the ontological and epistemological perceptions of reality and knowledge. By employing a given theory, a researcher chooses to build on certain premises and thus contribute to current understandings of the world from the ontological and epistemological underpinnings of that theory.
In a similar manner, this paper was built on a premise: the idea that globalisation may be in a process of diversification or disintegration and conflict. This idea however was founded not so much embracing former conceptualisations of globalisation and world order but more on combining former understanding with new observations with at attempt to open minded reflection.
Thus, this monograph opened with an exposition of a new phenomenon in global politics. Sections II, III and IV provided a short description of that phenomenon. It has at least two mutually enforcing dimensions – regionalism and power shifts. Section II commenced with an introduction of Robert Baldwin's concept of '21st century regionalism', which was further expanded and contrasted with the former concept of 'new regionalism' of the 1990s.
Section III reviewed the ongoing debates on the two dimensions of the new phenomenon, and section IV focused on power shifts which was framed with a Western theoretical perspective (Power Transition theory).
Battle for Globalisations?
Through a process of contextualisation, literature review, and comparative analysis of empirical data, these preliminary sections showed that a) transformation of the current global order is an ongoing process, and b) the old concept and perspectives may not suffice to understand it. Based on this work, the paper argued that '21st century regionalism' not only is a broader matter of global transformations but also that unlike 'new regionalism' the '21st century regionalism' no longer is clearly conducive to and assertive of global
governance. In this manner a hypothesis was formed:
• Battle for Globalisations With the concept, 'battle for globalisations', this paper refers to two conflicting interpretations of change. Firstly, the new phenomenon is about increasing multiplicity for political economy and development emerging from within for example the BRICS. On one hand, the new phenomenon can be seen as an emergence of non-conforming and competing processes of globalisation that enforce the new balance of power between US (and EU), on the other hand, and the Eurasian trio on the other. The two hypotheses that correspond to these
two perspectives are:
• H1 - Battle for a Singular Globalisation • H2 - Battle for Plural Globalisations The second part of this study focused on two case studies as evidence, BRICS and US MRTAs, TPP and TTIP. The most important BRICS Joint Statements were read from the perspective that was developed in the first section. The result was localisation of three specific areas of potential battlegrounds for globalisation(s). Firstly, the recently launched New Development Bank reflects battles for a more plural conception and financing of development. The other two areas were BRICS political economy and foreign policy perspectives, where this study relied strongly upon framed literature review.
In analysis this enquiry operated with framed textual analysis and comparative analysis. With framed textual analysis the study referred to the process of using a frame as the lens through which the object of study, in this case BRICS documents and previous literature, is observed and organised. The frame in
question was developed in the first part of this paper and explicated in the two hypothesis.
In similar manner the enquiry into TPP and TTIP relied partly on framed literature review, partly on comparative analysis, partly on logical interpretation of TPP text, and partly on analysing some descriptive quantitative data through operationalising H1.
Results The results of this paper can be divided into two categories. First category relates to the two case studies and second to the broader applicability and theoretical implications of the findings.
In the case of BRICS this paper can maintain the H2. It appears that BRICS is a bloc of states which stand for and have launched initiatives for plural globalisations, i.e., which complement the existing organisations of global governance. In the case of US MRTAs, on the other hand, the H1 can be maintained. The MRTAs appear to be an attempt by the Western powers to globalise Western country trade regime. In this sense Baldwin's conceptualisation of 21st century regionalism is accurate, although it does not account for the change in regionalism of which BRICS is an example of.
Moreover, the BRICS and the US MRTAs are not directly opposing each other albeit US Mega-Regional Trade Policy may collide with BRICS political economy perceptions. To study that particular question, research could focus on foreign trade perceptions of the BRICS, conceptualisations among the BRICS on state-market relations, and the ownership structure of the BRICS companies. This paper reviewed some previous literature on this subject which, however, do not reflect the effects of the process of change that the MRTAs are causing.
The overall finding of this study suggest, that the change in world order is bringing more complexity and less conformity, which does not necessarily mean less cooperation and more conflicts. The reason may reside in the distinct civilisational nature of most of the BRICS and the resulting possibility to conceive of chaos not as destructive anarchy but a creative force – which idea would resemble the 'creative chaos' of atomic particles in fusion reaction (e.g., sun). At the theoretical level, this paper implies that BRICS bloc may challenge
Battle for Globalisations?
Western integration theories and idea that federal idea of global governance.
More specifically, BRICS is a heterogeneous bloc, state sovereignty is its key value, various conflicts divide individual BRICS members, but it still can find common ground for launching constructive global action. Moreover, this paper supports the prevalent idea that state-centric analysis leaves out key explanatory factors of global order, and that there is a gap in research on the ownership of TNCs and their control on world trade. The world's biggest publicly traded company is a Chinese bank, with the People's Republic as a majority shareholder.
A key insight with regard to BRICS is that it is an evolving process. Its member states are by far unitary, and important strategic and territorial cleavage points exist within its three most powerful members. Within the context of global governance, however, the strategic and territorial differences do not appear to obstruct cooperation. NDB is perhaps the best case of this. It appears that NDB is an instrument to reconfigure the previous development finance but it can also affect global financial governance of the world.
Does this amount to a battle for globalisations? The understanding of the authors is that while the NDB does seem to reject the development policy of the Bretton Woods system, it is likely to become a complementary institution as well as a source for complementary development policy. Now that IMF has granted China a larger share in SDR it appears likely that through the political leverage of both the NDB and AIIB, the emerging powers could gain a stronger role even in the dominant institutions of global financial governance.
The political economy of the three major BRICS countries shows some semblance of divergence. Nevertheless, the cleavage points are not directly related to global economic governance (of economic globalisation) and do not indicate that BRICS would aspire for a conflicting type of economic globalisation. At the same time, one could argue that divergences in the three major BRICS countries stand as reason for negotiating a Regional Comprehensive Economic Agreement – a trade agreement that some analysts refer to as being of “low quality”. Compared to Western MRTAs, this would represent diversification of regional trade rules, but not disintegration of global trade.
Battle for Globalisations?
Moreover, some Indian experts view RCEP as a means to advance— slowly—within the current trade regime. Development of trade rules in slow motion would be necessary because of the high costs involved in a rapid upgrading of regulatory standards including, for instance, labour laws. From this perspective, and as far as India is concerned, political economy divergence is rather a matter of development rather than divergent perceptions of the overall benefits of trade (in the long run). Similarly, China has already expressed its desire to join TPP.
Besides development finance, foreign policy statements by the BRICS stands as evidence for some disagreement concerning the fundamental values of democracy and human rights. More specifically, BRICS perception of national integrity and state sovereignty collide with promotion of democracy and military interventions as part of R2P. Only Russia and China, however, have actively engaged in countering these policies. Nevertheless, this critical stance does not mount up to a battle for globalisations. Instead, with the rising influence of the BRICS and SCO there may be a more balanced discussion on the premises of R2P and democracy promotion.