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  Félix Peña

INTERNATIONAL TRADE RELATIONS NEWSLETTER
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009
FOREIGN TRADE IN A WORLD OF MULTIPLE OPTIONS:
The importance of the diversity of trade and transport corridors.

by Félix Peña
April 2015

English translation: Isabel Romero Carranza


 

Demographic growth, the greater number of countries and regions with a leading role in international trade and the shortening of physical and cultural distances between the different markets are some of the factors that accentuate the multiplex character of today's world. Of these, the factor that will probably have the greatest influence in the design of the map of world trade will be the strong future growth of world population, with its consequent impact on the demand, for example, of food.

Three consequences can be drawn regarding the commercial insertion of Argentina in a world that offers multiple options. The first is whether to devise strategies with multiple simultaneous directions. This would involve a great national effort of organization and coordination with other countries with similar interests and competitive advantages. The second consequence relates to the agenda of multilateral trade negotiations. Strengthening the WTO is a valued objective for Argentina and its regional partners. If the current efforts to achieve progress in the negotiations of the Doha Round did not produce the results sought by the Director General of the WTO, it would be advisable for our country and its regional partners to contribute, through their leadership, to find other modalities in order to move forward. The third consequence relates to preferential trade negotiations. The main negotiation in which Argentina participates together with its Mercosur partners is that with the EU. Nothing prevents the country from opening other negotiating fronts with the major regions of world trade.

A strategy of active integration into world trade scenarios will require increasing the density of the physical connection of the country and its Mercosur partners with the large markets of the future. The fact of not being situated in the Pacific Ocean does not limit the possibilities of developing multiple corridors of transport and preferential trade with other regional spaces, which in the future will be active protagonists in agrifood production and trade, including services and technologies. We are referring to Asian countries, in particular China and India, and the Arab and sub-Saharan African countries. It will imply harnessing and increasing the connectivity of the ports of the South American Atlantic with the main ports of Asia, Africa and the Persian Gulf, especially through the routes across the Atlantic.


As we have stated in other occasions, (see the July 2014 issue of this newsletter). Amitav Acharya (in his book "The End of the American World", Polity Press, Cambridge-Malden 2014), with his idea that the world today has become "multiplex", helps us understand the dynamics of the international environment in which the foreign trade of every country is inserted.

Acharya makes an analogy in which he likens the world to a multiplex theatre with an offering of multiple and differentiated shows. In an environment with these characteristics, you can choose what suits you best and adapts to your preferences. It is the same situation of someone who goes to a modern shopping mall in a city, or of those who in the past went to the fairs of a large village. The key in each of these cases is that those on the demand side could have a specific idea of what they want to obtain and of what they can purchase in a context with a variety of offerings. Hence the importance of the contribution by Ian Bremmer (in his book "Every nation for itself. Winners and Losers in a G-Zero World", Portfolio-Penguin, New York 2012), in the sense that in today's world, which he describes as Ground Zero, each country is on its own. The problem in this case would be if a country does not know what it wants and, in particular, what it can achieve in its relations with other countries and in its insertion in the world.

Population growth, the larger number of countries and regions that have become protagonists of international trade and, in particular, the shortening of physical and cultural distances between the different markets are, among others, some of the factors that are accentuating the multiplex characteristics of today's world

Of these factors, the one that will probably have the greatest influence on the design of the future map of world trade will be population growth, with its consequent impact on the demand, for example of food. By 2050 the FAO has estimated that, with a world population of over nine billion, it will be necessary to increase food production by approximately seventy percent in relation to the current level. Additionally, we must also consider the fact that an estimated two billion people will have been added to the urban middle classes (in this regard see the report by Carlos Pérez del Castillo, included as recommended reading of this Newsletter).

But the difficulty of international trade in a multiplex world -though it may seem a paradox- will be to have an accurate idea of what options are available, both for those who offer as well as for those who demand goods, services or technologies. Information will become of great importance for the various protagonists of a commercial environment with multiple options. Hence the growing relevance that competitive intelligence will acquire as a key factor for the external trade integration of firms and countries (see the February 2011 issue of this Newsletter).

What we have mentioned becomes still more relevant when we take into account the strong dynamics that characterizes international trade today due, among other factors, to the shifts in competitive advantages caused by the constant changes in production, transport and information technologies; in national and international trade rules (for example, as a result of the proliferation of preferential trade agreements), and in consumer preferences, especially of the growing urban middle classes, that have become aware of the power of their purchasing decisions.

At least three consequences can be drawn regarding the commercial insertion of a country such as Argentina in a world that offers a set of multiple options.

The first has to do with the convenience of planning and executing strategies with multiple simultaneous directions ("tout azimout"). It involves an effort of organization at the national level and of coordination with other countries (see the January 2015 issue of this Newsletter). This has been an ongoing aim in the agrifood industry through the Group of Producing Countries from the Southern Cone (GPS), which seeks to contribute specifically towards sustainable global food production. It has been promoted by the CARI and is formed by specialists from Argentina, Brazil, Paraguay and Uruguay (ABPU).

The second relates to the agenda of multilateral trade negotiations. The strengthening of the multilateral trading system, institutionalized in the World Trade Organization (WTO), is a goal that has been valued by Argentina and its Mercosur partners (see the February 2015 issue of this Newsletter). If the current efforts to make progress in the negotiations of the Doha Round did not yield the result sought by Roberto Azevêdo, Director General of the WTO, it would be advisable for our country and its regional partners to contribute, through their leadership, to seek other modalities to move forward with multilateral trade negotiations. The 10th WTO Ministerial Conference to be held in Nairobi, Kenya, from 15 to 18 December provides, in this sense, an opportunity to attempt to open, if necessary, other negotiating options.

The third practical consequence is related to the front of preferential trade negotiations (see the March 2015 issue of this Newsletter). The main preferential negotiation in which Argentina participates, together with its Mercosur partners, is that with the European Union (EU). It is difficult to visualize a quick end on this negotiating front. The exchange of offers is still delayed and it is true, at least this time that the ball is now in the European playing field. Currently, the only activity that can be observed is related with the "blame game" that has become common practice when international trade negotiations are stalled. At least for the moment, there are no other initiatives aimed at making the negotiation between the two regions more feasible through the relaxation of the objectives in terms of timing and of the coverage of trade subject to tariff reductions. As was noted on other occasions, this is not a flexibilization that may be hindered by a possible interpretation of the provisions of Article XXIV of GATT. However, it seems clear that this would involve a dose of political initiative that is not present at the moment (see the February 2013 issue of this Newsletter).

Today, there are no deterrents that would prevent opening other negotiating fronts with the main regions involved in world trade. For example, in 2012 China made a proposal to address a feasibility study for the negotiation of a free trade agreement with Mercosur countries (see the March 2015 issue of this Newsletter). As with the EU and, eventually, the US, the concept of preferential trade agreement and its modalities allows for multiple derivations that can be compatible with WTO rules. It seems worthwhile to explore such alternatives in view of what we have termed as the "metamorphosis" of Mercosur, which implies reconciling predictability with flexibility in order to advance productive integration strategies and competitive integration at global level and in the multiple interregional scenarios (See also the Techint Bulletin, November 2014, on www.felixpena.com.ar).

A strategy for insertion in multiple international trade scenarios will also require furthering the density of the physical connection of the country and its Mercosur partners with larger markets. The multiplicity of trade and transport corridors, known in a way as the new "Silk Road", will be a key factor for the future development of international trade in the region (see the January 2013 issue of this Newsletter).

The fact that Argentina is not located in the Pacific Ocean does not necessarily limit the chances of developing multiple transport and trade corridors with other regional spaces that, in the future, will be active players in agrifood production and trade, including related services and technologies. We are referring to those in Asia and particularly China and India, and the Arab and sub-Saharan African countries. Among others, the reports carried out by Jan Hoffman during his time at the ECLAC and later at the UNCTAD (see, among others, his article "El potencial de puertos pivotes en la costa del Pacífico Sudamericano"), help appreciate the degree of connectivity of the ports of the South American Atlantic with the most important ports of Asia, especially across the Atlantic-Indian route. In nautical miles, the ports of Buenos Aires and Santos, for example, are closer to ports such as Hong Kong and Singapore than ports of Chile and Peru located in the South American west coast. Moreover, the physical connectivity index plays to their advantage.



Recommended Reading:


  • Amorim, Celso, "Breves narrativas diplomáticas", Benvirá, Editora Saraiva, Sâo Paulo 2013.
  • Amorim, Celso, "Teerâ, Ramalá e Doha. Memórias da política externa ativa e altiva", Benvirá, Editora Saraiva, Sâo Paulo 2015.
  • Baldwin, Richard; Kawai, Masahiro; Wignaraja, Ganeshan (eds.), "A World Trade Organization for the 21st Century. The Asian Perspective", Asian Development Bank Institute (ADBI), Edward Elgar Publishing, Cheltenham-Northampton, 2014, en: http://adbi.adb.org/.
  • Bayne, Nicholas; Woolcock, Stephen (eds.), "The New Economic Diplomacy. Decision-Making and Negotiation in International Economic Relations", Global Finance Series, Ashgate, Surrey - Burlington 2011.
  • Cámara de Comercio Argentino-Británica, "La influencia británica en el desarrollo de Argentina", Edición bilingüe con motivo de los 100 años de la Cámara de Comercio Argentino-Británica, Buenos Aires 2014.
  • Closa, Carlos, "Mainstreaming Regionalism", European University Institute (EUI), Robert Schuman Centre for Advance Studies, Global Governance Programme-158, EUI Working Papers, RSCAS 2015/12, San Domenico di Fiesole 2015.
  • Díaz, Alberto, "Biotecnología en todos lados. En los alimentos, la medicina, la agricultura, la química…¡y esto recién empieza!, Siglo XXI Editores, Buenos Aires 2014.
  • ECLAC, "The economics of climate change in Latin America and the Caribbean. Paradoxes and challenges", ECLAC, Santiago de Chile, September 2014, en: http://repositorio.cepal.org/. Para la edición en español ver: http://repositorio.cepal.org/.
  • Elverdin, Pablo, "Argentina, Brasil, Paraguay y Uruguay (ABPU) y su participación en la agricultura mundial", Grupo de Países Productores del Sur (GPS), Informes, Agosto 2014, en: http://grupogpps.org/wp-content/.
  • Feketekuty, Geza, "Policy Development and Negotiations in International Trade. A Practical Guide to Effective Commercial Diplomacy", Geze Feketekuty, 2012.
  • Fourcade, Marion; Ollion, Etienne; Algan, Yann, "The Superiority of Economists", Maxpo Discussion Paper, n° 14/3, Paris, November 2014, en: http://www.maxpo.eu/.
  • Friedman, George, "The Middle Eastern Balance of Power Matures", Stratfor Global Intelligence, Geopolitical Weekly, March 31, 2015, en: https://www.stratfor.com/weekly/middle-eastern-balance-power-matures.
  • Funes, Patricia, "Historia Mínima de las Ideas Políticas en América Latina", El Colegio de México - Turner, Madrid - México 2014.
  • Hamanaka, Shintaro, "Trans-Pacific Partnership versus Regional Comprehensive Economic Partnership: Control of Membership and Agenda Setting", Asian Development Bank, ADB Working Paper Series on Regional Economic Integration, n° 146, Manila, December 2014, en: http://www.adb.org/.
  • Instituto de Relaciones Internacionales (IRI), "Revista Relaciones Internacionales", IRI - Universidad de La Plata y Nuevo Hacer - Grupo Editor Latinoamericano, Año 23, N° 47, La Plata, Julio-Diciembre 2014.
  • Idigoras, Gustavo, "Estado de la Integración Agroalimentaria en Reglamentos Técnicos, Sanidad y Calidad en el Mercosur", Grupo de Países Productores del Sur (GPS), Buenos Aires, Noviembre 2014, en: http://grupogpps.org/.
  • López Garrido, Diego (dir.), "El estado de la Unión Europea. La ciudadanía europea en tiempos de crisis", Fundación Alternativas y Friedrich Ebert-Stiftung, Madrid 2014.
  • McKeon, Nora, "Food Security Governance. Empowering communities, regulating corporations", Routledge, London - New York 2015.
  • Nye, Joseph S., "Is The American Century Over?", Polity Press, Cambridge - Malden, 2015.
  • Pérez del Castillo, Carlos, "Food Security and International Agricultural Trade", Grupo de Países Productores del Sur (GPS), Montevideo, Marzo 2015. Se puede consultar en: CURI, Análisis, 01-15, en: http://curi.org.uy/.
  • Piñeiro, Martín; "Las Principales Acciones para Construir la Integración Regional en el Sector Agro-industrial", Grupo de Países Productores del Sur, Buenos Aires, diciembre 2014, en: http://grupogpps.org/.
  • Pontiroli, Norberto; Ochoa, Paloma, "Políticas Comerciales y de Inversiones en Argentina, Brasil, Paraguay and Uruguay (ABPU): Hacia demandas de coordinación flexibles", Grupo de Países Productores del Sur, Buenos Aires, Julio 2014, en: http://grupogpps.org/.
  • Rogan, Eugene, "The Fall of the Ottomans. The Great War in the Middle East", Basic Books, New York 2015.
  • Rozenwurcel, Guillermo, "Coordinación Macroeconómica en el Mercosur: Hoy no existe, ¿la habrá algún día?", Grupo de Países Productores del Sur (GPS), Buenos Aires, Julio 2014, en: http://grupogpps.org/.
  • Shiffer, Michael, "The Caracas Context. Venezuela Sanctions Prompt Cold War Memories", Foreign Affairs, com, April 2, 2015, en: http://www.foreignaffairs.com/.
  • Telò, Mario (ed.), "European Union and New Regionalism. Competing Regionalism and Global Governance in a Post-Hegemonic Era", Ashgate, Surrey-Burlington 2014.

Félix Peña Director of the Institute of International Trade at the ICBC Foundation. Director of the Masters Degree in International Trade Relations at Tres de Febrero National University (UNTREF). Member of the Executive Committee of the Argentine Council for International Relations (CARI). Member of the Evian Group Brains Trust. More information.

http://www.felixpena.com.ar | info@felixpena.com.ar


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