| FOREIGN TRADE IN A WORLD OF MULTIPLE OPTIONS:
The importance of the diversity of trade and transport corridors.
by Félix Peña
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,
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
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.
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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