INTERREGIONAL ALLIANCES AND GLOBAL TRADE
Their importance in the context of a renewed and strengthened WTO
by Félix Peña
English translation: Isabel Romero Carranza
The redesign of the global multilateral system is
just one of the concrete challenges that result from the new realities
and trends that can be observed as a consequence of the Covid19 pandemic,
among other factors.
In this opportunity, we will refer to the WTO and the regional agreements
and interregional alliances with international trade commitments involving
developing countries in Africa, Asia and Latin America.
We will consider the recent experience of Latin American countries
in the WTO and provide a perspective on how the region could contribute
to the development of a new era of multilateralism in world trade. In
this regard, some institutional requirements that Latin American countries
should bear in mind when designing their strategies for participation
in the future global trade system will be taken into account.
A first requirement is related to the position of Latin American countries
in relation to the necessary adaptation of the WTO system to the new international
realities. The second requirement refers to the interaction between the
different integration processes within the region, in order to increase
their reciprocal connection and develop mechanisms to facilitate their
effectiveness. The third requirement refers to the interregional aspect.
It involves, in particular, the advantages that can be gained from a more
intense and effective connection of the various joint work processes between
Latin American countries and those of other developing regions in Asia
and Africa, especially ASEAN and the African Union. It also comprises
the association with the various existing regional agreements involving
industrialized countries, such as the agreements with the EU and the new
North American free trade agreement.
The idea of joint work between different regional and interregional
processes, within the framework of the rules of a renewed and strengthened
WTO, could have a positive effect on the necessary development of a new
stage of the multilateral system of international trade.
The redesign of the multilateral global system is one of the concrete
challenges derived from the new realities and trends that can be observed
as a consequence of the Covid19 pandemic, among other factors. These new
realities and trends, together with other forces, are an outcome of the
redistribution of power among nations, which has become evident in recent
years, especially at the highest level of the stratified international
In this opportunity, our observations will be related to the global multilateral
system of international trade -the World Trade Organization- and its relationship
to regional agreements and interregional alliances with international
trade commitments involving developing countries in Africa, Asia and Latin
America. We will also examine the progress that could be made in relation
to the changes required in the international trading system, which in
turn could have a positive impact on the efforts to reform the United
Nations as a key component of the global system. (See the recent report
edited by Ettore Greco, whose reference is included as recommended reading
at the end of this newsletter, and the reports edited by Mario Teló,
listed as recommended reading in the April issue of our newsletter).
Our perspective takes into account the experience of Latin American
countries in the WTO and a vision of how the region could contribute to
the development of a new era of multilateralism in world trade (see the
January and June 2020 issues of our newsletter). We will take into account
some institutional requirements that Latin American countries should bear
in mind when outlining their strategies for participating in the future
international trading system.
After the recent appointment and taking office of Ngozi OKonjo-Iweala
as the new WTO Director General in charge of leading the organization,
a first requirement is related to the position of Latin American countries
regarding the adaptation of the WTO system to the new international realities
in at least two relevant aspects (see Alan Wm Wolf in the recommended
reading section of this newsletter). These involve, on the one hand, the
rules referring to the principle of non-discrimination in international
trade (especially those of article XXIV of the GATT and those of the Enabling
Clause) and, on the other hand, the effectiveness of the dispute settlement
mechanism, in order to ensure that it can truly be perceived as a guarantee
of a multilateral system of global trade guided by rules that are in fact
observed. These two issues have been of great relevance for many Latin
American countries since the GATT era and continue to be so.
A second requirement refers to the interaction between the various Latin
American integration processes within the region itself, in order to achieve
their reciprocal interconnection and the development of mechanisms that
enable their articulation and effectiveness. Above all, this would facilitate
joint work among the member countries, both at the regional and global
levels, including the different forms of possible interregional alliances,
especially with the participation of other developing countries.
The idea of joint work among the countries of the region, especially
in the cases of the Pacific Alliance and Mercosur, may make it possible
to harness the full potential of the regional trade system institutionalized
in the Latin American Integration Association (LAIA). Without the need
for any modification of the 1980 Treaty of Montevideo, its mechanisms
and rules have the potential, in many cases, to effectively connect the
various sub regional processes currently in place in the Latin American
region (see the October 2020 edition of our newsletter). The various possible
modalities for the so-called partial scope agreements, as provided for
in Articles 8 and 14 of the Treaty of Montevideo, are an example of the
regulatory breadth of scope of LAIA, which has not always been fully used.
It would likewise allow Latin American countries to derive joint benefits
from an eventually renewed WTO system and, at the same time, to develop
interregional preferential trade networks with other regional agreements,
especially those involving developing countries. In particular, they can
be the framework for including other issues that are currently relevant
to the relationship between trade and economic development, such as, among
others, those related to sustainable development and, especially, climate
A third requirement refers precisely to the interregional level (see
the November 2019 edition of our newsletter). It involves the mega-networks
of trade preferences of trans-regional scope. It includes, in particular,
the advantages that can be drawn from a more intense and effective connection
of the several joint work processes between countries in the Latin American
region and those of other developing regions in Asia and Africa, especially
with ASEAN and the African Union, without excluding others.
At the same time, it also includes institutionalization through the existing
regional agreements in which industrialized countries participate, such
as the European Union and the new North American Free Trade Agreement
(UMSCA, for its updated acronym in English, or CUSMA in Spanish). In the
case of Mercosur, the agreement with the EU that was concluded in 2019
(more than twenty years after negotiations were initiated) is still at
a standstill due to the present differences, especially among the EU member
Latin American interest in ASEAN seems to have increased after the signing
of the Regional Comprehensive Economic Partnership (RCEP) last year (see
our newsletter from December 2020 and the report by Andrés Serbin
listed as recommended reading below, among several others).
As for the African region, two recent publications help to remind us
of the growing interest in relations with the African Union as an area
of great potential for interacting with Latin American countries. We are
referring to the work of Landry Signé and Carlos Lopes, both included
as recommended reading of this newsletter. Both books help to develop
a positive perspective on the huge potential that the African region has
for the future, including those possibilities that open up for joint work
with Latin American countries.
For many reasons, the EU would be in a position to play a truly positive
role, especially with interregional agreements aimed at effectively strengthening
trade and sustainable development with the main integration agreements
in the developing world. However, it would be extremely useful to be able
to support the above with concrete actions resulting, for example, from
a rapid signing and implementation of the agreement already concluded
In our opinion, the idea of joint work between different regional and
interregional processes, within the framework of the rules of a renewed
and strengthened WTO, could have a positive impact on the necessary development
of a new stage of the multilateral system of international trade.
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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