Europe trade policy and multilateralism: the perspective of a new, deeper and broader idea of reciprocity

July 9, 2020
Editorial Europe
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The world’s main trade powers are facing alternative options in the context of WTO -DDR deadlock. To understand them we should focus on background, development and achievements of the EU new trade policy, and especially its understanding of the “second generation of free trade and  arrangements”, which are in fact standard-upgrading agreements and  “regulatory arrangements”: Here, we consider CETA with Canada, trade agreements with S-Korea, Vietnam, Japan, MERCOSUR, including the proposal of replacing the ISDS conflict-setting mechanism, as well as on the ongoing negotiations on trade and/or investment regulation with other relevant partners, including the Comprehensive Agreement  on Investments with China.

The EU perspective of a new, deeper and broader idea of reciprocity opens the door to new understandings of trade’s cultural impact, on the one hand, and, on the other, on multiple and various forms of cooperation reviving multilateralism by new ways.

For many decades, trade was the main driver of global economic growth. But now that is no longer the case. The current administration in the United States has reacted to novel circumstances, including especially the emergence of trading powers such as China and the EU, by disrupting the global multilateral trading system—e.g., by boycotting the WTO and starting trade wars. According to some American scholars, including Ikenberry and Deudney (2018), the country’s new approach runs counter to its traditional commitments to multilateralism and free trade   Secondly, China, the main country benefitting of the relevant globalization wave following 1989 and its WTO membership is not very much interested to a true WTO reform addressing new issues and  in particular the weight of state-subsidies, digital economy, public procurement, rule of law, and the consequences of sustainable development for human  and labor rights

The EU is reacting to the stalemate of WTO negotiations by starting a new trade policy based on the Lisbon Treaty comprehensive approach to external relations and its consequences. Analysis and comparative assessment of the EU recent trade arrangements with Singapore, South Korea, Vietnam, Japan, Mexico, Canada MERCOSUR and the ongoing negotiations with China ( CAI), Australia, New Zealand.

Two research outcomes are expected

  1.  The first concerns the field of policy recommendations. Assuming that further progress by classic, WTO-level multilateralism cannot longer be the main option as wished by classic economic liberalism (Bhagwati 1992), the main issue at stake in global trade is whether what are defined as “next best options” work against or in favor of a new multilateralism. We know that both unilateralism and asymmetrical transactional bilateralism may negatively affect global trade, interregional relations, and multilateralism. Upgraded interregional arrangements may offer a way out, provided that the current new multilayered trade multilateralism can become more efficient by including higher standards on matters such as working conditions and environmental protection; more legitimate, in a less contingent way and inspired by the wish of eventually relaunching global multilateralism. In the current century, trade is no longer about mere specific reciprocity, but about living standards, as well as cultural and political ties between peoples and civilizations. Specific reciprocity is a fundamental and traditional feature of trade arrangements. However, the standards imbedded in trade agreements need to be upgraded and negotiated more holistically, to encompass social, environmental, cultural, and legal concerns (rule of law, labor rights), among others. Amid the current global instability, in the event that the US continues to renounce any kind of leadership role, the EU—in alliance with many countries of Asia, Africa and the Americas—has a special responsibility to undertake enhanced efforts aimed at forging regional and interregional arrangements and strategically framing their geopolitical implications. If these are well designed and thoughtfully applied, they could help revive or even create a post-hegemonic, pluralistic, participatory multilateralism. Such efforts eventually could spark a revival of the WTO, but this time supported by multilayered arrangements, suited to a new generation of regulatory agreements.
  2.  This research also aims at contributing to international relations theory. It points toward an answer to the vital question of how, in the context of post-realist, neo-institutionalist cooperation theories students of international relations ought to approach trade. We simply cannot understand what is happening in global trade and its interplay with interregional dialogue without taking into account variables other than the mere cost-benefit calculations of involved actors. Rational choice is not a sufficient explanation. Instead, we must adopt a more inclusive hermeneutic approach. While the weight of rational choice factors (notably states’ interests in reducing transaction costs) obviously still matters for purposes of comparative and normative research on trade policy, it is increasingly contained and complemented by other variables. In particular, the relevance of the following non-rational-choice drivers of trade has come to the fore in comparative and normative research in this field.



The author

Mario Telò is Full Professor in History and theory of european integrations at the Political Sciences Department in Luiss Guido Carlo University