Multilateralism The New Norm of the 21st Century

ALDE-CALD 2012 Summit

Congressman Jerry P. Treñas

The present context of the global community has shaped the international market place, removing restrictions which used to hamper free trade. Our enormous planet used to stretch across the seven seas, seemingly without borders, preventing commercial interactions between communities separated by oceans, deserts, and mountains. Nowadays, no frontiers are left to be braved, no town unconnected from the rest of modern society. The smallest community from the most backward and inaccessible place on Earth can do business with corporate moguls in the financial capitals of our planet. If the least progressive and most isolated community can participate in international commerce, it is quite obvious that all nation-states are now active players in the global market.

Given that all countries are vigorous participants in international trade, and taking into consideration that there is a plurality of nation-states currently existing, one has to wonder if the bilateral approach in establishing economic ties is still the proper mindset in dealing with inter-state trade. Based on the current developments in technology, international relations, and economic trends, it is clear that bilateralism is already an archaic school of thought.

We no longer have a handful of nation-states or empires which could easily handle a few bilateral agreements with its trading partners. There are almost 200 existing and recognized independent states in the world today. Bilateralism will only complicate the commercial relationships of a state since it has to forge agreements with so many other independent nations. Moreover, having numerous bilateral agreements will cause discrepancies and possible conflicts in international trade. If all countries will insist on having a purely bilateral policy on trade, we will have an anarchic system of incompatible trade practices which could prejudice other states and hamper the growth of commerce through free trade.

Realizing the need to harmonize international trade, and mindful of the fact that the demise of the age of colonization after the Second World War had caused an explosion of new independent nation-states, the international community reacted accordingly by forging agreements such as the General Agreement on Tariffs and Trade (GATT) and by forming international organizations such as the World Trade Organization (WTO). The new post War framework adopted a multilateral approach in managing international commerce. It allowed a plethora of developed and developing countries to participate in trade negotiations.

The Doha Round is the current round of negotiations among the members of the WTO. It is has an ambitious but achievable goal of reforming international trade through the reduction of trade barriers and amendments of trade rules. For developing countries such as the Philippines, the Doha Round is very significant because of the Doha Development Agenda, which aims to improve the trading prospects of developing nations.

Developing countries will also benefit if the current negotiations successfully increase market access of developing nations, as it will promote economic growth and reduce poverty all over the world. The developing nations are hopeful that the pressing issues in the current round, such as the removal of agricultural trade protection such as tariffs and high subsidies which are imposed by rich countries, could be resolved at the soonest possible time. Over two-thirds of the WTO member countries are agricultural exporters and up to 75% of the world’s poor are directly or indirectly involved with agriculture.

The impasse among WTO countries has stalled the Doha Round of negotiations, which began in Qatar in 2001. The roadblocks experienced by the WTO members with the Doha Round may be construed as an argument against multilateralism, but I beg to disagree. Indeed, there are conflicting interests between developed and developing countries, among developing countries, and even among developed countries. Even the United States and the European Union have opposite views on key trade issues. Nevertheless, the disagreements among the WTO members are healthy signs that multilateralism works. While bilateral talks can forge agreements at a more rapid pace, multilateral negotiations assure that all sides are heard, and that no parties will be short-changed. Multilateralism gives a wider perspective on the impact of policy decisions. It allows all countries, representing different economic, social, and political backgrounds, to communicate their advocacies and defend their interests. Most importantly, multilateralism allows the nations of the world to compromise.

Win-win situations can be achieved through careful negotiations done in good faith. It must be stressed that the nations of the world are now heavily dependent on one another in terms of trade, access to raw materials, manpower, and finance. It therefore is in the best interest of every nation to ensure that all countries in the world are prospering; otherwise, the instability of one country will cause severe repercussions to its trading partners, which in turn will cause tumultuous ripples across the world due to the interdependent nature of the 21st Century economies of nations. Such was the case when the Asian financial crisis was triggered by the financial collapse of the Thai Baht in 1997, the Argentine economic crisis at the turn of the 21st Century, and the Greek debt crisis which has affected the entire Eurozone. It is therefore in the best interest of all countries to protect each other’s interest, and this could only be achieved through multilateralism.

Multilateralism has also been spurred by the trend of economic integration. It started in Europe, with the European Coal and Steel Community (ECSC). The ECSC was formed as an economic block of six nations after World War 2. It included France and Germany, countries which were at the forefront of the opposing sides in the two World Wars of the 20th Century. Konrad Adenauer, the first Chancellor of the Federal Republic of Germany and a champion of democratic values and strong economic cooperation, strongly supported the ECSC. The ECSC evolved to become the European Economic Community, which eventually became the European Community. Today, we all know this successful European economic bloc as the European Union.

A similar organization exists in the Southeast Asian region. The Association of Southeast Asian Nations (ASEAN) is a bloc of Southeast Asian countries built on its three pillars of security, socio-cultural integration, and economic integration. The Philippines is one of the founding members of ASEAN, and is considered as one of the Association’s “six majors”, since the Philippines is one of the six largest economies in the regional bloc. The ASEAN became a Free Trade Area (FTA) in 1992 and it aims to integrate further by creating the ASEAN Economic Community by 2015. Although the ASEAN is still far behind the European Union in terms of economic integration, the member-states of the Southeast Asian bloc are fully committed to achieve better economic cooperation through the harmonization of economic policies. Perhaps the ASEAN could even have an economic and monetary union in the foreseeable future.

While it is still prudent to conduct bilateral talks on trade agreements which merely affect two contracting nations, the lessons that we have learned in the past six decades, as well as the current context of 21st Century trade dictate that multilateralism is the wiser approach when it comes to policy and trade regulatory decisions which will directly or indirectly affect a good number of countries. It is true that multilateral agreements usually take a long time to be perfected, as the nations of the world have different interests to protect. Multilateralism has also proven to be ineffective in some non-trade issues, such as the refusal of powerful nations to sign the Kyoto Protocol on global warming and to ratify the Rome Statute treaty of the International Criminal Court.

Nevertheless, in the realm of commerce, all nations must speak and understand one universal tongue: the language of trade. It must not be distorted by conflicting bilateral arrangements which are contrary to the WTO rules and norms. More so, it must reflect the voice of the entire international community. The rules on international commercial transactions should be fair to all of the players in global trade, and this could only be achieved through multilateralism.