Why multilateralism still matters
Across the West, faith in international governance and economic globalisation is declining. As Donald Trump’s victory in the United States’ presidential election showed, voters, driven by a sense of injustice and inequality, are increasingly rejecting openness, as well as the political establishment that has advanced it. But, while the grievances fueling these choices are real – many have been left behind by globalisation – the treatment is likely to cause more harm than the disease.
Trump won by promising to pursue unilateral and inward-looking solutions, much like those advocated by proponents of the United Kingdom’s exit from the European Union. Voters were galvanised by the prospect of rejecting new free-trade agreements like the Trans-Pacific Partnership (TPP), and renegotiating old ones like the North American Free-Trade Agreement (NAFTA). They rally against multilateral bodies like the World Trade Organisation (WTO) – the main forum for negotiating and implementing global trade norms and one of the only international organisations with a quasi-judicial dispute-settlement entity.
All of this ignores a crucial fact: in today’s world, turning inward is not a viable option, especially for Western liberal democracies. We are simply too interconnected; the problems, challenges, and opportunities we face have no regard for national borders.
Efforts to move backward to the time of independent nation-states will therefore carry massive costs. Indeed, the decline of the WTO, together with the demise of deals like the TPP and NAFTA, would fuel the emergence of separate trade blocs, inaugurating a new era of great power competition. Perhaps most important, a retreat from global trade would bring about a generalized loss of welfare.
The good news is that not everyone is suffering from such a lack of vision. The European Union and Canada have signed the Comprehensive Economic and Trade Agreement (CETA), providing a glimmer of hope that progress can still be made on prosperity-enhancing trade and investment pacts.
It was not an easy negotiation, and the CETA has faced resistance from groups that worry that more trade will hurt their livelihoods. But the protracted talks, which included a complex final approval process, finally succeeded in October.
The CETA is a positive development not only because it links two developed economies that project democratic values and boast strong welfare systems, but also because it introduces high environmental, labor, and phytosanitary standards for trade. It will also provide a substantial economic boost, possibly adding around €12 billion ($12.7 billion) to the EU’s GDP, while underpinning a nearly 25 per cent increase in the trade of goods and services for both sides. This is particularly important at a time when trade growth is outpaced by GDP growth, a dramatic reversal from recent trends.
Yet another advantage of the CETA is improved dispute settlement, brought about by the establishment of a permanent court whose members will be chosen by Canada and the EU together, in order to avoid conflicts of interest. To ensure transparency, arbitral awards will be made public, and parties will have the right to appeal.
Recent election outcomes threaten not only trade, but also the environment and the world’s climate. The US, which is responsible for 16 per cent of global greenhouse-gas emissions, is critical to any effort to fight climate change – not least because of the example it sets for other high-emitting countries. Yet Trump vowed repeatedly during his campaign to “cancel” the historic global climate agreement reached in Paris last December.
If Trump delivers on this promise, the consequences could be dire. The promising news here is that, at this year’s climate conference in Marrakesh, Morocco, the rest of the signatories to the Paris agreement clearly expressed their determination to implement the commitments they submitted.
There is even more promising news: last month, governments, industry, and civil-society representatives reached a deal to limit CO2 emissions by the civil aviation industry – the first-ever agreement to reduce CO2 emissions in a global sector. Given that, in a high-demand scenario, the industry would be emitting by 2050 almost as much CO2 as Russia and India combined emit today, this is a hugely important development.
Again, the EU stands out for its forward-thinking stance, playing a central role – along with its member states – in brokering the deal, which requires airlines to offset the growth of their CO2 emissions from 2020 by purchasing “emission units” generated by emissions-reducing projects in other sectors, like renewables.
In the mid-2000s, the EU – which already had its own carbon-trading scheme (the EU ETS) in place – recognized that despite the commitments included in the Kyoto Protocol, the world had not succeeded in reducing the industry’s emissions. It commenced work on a solution in 2008. By 2012, it had convinced the International Civil Aviation Organization to commit to reaching a global agreement by the end of 2016. The fulfillment of that commitment amounts to a major step forward for climate cooperation.
The world is past the point of closed borders and unilateral solutions. We have already globalised; now we need global rules to underpin economic and financial stability, as well as peace and security. The EU, despite its many challenges, has not only proved its value as a cornerstone of the international order; it has also vindicated the broader value of global vision and leadership, carried out through diplomacy and smart multilateralism. Now more than ever, it is a lesson that we cannot afford to ignore.