By Steven Dhondt
Globalisation occurs in waves. Before 1950, the world experienced an intense phase of globalisation. Post-1950, the focus on international trade relations weakened. The establishment of the World Trade Organization (WTO) in 1994 revitalised local agreements. A significant expansion of globalisation followed China’s entry into the WTO in 1999, leading to tremendous growth in global trade. Globalisation enabled technology to impact economies profoundly, shifting jobs and creating new ones. David Ricardo would be proud of these accomplishments.
However, if you follow the daily news, it appears that Europe faces constant challenges in its trade relations with the rest of the world. For instance, Wallonia managed to block the CETA agreement with Canada. Currently, the Mercosur agreement (EU-South America) is under scrutiny due to opposition from France and the Netherlands. Such agreements are crucial because the WTO no longer functions as intended. Since 2001, progress in multilateral agreements has been minimal. Post-2012, noticeable advancements have been scarce, with only super-specialists recognising any forward steps.
This does not imply that the EU is passively waiting for resolutions. Up to 2001, the EU concluded agreements with 27 trading partners (countries and blocs). From 2001 to 2012, there were 40 agreements. Since then, 48 more agreements have been added, indicating an acceleration. Not all negotiations reach full agreements; some are even put “on hold.” Currently, 21 agreements are in the freezer, with most being put on hold around 2012.
The skirmishes around CETA and Mercosur suggest significant problems in our trade relations. In reality, the EU is continuously concluding new bilateral agreements. This process is highly inefficient, as these agreements are now negotiated between blocs, whereas the WTO could have provided a more efficient outcome. The GI-NI project has experimented with various scenarios to determine if deglobalisation could offer any benefits. The conclusion is clear: only a loss of prosperity. The struggles of France and the Netherlands with Mercosur are merely for show. Parliaments are agitating for the wrong reasons, lacking a broader perspective on the agreements. The EU continues its work, but perhaps the issue lies in the need for more democratic scrutiny. If the EU had more democratic oversight, parliaments could address their grievances through the European Parliament.
Globalisation may seem to be in a slump, but the larger wave will continue despite Trump and his allies.
At GI-NI’s Final Conference, you can discuss your observations about the multilateral world with the team’s researchers. We look forward to seeing you in Brussels! You can participate by signing up here: https://ceps.com/eventregistration?eventid=a1GQA000003RF7i2AG