Has the crisis killed multilateralism? |

Has the crisis killed multilateralism?

20120319_Pascal-Lamy_w170On 19 March 2012, Mr. Pascal Lamy, Director-General of the World Trade Organization (WTO), shared his perspectives on the future of multilateralism in a full-house dialogue session with Professor Kishore Mahbubani, Dean of the Lee Kuan Yew School of Public Policy. He reflected the financial crisis, its causes and impacts, and emphasized that greater international cooperation was crucial to exert the world from this current situation.

In initiating the debate, Prof. Mahbubani wondered about the future of Europe. Mr. Lamy said this critical question could be simply answered with the notion that “the future of Europe is in the hands of European citizens”. Even if the European Union (EU) crisis demonstrated that the EU integration was not optimal, further institutional integration is the only option and multilateralism is a compelling mechanism. From a “Schuman” perspective, the EU reached its tipping point when it entered the monetary integration. The reluctance of the states to seed their supra-nationality to the EU level, the discrepancy between the economic and political integration serve has impediments to the success of the EU governance.

Prof. Mahbubani pointed out the creation of an “exit close” could allow countries wishing to opt out to do so. Mr. Lamy highlighted that the treaty of Maastricht was very clear in the level of integration required for a sustainable monetary integration. Thus the current state of the union could survive but at a cost for the economy and cost for the taxpayers. The states should draw lessons from this issue in implementing soft laws to enforce solid budgetary conversion and more economic union with for instance mobility of labor. On EU governance, quoting from Montesquieu, Mr. Lamy said that “the emotional element was missing, (and) the legitimacy part was missing”. He further stated “to accept governance one needs to accept being part of a greater whole. The feeling of togetherness creates the legitimacy of a global governance system. This is one reason that explains why the EU failed to reach its target”.

Prof. Mahbubani alluded to the difficult Doha round inquiring about its future outcome. Mr. Lamy acknowledged that the world has changed and that it has moved to a world where the simple North-South division cannot apply anymore. Speaking about the WTO mandate, he said that it reaches far beyond the Doha round, for instance through its technical assistance and legislative function. He further explains that “the aid for trade is working at full speed, the litigation system is working beyond the principle of sovereignty and the monitoring system is strong. Trade facilitation will be a huge opportunity, underlining the fact that Africa will be the next opportunity.”

From the audience, Mr. Jack Sim, founder of the World Toilet Organization, asked the challenging question on “how the 4 billion people, not included in the economic market, could benefit from trade opening”. Mr. Lamy pointed out that with the proper conditions and proper catalyzers, trade opening was an efficient tool for everybody, when “Ricardian truth” and the “Schumpeterian principle” are combined: efficiency gain is driven by technology, which is relevant for the new economy and intuitively efficiency gain would translate into growth. 

Ms. Luz d’Ans, an alumni of Sciences Po and a banker in Singapore, asked, “How were the banks responsible for the crisis?” Mr. Lamy responded that this crisis was not multilaterally monitored; there was no proper governance, rules or regulation. A proper global regulatory framework, such as the G20, would be needed to avoid repeating a situation where there is a “de facto” open system without proper regulation. 

Furthermore Ms. d’Ans inquired how the WTO responds to the rise of Free Trade Agreements proliferation. Mr. Lamy explained that in theory, based on article 24 of the General Agreement on Tariffs and Trade, multilateral rules prevail over bilateral rules. Some may lead to multilateral optimum. Therefore the more preferences members give to one another, the more it erodes the benefits for all members. The proliferation of Free Trade Agreement causes a risk of “deglobalizing” the economy.

Taking a Eurosceptic perspective, Dr. Razeen Sally, Director of the European Center for International Political Economy, pointed out that a more federated European Union would only add to the world’s status quo leaving it with a declining power. Mr. Lamy argued that a federated EU would instead have the power of a single market, which is a necessary condition to have a political influence. He raised the questions, “How much political integration is needed? Is political integration really necessary for economic integration?” The ASEAN is a good model of governance and transparency. However, in a world where technology and capitalism push for more integration, more global governance is need.

“Global governance is about politics,” said Mr. Lamy. It is a political issue that calls for global rules. There is also an element of soft politics because there is an element of values. It is difficult to integrate the spectrum of values when in reality interconnected values rule. The world needs global values that allow compromises. A political debate is needed at all levels since all countries have a stake in improving the trade frameworks.

The dialogue concluded when both speakers agreed on a metaphoric note. They highlighted the “liquid” nature of the European Union governance and the “gaseous” nature of the global governance as the true symbols of the difficulties the world currently faces.

 

By Olola Vieyra, part of the editorial team of the Asian Journal of Public Affairs (AJPA).

 

Multimedia: Webcast |

 
Synopsis:

Click here for more info.

Speaker(s):

Mr. Pascal Lamy, Director-General, World Trade Organization (WTO)

Date:
Monday, 19 March 2012
Time:
5.15 p.m. - 6.30 p.m.
Venue:

Auditorium, Level 3, Block B, Faculty of Law,
NUS Bukit Timah Campus
469G Bukit Timah Road
Singapore 259776

WordPress Video Lightbox Plugin