In what can be defined as a wake from the global fiscal crisis of 2008, inter-dependence between trade and governance has evolved. Now, multilateral trading needs can determine the dynamics, objectives and mechanisms of global governance more prominently. It is good because it triggers the public domain to establish stronger national and regional blocs and be more representative of the public’s trading aspirations. The realization that multilateral trade can reform the architecture of global governance is essential because it makes it legitimate for us to ask how the increasing need for multilateral trading is urging global economic and political institutions to ensure that a demonstrable, sustainable and transparent progress is delivered. It also makes it legitimate for us to ask how far multilateral trade can take the theoretical framework of the global system to the grassroots, specifically in small and vulnerable economies.
In year 2008, before the economic crisis became certain and a conclusion of the Doha Round was being sought, an obvious perception was that a successful and timely conclusion to the Doha Development Agenda will re-affirm that a strong global governance which determines the flow of multilateral trade is intact. In the same year, Dr. Debapriya Bhattacharya – macroeconomist and public policy analyst – opined that ‘we are putting too much value on Doha Round when we are witnessing failure of global economic governance’.
His analysis and the harsh fiscal imbalance the world subsequently underwent imply that in the post-crisis scenario, we must attempt to answer two tough questions pragmatically.
1. How far have we embraced the transition into a relatively more participatory, decentralized system of regional economic governance?
2. Are practices of competition and fair trade providing sufficient ‘fair play’ to developing and least-developed economies and really establishing them as equal stakeholders in world economy?
Due to their smaller administrative size as opposed to global institutions, regional bodies can have greater people’s participation and engage public domains more rapidly.
A decentralized model of economic governance therefore, being interestingly more participatory and more representative of public aspirations, also furthers the synchronization which is mandatory for global governance, by building coherence in the implementation of international economic policies at regional and local levels.
To answer the second question, when we talk about sub-standard manufactured goods being exported from developing or least developed countries, we tend to assume that Lower Tariffs, Relaxation on Trade Barriers like Standards of Products and Increased Trade Quotas to under-developed nations provide them with fair opportunities of growth. Here, institutions of global governance must take into account the acute lack of infrastructure that exists in under-developed economies. Countries suffering from a decline in production of goods due to lack of technology/infrastructure, crisis of energy, absence of access to technical skills and capacity-building and a declining foreign investment due to failure in the maintenance of law and order, are at an obvious disadvantage in perspective of relative multilateral trade.
Competitive practices are not inherent in developing economies and a lack of skill and technology does not allow cottage-industries and small-scale entrepreneurs aiming for productions of scale, to grow. It is therefore imperative that global institutions support vulnerable economies to facilitate the inviting of foreign investment. It is also imperative that financial support to governments be directed towards value-addition of products to ensure that finished-products are being exported and that assistance in value-addition processes of packaging, handling and storing becomes a source of lasting skill-transfer for local labor.
Our investigation into the systems of global economic governance must answer whether or not global governance has the capacity to provide a model that delivers equitable opportunities and facilitates developing and underdeveloped economies, as much as it facilitates the developed ones. It is important that the term ‘fair’, when used in connection to Trade Quotas, Tariffs, Standard Safeguards and Import Sensitive Lists, accompanies a reminder of the conditions in which developing economies are striving for growth.
Progressive multilateral trading system demands of global governance institutions to provide for a greater openness in markets. But this is what multilateralism demands in the short-run because in the longer-run the system is going to need regulations which are empathetic, not framed and implemented at the cost of the developing economies.
Developing economies tend to suffer from a weaker economic standing which in turn leads to their weak lobbying capacity at global forums. The regulatory framework we need therefore, is the framework which bridges this inherent gap.