Global Macroeconomic And Financial Coordination System Needs To Act Collectively – Part 2: Multilateralism and the recent rise of regionalism

By Pedro Sousa

* The second in a series of five articles

Multilateralism and the recent rise of regionalism

The growing regional focus is what we have heard about in the news in recent years. In 2015, we saw a major move towards the regional adaptation of the international trading order with completion of the TransPacific Partnership (TPP) agreement. The TPP’s proposal was to establish new, high-standard global trade rules to reflect the realities of today’s supply-chain-based international economy. Some regard this a pragmatic approach to multilateralism where we eventually multilateralise regionalism in to the already existing multilateral institution. On trade, the idea would be to attempt to find alternative paths – including other mega-regional deals – to the desired multilateral summit, which has been extremely difficult to reach through the direct route of the Doha Round. On the other hand, an example of the direct path was also achieved last year. In what may be seen by future historians as the most significant climate agreement to date, 196 countries agreed on a new international framework for curbing greenhouse gas emissions. The historic agreement reached in Paris in December 2015 outlines a global commitment to limit global warming to between 1.5 and 2°C and could become legally binding. Wealthier countries also committed to deliver significant flows of money and technical support to help poor countries cope with curbing their greenhouse gas emissions and adapt to climate change. It remains to be seen whether the ambitious targets for capping global temperature increases will be met, especially as the plan to limit temperature rises to 1.5°C has been delayed until 2020 and doubts have been expressed about the massive behavioural change required in order to prevent significant damage before then. It will definitely impact the global economy in several ways. The Paris agreement, nonetheless, fills a significant gap in the existing order. In addition to this, the year 2015 marked a turning point for the global development agenda, with both the Third International Conference on Financing for Development in Addis Ababa, and the UN Summit for the adoption of the post-2015 agenda in New York. This new agenda commits to end poverty in all its forms, conveys the urgency of climate action, is rooted in gender equality and respect for the rights of all, and is a firm pledge to leave no one behind. Achieving the 17 Sustainable Development Goals (SDGs) will depend not only on the availability and quantity of financial resources, but also on sound policy choices and international cooperation to address cross-border challenges. There is hope that the SDGs provide a different lens for looking at today’s interconnected world, and a move away from North-South distinctions, which have characterized discussions on global development for many decades.

Further references:
Berglof, Eril, (2015), “Will China Change The World’s Financial Institutions?”, World Economic Forum: https://www.weforum.org/agenda/2015/11/will-china-change-the-worlds-financial-institutions/?utm_content=buffer0b04b&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer
Carmichael, Kevin, (2015), “A Christmas Miracle: Obama Finds A Way To Save IMF Reform”, Kevin Carmichael’s Observer, Centre For International Governance Innovation, Waterloo: https://www.cigionline.org/blogs/kevin-carmichaels-observer/christmas-miracle-obama-finds-way-save-imf-reform
Frankel, Jeffrey, (2015), “International Macroeconomic Policy Coordination”, VOX CEPS’s Policy Portal: http://www.voxeu.org/article/international-macroeconomic-policy-coordination
Goodman, Matthew P., (2015), “An adaptable order: global economic governance in 2015”, in Global Economics Monthly, Center for Strategic and International Studies (CSIS), Vol. IV, Issue 12, Washington DC: http://csis.org/files/publication/151217_Global_Economics_Monthly_V4.pdf
Sainsbury, Tristram, (2015), “IMF: The Hard Yards On Reform Are Still To Come”, Lowy Interpreter, Lowy Institute for International Policy: http://www.lowyinterpreter.org/post/2015/12/23/IMF-the-hard-yards-on-reform-still-to-come.aspx
Shafik, Nemat, (2013), “Smart Governance: Solutions for Today’s Global Economy”, Deputy Managing Director, International Monetary Fund, Oxford, United Kingdom, IMF: https://www.imf.org/external/np/speeches/2013/120513.htm
Stiglitz, Joseph E., (2016), “The New Geo-Economics”, Project Syndicate: https://www.project-syndicate.org/commentary/hope-for-better-global-governance-by-joseph-e–stiglitz-2016-01
Subacchi, Paola, (2015), “The AIIB Is a Threat to Global Economic Governance”, Foreign Policy: http://foreignpolicy.com/2015/03/31/the-aiib-is-a-threat-to-global-economic-governance-china/
Woods, Ngaire, (2016), “Why Can’t The World Agree On Monetary Policy?”, World Economic Forum: https://www.weforum.org/agenda/2016/03/why-cant-the-world-agree-on-monetary-policy?utm_content=buffer9aa9c&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer
Woods, Ngaire, (2016), “How to Save the World Bank”, Project Syndicate: https://www.project-syndicate.org/commentary/saving-the-world-bank-by-ngaire-woods-2016-01?barrier=true
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