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TWN
Info Service on WTO and Trade Issues (Jan26/09) Geneva, 23 Jan (D. Ravi Kanth) — The Prime Minister of Canada Mark Carney has seemingly struck a bold chord at the World Economic Forum (WEF) on 20 January by suggesting “a rupture in the world order, the end of a pleasant fiction and the beginning of a harsh reality, where geopolitics – where the large, main power, geopolitics – is submitted to no limits, no constraints.” However, Carney’s recipe for addressing the current disorder arising from great-power conflict – particularly the proverbial “my-way-or-the-highway” geopolitical and geoeconomic approach – centred on what he called “middle powers” finding their collective voice by pursuing plurilateral outcomes, could leave many developing and least-developed countries on the wayside. “A brilliant speech (by Mark Carney), a very good diagnosis of where we are, and a terrible recipe for what we should be doing,” said Yanis Varoufakis, the former Greek finance minister, known for standing up for developing and poor countries. In his prognosis of the current order, the Canadian Prime Minister said, “It seems that every day we’re reminded that we live in an era of great power rivalry, that the rules-based order is fading, that the strong can do what they can, and the weak must suffer what they must” – citing a quote from the great ancient Athenian historian Thucydides. He said that “this aphorism of Thucydides is presented as inevitable, as the natural logic of international relations reasserting itself.” “Faced with this logic,” Carney maintained, “there is a strong tendency for countries to go along to get along, to accommodate, to avoid trouble, to hope that compliance will buy safety.” He warned that such an approach won’t accomplish anything. In a rather dramatic flourish, he invoked the 1978 essay by Czech dissident Vaclav Havel, entitled “The Power of the Powerless” to argue that “it is essential to refuse to repeat a lie, even if that may be the path of least resistance.” He said such a practical arrangement or compromise between conflicting parties to coexist peacefully “will not serve the purpose.” “For decades,” Carney said, “countries like Canada prospered under what we called the rules-based international order,” adding that Ottawa “joined its institutions, we praised its principles, we benefited from its predictability” to pursue “values-based foreign policies under its protection.” He said Canada was always aware that “the story of the international rules-based order was partially false – that the strongest would exempt themselves when convenient, that trade rules were enforced asymmetrically.” The Canadian Prime Minister said that his country “knew that international law applied with varying rigour depending on the identity of the accused or the victim.” “This fiction was useful, and American hegemony, in particular, helped provide public goods, open sea lanes, a stable financial system, collective security and support for frameworks for resolving disputes,” he argued. He said that “we participated in the rituals, and we largely avoided calling out the gaps between rhetoric and reality.” However, “this bargain no longer works,” he stressed. “Over the past two decades, a series of crises in finance, health, energy and geopolitics have laid bare the risks of extreme global integration,” Carney contended. “More recently,” he suggested, “great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited.” According to Carney, countries “cannot live within the lie of mutual benefit through integration, when integration becomes the source of your subordination.” “MIDDLE POWERS” Clubbing his country together with other “middle powers” like Singapore, Malaysia, Norway, and Switzerland among others – who are known more aptly at the World Trade Organization as the “Friends of the System” – Carney said that “the multilateral institutions on which the middle powers have relied – the WTO, the UN, the COP – the architecture, the very architecture of collective problem solving – are under threat.” “And as a result, many countries are drawing the same conclusion: that they must develop greater strategic autonomy in energy, food, critical minerals, in finance and supply chains,” he stated. Further, he warned that “hegemons cannot continually monetize their relationships,” while “allies will diversify to hedge against uncertainty.” Carney said the so-called “middle powers” – who are often praised by the WTO’s Director-General, Ms. Ngozi Okonjo-Iweala, for their so-called constructive role at the WTO – will “buy insurance, increase options in order to rebuild sovereignty – sovereignty that was once grounded in rules, but will increasingly be anchored in the ability to withstand pressure.” What Carney goes on to recommend are “collective investments in resilience,” which he described as “cheaper than everyone building their own fortresses.” “Shared standards reduce fragmentation. Complementarities are positive-sum. And the question for middle powers like Canada is not whether to adapt to the new reality – we must. The question is whether we adapt by simply building higher walls, or whether we can do something more ambitious.” What Carney advocates is what Alexander Stubb, the President of Finland, has termed “value-based realism.” Carney said he would like to tell “the other countries, especially intermediate powers like Canada, [that they] are not powerless.” “They have the capacity to build a new order that encompasses our values, such as respect for human rights, sustainable development, solidarity, sovereignty and territorial integrity of the various states,” he asserted, adding that “the power of the less powerful starts with honesty.” He told the Davos audience that “this is classic risk management. Risk management comes at a price, but that cost of strategic autonomy, of sovereignty, can also be shared.” Carney reminded the “middle powers” that “collective investments in resilience are cheaper than everyone building their own fortresses,” while sharing “standards reduce fragmentation. Complementarities are positive- sum.” “And the question for middle powers like Canada is not whether to adapt to the new reality – we must.” Further, he said “the middle powers must act together, because if we’re not at the table, we’re on the menu,” suggesting that “great powers – great powers can afford, for now, to go it alone. They have the market size, the military capacity and the leverage to dictate terms. Middle powers do not.” He urged the so-called “middle powers” to act “consistently, applying the same standards to allies and rivals.” “When middle powers criticize economic intimidation from one direction, but stay silent when it comes from another, we are keeping the sign in the window” that the international order is fine, he said. However, it is time for countries to take the sign of the rules-based international order “out of the window.” “We know the old order is not coming back,” he said, noting that “we shouldn’t mourn it. Nostalgia is not a strategy, but we believe that from the fracture, we can build something bigger, better, stronger, more just,” he said. Carney said that it “is the task of the middle powers – the countries that have the most to lose from a world of fortresses and most to gain from genuine cooperation.” PLURILATERALS “On plurilateral trade,” he said, Canada is “championing efforts to build a bridge between the Trans-Pacific Partnership and the EU, which would create a new trading bloc of 1.5 billion people.” “On critical minerals,” the Canadian Prime Minister maintained that “we’re forming buyers’ clubs anchored in the G7, so the world can diversify away from concentrated supply.” “And on AI, we’re cooperating with like-minded democracies to ensure that we won’t ultimately be forced to choose between hegemons and hyper-scalers.” “This is not naive multilateralism, nor is it relying on these institutions,” he said. “It’s building coalitions that work – issues by issue, with partners who share enough common ground to act together. In some cases, this will be the vast majority of nations.” He argued that “what it’s doing is creating a dense web of connections across trade, investment, culture, on which we can draw for future challenges and opportunities.” However, Carney seemingly remained silent on how his proposals would work for other developing and poor countries who are always being ignored in the current trading system. In short, developing and poor countries must see the writing on the wall: the WTO’s upcoming 14th ministerial conference (MC14) in Yaounde, Cameroon in March 2026 is likely to be about plurilaterals – in which they have little to gain – as well as the weakening of the principle of decision-making by consensus, said analysts who preferred not to be identified. +
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