Governance and multilateralism in the 21st century: Tim Groser focuses on international economic issues with strong emphasis on trade and climate change.

• Author: Groser, Tim

It is a statement of the obvious that political 'governance' exists on sub-national, the nation-state and supra-national levels. It became fashionable in policy circles some ten to fifteen years ago to talk of the 'porous' nature of modern sovereignty.

For a variety of reasons it became more noticeable that power was being 'drained' from the nation state in two opposing directions. First, it was becoming more and more practical to deal with problems below the level of central government--technology being a key enabler. Second, there was a growing realisation that the nation state was increasingly incapable of dealing alone with a wider variety of 'cross-border' issues than the traditional suite of policies in trade, international financial and security affairs--trans-national pollution being a classic example. The UN Framework Convention on Climate Change negotiations, which are trying to align climate change policies, are the ultimate expression of this trend. No wonder this is fraught with difficulties.

This growing realisation around the nature of power and responsibility socialised a political concept long discussed in European policy circles--the principle of 'subsidiarity', another political word that sounds decidedly odd when translated literally from French to English (like 'modalities' in trade negotiations). However, the core idea is anything but odd. I understand it as follows: we should seek to devolve power to the lowest level of political responsibility (or governance) consistent with the scale of the problem. Or to put it more crudely--small problems should be dealt with locally, problems too big for the nation state should be dealt with through multilateral, bilateral or plurilateral arrangements (whether legally binding or not).

This still leaves the vast bulk of responsibility for governance with the nation state. Any thought that this trend spelled the slow decline of the Westphalian system of sovereign nation states would be absurd. For as long as we can forecast, the sovereign nation state will remain the dominant political actor internationally. States will accept limitations on their sovereignty only in return for reciprocal limitations on the sovereign power of other states to engage in actions damaging to their own country's interests.

This may all sound a little 'pointy-headed', but it is anything but. It lies at the centre of the often ideological debate about the Trans-Pacific Partnership. When anti-trade groups or people say that the TPP will 'encroach on our sovereignty', I have quite deliberately said that this is technically correct, but in itself a trivial point. It is like listening to one hand clapping--and about as useful.

Destructive policies The entire purpose of internationally legally binding agreements is to limit sovereignty on a reciprocal and agreed basis. In the area of international trade, one could make a pretty robust argument that literally no developed country in the world has been more damaged than New Zealand by what I would call 'sovereignty out of control'. That is, our economy has been deeply damaged over the past 50 years by the sovereign right of our trading 'partners' to implement destructive policies (huge subsidisation, ever diminishing market access, for example) against our main internationally competitive agricultural exports.

We were not alone, of course. A number of other developing countries like Argentina, Chile, Brazil and Malaysia also suffered. This is one reason why I, and no doubt other New Zealanders, have often described New Zealand as structurally a developing country, with the income levels of a developed county New Zealand negotiators apparently turned up to the first meetings of the G-77 in the 1960s for this reason--before deciding it was not quite right for New Zealand. The difficulties New Zealand and leading developing country commodity exporters suffered were a direct consequence of a decision made in 1947 to keep agriculture outside systems of global governance being developed for trade.

The structure was partially fixed in the Uruguay Round, when operationally effective rules were introduced into the world trading system--though the degree of actual liberalisation within these new structures was very limited. This remains a central issue for developing country agriculture exporters led by Brazil. There is still scope for a great deal more, using the frameworks introduced into the World Trade Organisation some eighteen years ago.

Same principle

Exactly the same principle lies at the heart of all trade negotiations. The whole point of the TPP and the WTO is to put some reasonable limitations on that sovereignty around principles and policies that we know work and are mutually beneficial. For the most part, the limitations will be moderate, sensible and largely about binding in existing policy settings. We--and no doubt all of our negotiating partners--will make our decisions at the end of these negotiations when we can see the balance of the deal in terms of our overall national interest.

So, how well are we doing at the beginning of the 21st century? What metrics should we use to see how well the system has worked since the end of the Second World War, which established the key mechanisms of global governance?

In nay view, the answer is clear: the institutions of global governance have underwritten enormous social, economic and political progress. Obviously, far more is driving this than just the institutions of global governance--technology and the spread of ideas is a massive contributor. The key word is 'underwritten'.

A simple real-world example should be enough to make the point. In 1950 South Korea was one of the poorest countries in the world. There was an infamous Australian Senate inquiry into the state of Korea at the end of the Korean War, which basically wrote the country off in...