Whose Rules-Based International Order is it Anyway?

As he prepares to welcome his G7 counterparts to their summit in Biarritz on August 24-26, French President Emmanuel Macron may be wondering if he will suffer the same fate as Canada’s Prime Minister Justin Trudeau. Last year’s host, Trudeau received the full Donald Trump treatment reserved for leaders who are supposed to be US allies – the president arrived late to sessions, left early, criticized “Justin” for being “very dishonest and weak”, and rescinded his endorsement of the communiqué. With Macron’s relationship with Trump testier than when they first met, the American leader, who is attending his third G7 meeting, may once again raise a ruckus.

These days, global summits involving the US seem to be exercises in least-common-denominator negotiating and damage control to get some things done under Trump’s radar and avoid a Twitter tantrum. Trump does not do multilateralism. As for the liberal rules-based international order – underpinned by guiding principles or values including open markets, democracy and the rule of law, cooperation among nations to address global problems in multilateral institutions, and American leadership in concert with its (mainly Western) allies – he is not a fan. Trump campaigned against it and won the presidency in part because many Americans agreed with him that the international system is broken and that other countries have been taking advantage of the US, laughing as they do so.

Once in office, Trump proved true to his anti-globalist rhetoric. Consider his policies on trade, one area where he has been consistent in his views for decades. For months now, concern has been mounting about the World Trade Organization (WTO) and its ability to keep functioning. The Trump administration has been blocking appointments to the WTO’s Appellate Body that hears appeals in trade disputes. If the obstruction persists, the panel will not have enough judges and the dispute settlement system will grind to a halt on December 10.

This would possibly be a fatal blow to the multilateral organization that provides governance over global trade, which is already reeling from the failure of its 164 members to conclude the Doha Round of international negotiations (launched in 2001) and unilateral action by Trump to flout the rules and wield tariffs against both allies and competitors to correct real or imagined trade imbalances. Washington had started with levies on steel and aluminum that mainly affected close partners such as Canada, South Korea and Germany, expanding the attacks into a full-scale onslaught against China and a confrontation with India over trade preferences. The winding down of the dispute settlement mechanism could have been the coup de grâce. RIP WTO, some trade analysts have already pronounced.

Into this potential debacle have stepped Canada and the European Union. On July 25, with little fanfare, they announced that they had agreed on an interim appeal arbitration arrangement that would apply to disputes between them should the WTO be unable to hear appeals. Other members could join the stopgap framework or make their own similar arrangements. The EU and Canada are also proposing a multilateral Investment Court System that would offer greater transparency and accountability to settling investor-state disputes.

Ottawa and Brussels characterized their efforts as a reaffirmation of their “shared commitment to the rules-based international order”. Canada, meanwhile, is spearheading a group of WTO members committed to improving and reforming the organization. The EU is also involved, as well as Australia, Brazil, Chile, Japan (the current G20 president), Kenya, South Korea, Mexico, New Zealand, Norway, Singapore and Switzerland.

The Ottawa Group, as it is called, is not the only international coalition bringing together countries concerned about the breakdown of multilateralism and the rules-based international order. In April, at the G7 foreign ministers’ meeting in France, Canada and Japan formally joined the Alliance for Multilateralism, which Paris and Berlin had launched earlier in the month.

A minus-US world

In testimony before the Senate of Canada’s Standing Committee on Foreign Affairs and International Trade on April 9, Canadian Minister of Foreign Affairs Chrystia Freeland spoke of the budding multilateralist alliance: “We agree that the greatest challenges of our time — like climate change, income inequality, managing the power of global technology platforms, maintaining rules-based global trade and mass migration — are truly international challenges. No one country can solve them. They can only be solved when we work together.” She added that “Canada is proud to be among the strongest defenders of this notion of the crucial importance of multilateralism today and to be working closely with our closest allies on it.”

Freeland did not cite the US, Canada’s closest ally, as an exception to the multilateralist cause. Instead, she noted that, as part of Ottawa’s efforts to defend the rules-based international order, Canada had last year concluded negotiations with the US and Mexico for a successor to the North American Free Trade Agreement (NAFTA).

Paris’s ambassador in Ottawa, however, was not skittish about calling out Trump and linking his disruptions of the rules-based international order to the launch of the Alliance for Multilateralism. “Mr Trump doesn’t like multilateralism,” Kareen Rispal said in an interview, referring to how the president has disparaged the UN and the WTO and his decision to withdraw the US from the Paris Agreement on climate change. “It sends the wrong message to the world if we think that because Mr. Trump is not in favor of multilateralism, it doesn’t mean we — I mean countries like Canada, France, Germany and many others — are not still strong believers.”

Indeed, countries that might in the past have worked in close concert with the US across a range of files are now excluding, bypassing or simply not bothering to deal with Washington. To be sure, even this far into the Trump administration, some key policy making positions remain unfilled or are held by acting officials. Yet there are many discussions – bilateral and plurilateral government-to-government exchanges and talks along other tracks – aimed at finding ways to cope in a “minus-US” world, at least on some critical issues.

The most striking minus-US move has been the decision by the 11 remaining members of the Trans-Pacific Partnership (TPP), with Japan and Australia taking the lead, to move ahead with a reconfigured accord. In a matter of months, the TPP-11 renegotiated the agreement, suspending certain sections pertinent to the US, and signed the deal, which went into force at the beginning of this year in the first seven countries that ratified it. Economies such as Vietnam and Canada are already reaping benefits, notably agri-food exporters who now enjoy easier access to certain markets than their American competitors.

Another instance of Trump disruption that upset allies and had negative consequences is the withdrawal from the 2015 Iran nuclear deal. Europe and other parties struggled to keep it going, but Iran eventually broke some of its commitments in July. A more recent example of countries banding together without the US is the messaging on the protests in Hong Kong. In May, Canada issued a joint statement with the UK on the controversial extradition amendment bill, opposition to which sparked the street action. This month, Canada and the EU released a joint statement stressing that fundamental freedoms and Hong Kong’s autonomy must be upheld. Trump, meanwhile, was advising Chinese President Xi Jinping – “a good man in a ‘tough business’", he tweeted – to meet with the protesters – a highly unlikely prospect.

Selective multilateralism

China, of course, is often also criticized for not playing well with other countries. But the reality is not so cut and dried. The Chinese have clearly grown into the role of “responsible stakeholder in the international system,” as then-US Deputy Secretary of State Robert Zoellick proffered in 2005 as a role that Washington and its allies should encourage Beijing to fill. China has proven itself a team player, even a leader, on important fields such as peacekeeping, climate change, and management global financial crises.

The rebooting of China’s Belt and Road Initiative (BRI) to address criticism of the plan (that soft loans pushes host countries into debt and that China gains more commercial and employment benefits than its partners, among other complaints) and the success that the China-conceived Asian Infrastructure Investment Bank (AIIB) has had in winning over critics skeptical of its operational standards are signs that Beijing aims to play by the rules when it sees it in its interest to do so. But throw the values book at them and they are unlikely to budge. Would any major power? China can be selective about the rules of the international order it is willing to observe. Which major power has not done the same?

China has certainly been throwing its weight around more aggressively on the international stage. Its ongoing dispute with Canada over the arrest in December 2018 of the Huawei CFO on an extradition request from the US illustrates how a middle power may not have much leverage in dealing with a China set on asserting its interests. Chinese actions in the South China Sea have provoked some Southeast Asian countries, forcing them to make difficult choices as they balance their close relationship with US, the guarantor of regional security, with the desire for a productive and commercially beneficial relationship with China.

Whether any country’s leaders are hypocritical or not in their support of multilateralism may be peripheral to the issue of what rules-based international order the world needs or can have when the very architect of those rules has become the biggest breacher of them. The Chinese leadership has sought to portray China as a guardian of the global system. Remember Xi Jinping’s prescient speech at the World Economic Forum Annual Meeting in Davos in January 2017, just days before Trump’s inauguration: “We must remain committed to developing global free trade and investment, promote trade and investment liberalization and facilitation through opening-up and say no to protectionism. Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. No one will emerge as a winner in a trade war.”

China was quick to express support for the Alliance for Multilateralism soon after France and Germany proposed it. While collective eyes may have been rolling in Western capitals, the fact is that to reshape the rules-based international order will require the participation not just of the club of “like-minded” Western – and a few non-Western countries (review the list of Ottawa Group members) but also key players who are not on the liberal-order roster – China and India, to name two obvious ones.

And so, it becomes a matter of semantics and deciding what the goal of any initiative to defend multilateralism should be. The post-Cold War US-led rules-based international order is unlikely to be restored even if Trump loses in 2020. This is not to say that the world does not need a rules-based order or will have to make do without one; it just needs one that is realistic or pragmatic. What was normal before may never return. Aspects of Trump will live beyond his administration, particularly in the realm of trade. Every country should be busy construing what those features may be and planning policies accordingly.

A new rules-based order

The US under Trump is of course not alone in viewing the existing order as dysfunctional. Developing economies in particular argue that the system reflects the global balance of power after World War II and favors the US and developed Western nations. The defeat of communism and the end of the Cold War bolstered the proponents of the US-led liberal rules-based order, strengthened even more after the 9/11 terrorist attacks in 2001.

The global financial crisis in 2008 exposed some of the pretense. With the flaws of the American system laid bare, other countries questioned Washington's moral authority to promote open markets, politics and societies. China's economic achievements and its success in proving itself to be a major power able and willing to shoulder its share of the responsibility for restoring and maintaining global economic order reinforced the attractiveness of its development model.

With chauvinism a guiding principle of US policy, calls to reconfirm a values-based international order – one based on liberal values once championed by the US – ring hollow. A restoration will not bridge divides or secure multilateralism, especially if China, India, ASEAN (notably its bigger and most populous economies such as Indonesia, Vietnam and the Philippines), Russia and others are to have greater power and influence in the new order. Some G7 countries acting in an alliance without the two major powers will only be playing a futile game, especially if they flash the values card.  “With the rise of China and the resurrection of Russian power, we are now moving from a uni-polar world to a multi-polar world,” American realist political scientist John Mearsheimer of the University of Chicago recently argued. “In a multi-polar world, especially with the US-China competition, it’s impossible to have a liberal international order.”

The rules-based global order is crumbling. Something new will emerge. But four G7 countries and their club of "like-minded" friends cannot make that happen by themselves.

What would a new rules-based order look like? That is of course the most difficult question to answer. Given the fractured nature of global politics, the solution is likely to be a series of redesigns rather than a wholescale rebuilding. Another Bretton Woods could well be a sequel to the Doha Round, only with more complex plot lines.

Efforts to achieve UN Security Council reform have gone nowhere, though there are several proposals on the table. Even modest redesigns have been difficult to execute. After the Great Recession, there was a flurry of international action to broaden the representation and strengthen the voice of developing countries on the world stage. The G7 gave way to the (still unrepresentative) G20 as the premier forum for managing the global economy. The G20 took more seriously the need to reform the International Monetary Fund (IMF) quota system so that voting better reflects the realities of the global economy and financial system. Yet more than a decade later, the unfair imbalances have not been adequately addressed. For example, the US has a 17.46 percent of the voting power, while China has only 6.41 percent, slightly lower than Japan's. Germany and Belgium together have more voting power than China. Voting conventions in international organizations should be reviewed. When the unanimous approval of all members of a multilateral institution is required, the result is incremental change or, as in the case of the WTO's Doha Round, paralysis.

Finding answers may also require taking more seriously unconventional international governance models and giving them greater institutional strength and capacity. The UN recently recognized the importance of inclusive global governance when in June it signed an agreement with the World Economic Forum, the Switzerland-based international institution for public-private partnership, to accelerate the implementation of the 2030 Agenda for Sustainable Development. The World Economic Forum offers a flexible platform for discussion and action on global issues that is not organized in the traditional state-to-state format but instead brings together willing coalitions of government, business and civil society stakeholders.

Despite Brexit and cracks in the European Union, regional initiatives such as the EU, ASEAN, the Pacific Alliance and the Arctic Council could also provide possible models, however flawed. Regional and sub-regional arrangements may be nimbler, requiring fewer actors to form a consensus and a more limited field on which to play. Groupings of cities could also be effective governance frameworks, particularly in areas such as the environment, public safety and economic development.

The world is not somehow trapped in a dream sequence (some might call it a nightmare) from which it will awake in January 2021. Multilateralism is under assault and the old rules-based international order is crumbling. Something new - possibly smaller, less rigid arrangements - will evolve. But four G7 countries and their club of like-minded friends cannot make a new world order happen by themselves.

Further reading:

Mearsheimer, John J. (April 2019) “Bound to Fail: The Rise and Fall of the Liberal International Order”, International Security, Volume 43, Issue 4, Spring 2019.

Sheng, Andrew. (November 23, 2018) “The US is dismantling the multilateral order it built, but the world will have to carry on”, South China Morning Post.

Snower, Dennis J.; and Engels, Markus. (March 2019) Recoupling: The Global Solutions Summit Edition, Global Solutions Journal, Issue 4.