The Neoliberal Turn in Regional Trade Agreements
| Publication year | 2021 |
Second, this Article argues that bilateralism and regionalism in trade are contemporary fads that are spreading neoliberal economic ideals in the periphery of the global trading system. In other words, emulation by small developing countries of neoliberal economic policies in developed countries is a significant driver of economic reform. Developing countries adopt neoliberalism not simply because it is imposed, as many accounts suggest. Rather, neoliberalism is also voluntarily adopted for a variety of reasons: (i) because there has been a convergence in the thinking of policymakers and academic thinkers in developing and developed countries in part as a result of socialization through education or professional associations and contacts; (ii) as a result of persuasion that neoliberal reforms are important preconditions for goals such as increased economic growth or the efficiency of public sector institutions, developing country officials have adopted them; (iii) public officials in developing countries are strategically adopting neoliberal reforms since they are regarded as a signaling device that their country is 'safe' for investment or because bilateral and regional trade agreements come with budget support that is otherwise unavailable to these developing country officials in their home country; (iv) officials in developing countries are passive imitators who in the absence of solid evidence as to the efficacy of neoliberal ideals on their own account or in relation to alternative reform ideas are rationally bounded actors who find it impractical to assess the efficacy of neoliberal ideals or their alternatives.
In short, this Article argues that the increased number of regional and bilateral trade agreements represents an important opportunity for the further diffusion of neoliberal economic ideals, an insight often missing in leading accounts that have emphasized how this trend conforms or departs from the norms of the World Trade Organization. This paper does so using a constructivist account of the circumstances under which neoliberalism arises in the turn towards regionalism and bilateralism. It shows how ideas about market governance and the institutions and experts that generate and perpetuate these ideas impose an incentive structure within which choices in favor of neoliberalism are more than less likely to be exercised.
INTRODUCTION. ...............................................................................422
I. THE TREND TOWARD TRADE REGIONALISM AND BILATERALISM. ........................................................................427
A. The Long Litany of U.S. Regional and Bilateral Trade and Investment Agreements.................................................427
1. Bilateral Trade Agreements......................................430
2. Regional Initiatives...................................................432
3. Trade and Investment Framework Agreements (TIFAs) ..................................................................... 432
4. Bilateral Investment Treaties (BITs) ........................ 432
5. Model Agreements....................................................433
B. Economic Partnership Agreements (EPAs) and the EU's Global Europe Strategy........................................................434
1. Choice of Countries/Regions....................................437
II. ACCOUNTING FOR THE TURN TO REGIONAL AND BILATERAL TRADE AGREEMENTS......................................438
A. Standard Justifications for Regionalism and Bilateralism Emphasize the Benefits to Developing Countries................439
B. The Breakdown of Multilateral Negotiations Has Resulted in Forum Shifting..................................................441
C. Forum Shifting Reduces Developing Countries' Opportunities to Form Regional Coalitions.........................446
D. Other Reasons Accounting for the Spread of Regionalism and Bilateralism ................................................................... 449
1. The Influence of Global Norms: Constructivist Explanations.............................................................449
2. Competition for Resources and Markets................... 456
III. FORTIFYING THE NEOLIBERAL AGENDA OF THE WASHINGTON CONSENSUS ................................................... 460
A. Asymmetrical Liberalization................................................ 463
B. Intellectual Property Rights (IPR) and Asymmetrical Liberalization ....................................................................... 464
C. Agriculture and Asymmetrical Liberalization...................... 467
D. Is Resistance An Option?..................................................... 469
1. The SACU Example.................................................469
2. The U.S.-South Korea FTA.....................................470
CONCLUSION . ................................................................................... 471
INTRODUCTION
This Article argues that the increased resort to bilateral and regional trade agreements has taken a neoliberal turn. These trade agreements are now a primary means being used to realize neoliberal economic policies around the world. These neoliberal policies include trade liberalization, greater investor protections, commodification of social services, guaranteed rights of investor access to investment opportunities, privatization of public service goods, and generally the diminution of sovereign control over national economies. These trade agreements make the spread of neoliberal policies possible not just in developing countries, but in industrialized economies as well. I show that these agreements provide business interests with opportunities to exercise concerted pressure to influence the adoption of neoliberal economic policies in both developed economies and developing economies.
As such, this Article tells a story of spreading neoliberalism, not only through the market power of developed economies, or coercion, as this story has been predominantly told, but also through constructivist influences. (fn1) Constructivism explains the spread of neoliberalism in regional trade agreements in a number of ways, including the increasing convergence of business interests with a largely shared set of ideas supporting market governance in developing and developed countries that form coalitions to support mutually beneficial agreements.(fn2) Further, top government officials in developing countries have increasingly begun mimicking developed countries' strategies, including the pursuit of regional and bilateral trade agreements.
This Article therefore differs from leading accounts of the spread of neoliberalism that primarily or exclusively focus on the role of coercion to account for the diffusion of neoliberalism. (fn3) It also differs from accounts put forth by realists and critics of neoliberalism.(fn4) Further, my approach in this Article differs from the liberal intergovernmentalist approach that focuses on how economic interests, relative power, and the need for credible commitments alter actors' instrumental calculations. (fn5)
The claim here is not that constructivism is a superior explanatory or causal factor in the diffusion of neoliberalism to the preceding largely functionalist and rationalist approaches. Rather, the argument is that constructivism can help account for the circumstances under which neoliberalism arises in the turn towards regionalism and bilateralism in trade. It does so by taking into account how ideas about market governance generated by institutions and experts define the parameters within which choices in favor of neoliberalism are likely to be exercised. A constructivist approach therefore supplements functionalist and rationalist approaches by foregrounding the importance of ideas in the diffusion of phenomena such as neoliberalism. A constructivist approach does not focus on donor conditionality or coercion, but instead highlights that neoliberalism in bilateral and regional trade agreements may very well be the result of a tactical or strategic policy adjustment.
Proliferation of regionalism and bilateralism may also be a response to technological or market trends as a consequence of changes in ideas that were mimicked or voluntarily adopted, because the mimickers came to believe them and began changing their economic goals and policies accordingly...
To continue reading
Request your trial