A rapprochement in globalisation, multilateralism, nationalist unilateralism

The above 16th century quote neatly summarises globalisation. Essentially, the term embraces the economic interdependence of nation states, the universality thereof, underpinned by the rule of law. Its foundational hypothesis rests upon the premise that no matter how powerful and resourceful any country is, it simply cannot produce 100 per cent of all its needed resources 100per cent of the time for 100per cent of the people.

The logical extraction of that proposition invokes necessary cooperation, collaboration and healthy competition amongst countries. That all sounds straightforward right? Theoretically, yes! Practically, no! Because, whilst nations oftentimes cooperate, collaborate and compete, they neither do so consistently, nor always upon on a healthy, lawful nor rational foundational. National interests intervene, therefore geostrategic goals sometimes collide and, in extremis, explosively, resulting in wars. A classic example of that scenario is the ongoing Russia/Ukraine war.

To mitigate the risk of conflicting geostrategic interests, countries honour regulatory and treaty obligations, nations bargain, negotiate and trade-off policy goals over the short, medium or long term as the context justifies. The policy objective is to avoid a zero-sum game which entails an imperfect balancing of interests and potential gains.

Typically, these are executed under the auspices of global and regional institutions, like the African Union, BRICS, ECOWAS, EU, G7, G20, OECD, United Nations, World Health Organisation, World Trade Organisation etc. Plus, they encompass compacts, legal instruments, policies, regulations stemming from them. Fallible as they might be, those dynamics underpin the global order interposed with a prevailing quasi-free market orthodoxy. And it is quasi-free market because nowhere in the world is the economic order entirely subject to market forces.

According to the U.S. think tank, the Atlantic Council, as of November 2021, the four largest central banks in the world, the U.S. Federal Reserve, the Bank of Japan, the European Central Bank and the Bank of England, had collectively spent $24.5 trillion in quantitative easing arrangements aimed at stabilising their economies and, by extension, the international financial order. This was pursuant to the 2007/8 global financial crisis and the 2020 COVID-19 pandemic.

The globalisation school of thought contends that it is a force for sustaining peace and security because nations are less likely to go to war if they trade fairly and collaborate on multiple fronts. Accordingly, the ultimate objective of globalisation is the universality of economic development to address significant complexities around global commons – climate change, cybercrime, inequality, deprivation, pandemics, poverty etc – on a win: win basis guided by established legal rules.

On its part, multilateralism is but a slight variation on the globalisation theme. It is premised on the notion that three or more nations can collaborate and or compete as the context justifies in pursuit of their mutually geostrategic goals.

By its very definition of a minimum of a triptych of sovereign nations, multilateralism negates the kernel of universality which appertains to globalisation. Multilateralism does not purport to tackle the compounded cascading challenges of global commons. A school of thought contends that multilateralism is key to the post- World War II liberal orthodoxy and essential to sustaining peace and security not least given the relative accomplishments of the G20 in fixing the global financial crisis and embedding financial constancy.

In other words, the overarching aims of globalisation and multilateralism are not inherently mutually exclusive. The colliding objectives of globalisation and multilateralism on the one hand, and nationalistic unilateralism on the other, are set in the context of geopolitics. Ergo, the central philosophy of nationalistic unilateralism is premised on the reasoning that a sovereign nation, represented by the its people, under the instrumentality of a sovereign national parliament is the de facto,de jure and commanding authority, to set and administer policies, regulations and statutes in the national interest. This power, it is argued, cannot be supplanted by treaty obligations, international law nor by emanations thereof.  The 2003 U.S.-led invasion of Iraq in the absence of a definitive UN resolution is a classic exemplification of nationalist unilateralism.

Indeed, Oxford Professor, Timothy Garton Ash, argues that “assertive nationalism” was the “hallmark of the second Bush presidency from the outset” (Free World: America, Europe and the Surprising Future of the West, 2004). Proponents of America’s Iraqi invasion, however, vociferously contend that UN Security Resolution 1441 which offered Saddam Hussein, then Iraqi leader, “a final opportunity to comply with its disarmament obligations”; and UN Security Council resolution 687, of April 3, 1991 (pursuant to Iraq’s 1990 War of Aggression against Kuwait); provided, inter alia, that the Security Council may decide “… to take such further steps as may be required for the implementation of the present resolution and to secure peace and security in the area”; provided the legal basis for invasion in defence of America’s strategic interests in securing peace and stability in the Persian Gulf axis.

Another example of nationalistic unilateralism was Britain’s exit from the post-War II multilateral legal, socio-political architecture of the supra-national European Union (EU) following the 2016 referendum. Within the European Union, Hungary, and Italy are deeply Eurosceptic nations although this is not limited to these three countries. The essential thread running through these states and others is nationalistic unilateralism. That is, a desire to “go solo” and not be “dictated to” by multilateral organisations and legal frameworks.

That desire is driven by passionate concerns around the “increasing encroachment” on national sovereignty and, by extension, democratic illegitimacy; immigration, the pace of demographic change and its potential for adverse social cohesion, ditto unintended social re-engineering; the perception of multilateralism as elitist and undermining the interests of the working class; the shrinking of state and the advancement of privatisation.

Arguably, vociferous opinion against ECOWAS (under Nigeria’s leadership), invading Niger following the military coup d’état by General Abdourahamane Tchiani against the democratically elected government of President Mohamed Bazoum on July 26, 2023, was informed by nationalist unilateralism. That is, eventhough ECOWAS, the 15-nation regional bloc supported a military invasion against the Nigerien military junta, very many Nigerians were against the idea which, inescapably meant and means a distrust of multilateralism on this count.

Other examples of nationalist unilateralism are illustrated in protectionist economic policies. These are ostensibly aimed at “protecting” local industries but invariably risk tit-for-tat measures by other countries who not only engage in retaliatory practices, but perhaps, more disproportionately, interspersed with the law of unintended consequences.

Take the United States’ and China’s 2018/19 protectionist trade war which, eventually, sabotaged circa $450 billion in annual trade. The impact of those losses on direct and indirect employment in both countries, dislocated supply chains and dismal fiscal receipts are only too obvious. Whilst the trade war soured relations between both countries politically and cut U.S. exports to China and vice versa, nevertheless, it yielded the unintended consequence of increasing China’s global trade.

That said, international trade is intimately brigaded with politics. If the politics aren’t right, there trade relations will suffer. As between China and the United States, real tensions exist over geostrategic influence, military might, Taiwan, cybersecurity, protectionism and more. These political complexities imperil seamless trade.

Other times, protectionism, a subset of nationalist unilateralism, could prove to be self-harming. Take 2022, when the United States’ infant formula production capacity was insufficient to meet domestic demand.  A major crisis halted production at one of the four critical manufacturing hubs because of a serious microbial contagion. Nationalist unilateralism on these unique facts proved ineffectual. Trade was aid! Quite literally too! The crisis was only curbed when the Food and Drug Administration Agency granted emergency approvals for the emergency importation of infant formula.

Unilateralism harms competition, enterprise, innovation, free (er) markets and growth. What’s the point of competing in saturated markets with suboptimal profit margins say? Vijay Keshave Gokhale, a former Indian Foreign Secretary’s assessment is noteworthy. He opined against “unilateral tendencies” which were “coming to the fore, be they in rising trade protectionism or in the disregard for established international mechanisms governing the global commons” (Can Middle Powers Save the Liberal World Order? London: Chatham House, June 2019).

Therefore, for its populist allure, nationalist unilateralism possesses significant drawbacks. First, there is no compelling evidence that it works from an economic standpoint.

Second, analysis from the U.S. Department of Commerce established that total trade between China and the United States in 2022 exceeded $690 billion, more than 23 per cent above 2019 figures.

Third, the global response to the COVID-19 pandemic in 2020 and since, significantly reinforced the power of globalisation and multilateralism in that clinical accessories, personal protective equipment and vaccines, were shipped over complex supply chains in record time, which ultimately helped to save hundreds of millions of lives. The converse, and international trade restrictions, would have had disastrous consequences for humanity.

Fourth, according to the World Trade Organisation, more than 75 per cent of international trade was undertaken on “most-favoured nation” tariff principles, which nations afford all WTO members, thereby implicating the added value of globalisation and multilateralism.

Fifth, the World Bank in its August 2023 report, confirmed that since 1990, international trade has boosted incomes by 24 per cent worldwide and by 50 per cent for the poorest 40 per cent of the population, lifting over 1 billion out of the poverty trap. In other words, trade has demonstrably reshaped the global economy and catalysed positive socio-economic outcomes.

Summing up, it would be extremely naïve to assert that globalisation and multilateralism are panaceas to all international trade disputes. They are not. The striking challenges, complexities, volatilities and political strife in the global order, necessitate smart thinking and sensible policy trade-offs.

For a start, political stability and peace are indispensable conditions for sustainably effective global trade.
Nevertheless, fresh thinking envisions the digitisation of international trade which exploits 5G technology and the internet of things to cut transaction costs and geographical boundaries regarding contracting.

There is a case for re-examining “plurilateralism” on a limited privity of contract basis pertaining solely to the contracting parties, not multilateral WTO agreements where all members are contracting parties.

Its appeal lies in its potential efficacy, fitness-for-purpose and flexibility regarding the respective parties’ purposive contractual aspirations. Equally, regional economic compacts and partnerships like the African Continental Free Trade Area, Asia-Pacific Economic Cooperation, European Common Market, North American Free Trade Agreement etc will continue to reinforce more effective international trade. 

The Global South certainly needs more trade not more aid. Globalisation and multilateralism are pivotal in that regard. Concurrently, the underlying socio-economic concerns fuelling nationalist unilateralism demand innovative and nuanced policy approaches. Even so, as John Donne said centuries back: no one’s an island!
Ojumu is the Principal Partner at Balliol Myers LP, a firm of legal practitioners and strategy consultants in Lagos, Nigeria.