Failing big trade deals not necessarily the end of globalisation

The four-month-old Brexit result has left a significant aftermath for the European Union and the United Kingdom to deal with.

Yet little discussion has centred on why it may have come about in the first place. In fact, this opens up a lot of questions about multilateral agreements themselves. Resistance towards multilateral agreements The beauty of multilateral agreements is that they allow 'your friend's friend to become your friend'.

So, simple bilateral linkages allow a country to establish multiple relationships in one go.

Globalisation can progress at high speed if multilateral agreements are established and operational.

Yet, at the same time as the Brexit, the future of the Trans-Pacific Partnership Agreement (TPPA) has come under scrutiny, largely thanks to the uncertainty surrounding the United States elections. Last week saw the potential dramatic end to the European Union (EU)-Canada comprehensive free trade agreement after seven years of negotiation. The agreement would see Canada remove 98 per cent of tariffs, open up the EU's protected agricultural markets to Canadian farmers, and give EU companies access to Canada's lucrative public-procurement market. Yet, the deal is facing resistance from the parliament of the Belgian region Wallonia, which voted against the agreement. The region constitutes less than 1 per cent of EU's population. There are also other strong objections in Germany, Austria and France. Even if the agreement goes ahead, the deal can only be provisionally applied.

The most contentious aspect of the deal must still be ratified by all the EU member states. It would see the creation of independent dispute arbitration tribunals which would allow investors to sue governments if they believed national rules had been set that were in breach of the terms of the agreement.

This aspect of the deal is similar to one within the TPPA, which was a major point of objection for the countries involved and a major deterrent for those considering joining.

A similar free trade agreement—the Transatlantic Trade and Investment Partnership (TTIP)—between the EU and the US is also being negotiated, but has been met with far more opposition than the Canada pact.

So the EU desperately needs this Canadian deal to go through to establish its credibility internationally.

Globalisation lives on in other forms.

It is good that countries are cautious in entering into multilateral agreements. As much as there are significant benefits associated with these agreements, there are often huge costs involved.

Until the value of the benefits over the costs is properly communicated, it is hard to convince people that such an agreement makes sense.

The painful aftermath of the Brexit leads many to question whether such partnerships should indeed be entered into in the first place.

Although some multilateral trade agreements have not materialised as hoped, globalisation lives on in other forms.

We are still seeing a rising number of bilateral free trade agreements being negotiated and signed.

Trade is rising between countries, even though world trade volume has slowed down on the whole.

Emerging markets and their cities are also beginning to contribute significantly to world economy.

In the grand scheme of things, it isn't totally unexpected that certain mechanisms of world trade are facing hurdles.

After all, we cannot expect all countries to think and behave the same way.

Published on stuff.co.nz