POLICY ISSUE 5 ISSUE versions. for commentsonearlier Zachmann andGeorg Wolff Guntram Nicolas Véron, ReinhildeVeugelers, Sapir, André Papadia, Francesco George Papaconstantinou, Manuel Lafont-Rapnouil, Lamy, Adrien Bradley,Pascal Supervisory Board.Thanksto as amemberoftheECB the tenureofIgnazioAngeloni tomarktheendoforganised and centralbankers’, ‘Challenges forsupervisors BankcolloquiumCentral March 2019attheEuropean on remarksgiven22 BriefalsobuildsThis Policy Transformation.pdf. Global.Governance.Demise.or_. sites/39/2019/08/eBook_ eu/wp-content/uploads/ athttps://tgg.eui. available Transformation? Global Governance: (eds)(2019)Pisani-Ferry G.andJ.Papaconstantinou, befoundinwhich can Institute, asummaryof at theEuropeanUniversity with GeorgePapaconstantinou research undertaken jointly BriefisbasedonThis Policy Institute Peterson Visiting Fellow, University Institute, European Professor, Bruegel, Senior Fellow, Pisani-Ferry Jean | SEPTEMBER 2019 SEPTEMBER EUIe-book, BRIEF Demise or designed by others; Europe remains too weak and fragmented to offer sufficient leadership. sufficient offer to too weak andfragmented others; remains designed by Europe inasystem invest to is reluctant China role; itspost-war questioning US isincreasingly The leadership. isproviding main players None ofthe tenets. started affecthas to itscore offragmentation Aprocess andobsolete. incomplete looks increasingly system governance ofthe rules-based global architecture andinstitutional Thelegal nature. a structural of rivalrythe China-US impediments world are ofamultipolar andtheemergence sovereignty, andworldwide stance concernsover Trump’s Beyond President formidable. no less collectiveactionare Obstaclesglobal to threats. global to for commonresponses calls security, interdependence andinternet stability heightened financial to preservation climate collectiveaction. 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This calls for internal governance reforms. governance calls forinternal This game. this newglobal in equip itself should be to aneffectiveplayer Europe orpecuniaryas sanctions incentives. such mechanisms andenforcement participation strong to recourse solved without having will not be that problems are There social capital. asglobalisation’s be regarded should institutions Existing international institutions. and be served and legitimate nimble by onalimitedprinciplesrely set ofuniversal they should arrangements, such of effectiveness maximise the To networks. andknowledge participants non-state partnerships involving ofthewilling coalitions and open groupings, regional between agencies, independent cooperation mechanisms, are soft pledge-and-review These offields. emerged inanumber have forms ofcooperation New institutions. rules binding universal global supported by on anymore rely cannot It ofanewparadigm. collectiveactionisinsearch International THE ISSUE THE AREAS SELECTED IN INDICES CONCENTRATION ACTION: COLLECTIVE INTERNATIONAL POLICY CHALLENGE POLICY IN A FRAGMENTED WORLD FRAGMENTED A IN ACTION COLLECTIVE 0 0 0 . 0 0 0 1 2 . 5 5 5 1 2 0 Competition Banking regulation Climate Global Financial Safety Nets Taxation Current countriesindividualised) Benchmark (EU/euro-area countriesactingjointly EU/euro-area countriesactingindividually EU/euro-area dollar GDP Trade Internet regulation Population ion thanfortradeandinternet PPP GDP Migration - 2 POLICY BRIEF COLLECTIVE ACTION IN A FRAGMENTED WORLD 1 STATE OF PLAY For the Bretton Woods institutions, There is a greater need for interna- the Asian crisis of the late 1990s tional collective action than ever was a turning point. Intrusive and before. The threats of catastrophic cli- economically misguided International mate change and biodiversity collapse Monetary Fund programmes were demonstrate the increased importance considered proof that these institutions of global commons and the urgency of were at the service of the Western coordinating responses at global level. powers. A decade later, the multilateral But the need for collective action also response to the euro crisis was regarded arises from risks to financial stability, as further evidence of this built-in bias. threats to internet security, tax avoid- The global financial crisis did ance by multinational firms and mass not result in a permanent upgrade migration, to name only some of the to global governance. The response most prominent challenges. to the financial meltdown and the The 1990s represented the ensuing recession was swift and high water mark of the collective forceful, and the elevation of the G20 action model characteristic of the to leaders’ level adjusted the political post-second world war system. leadership body to the new reality of This system relied on universal, the global economy. But nevertheless treaty-based institutions tasked with changes to the rules and institutions the organisation of international of global governance fell short of the cooperation and the enforcement of leaders’ 2009 promise that “a global legally binding rules in major fields crisis requires a global solution”1. of interdependence. At the time, the Financial regulation was upgraded, template became truly universal as but international macroeconomic membership of the Bretton Woods coordination was short-lived and institutions was extended to Russia hopes that the crisis would provide an and the former Soviet bloc, while opportunity to reform the international preparations were made for Chinese monetary system were frustrated. and Russian membership of the World The urgency of climate change Trade Organisation. However, efforts to mitigation has not resulted in a replicate this template in fields such as revival of the post-war template. At investment, competition and climate Kyoto in 1997 and Copenhagen in 2009, action have been frustrated. attempts to create a legally binding, Once regarded as a milestone enforceable system of negotiated on the way to completing the emission reduction commitments institutional architecture of failed. The Paris Agreement of 2015 globalisation, the creation of the WTO was based on an entirely different did not achieve its aims. Since the paradigm: national ‘contributions’ that mid-1990s, multilateral negotiations are unilaterally determined and non- have stalled, trade governance binding. The expected effectiveness has fragmented into a myriad of of the collective endeavour to contain preferential agreements, and China’s the rise in temperature relies on soft membership of the WTO has failed to mechanisms: review procedures, peer trigger the convergence of its economic pressure and the involvement of non- system (let alone its political system) state participants. with the Western model. The essential The governance of the internet principles of the General Agreement epitomises the obsolescence of the on Tariffs and Trade (GATT) and post-war model. The emergence the dispute settlement mechanism of the first truly global, borderless 1. G20 London Summit – instituted with the creation of the WTO infrastructure has essentially been Leaders’ Statement, 2 April were nevertheless upheld, until the based on uncoordinated state and 2009, available at https:// Trump administration’s deliberate private initiatives based on broad www.imf.org/external/ np/sec/pr/2009/pdf/ sabotage undermined the core tenets of principles and a series of information g20_040209.pdf. the post-war order. exchange protocols. Its governance 3 POLICY BRIEF COLLECTIVE ACTION IN A FRAGMENTED WORLD structures have remained weak and concerns over national sovereignty are informal, and all attempts to give on the rise nearly everywhere. them a more formal structure have The stance of the Trump ended in deadlock. Since the start of administration is currently the single the decade divergent preferences on most significant obstacle to global privacy and the limits of free speech, collective action. Its worldview does and more fundamentally state control not build on the premise that a series over national citizens, have given rise of issues require global cooperation to a process of balkanisation. The unity and that well-structured joint action of the internet is a thing of the past and can yield benefits for all participants. the question now is what geometry will It favours a transactional approach emerge from its fragmentation. to international relations and regards The historic core of the global most international issues as zero-sum regime – trade and finance games. arrangements – is undergoing a However, US grievances against, process of fragmentation. Global and doubts about global rules rules and institutions are still there, and institutions did not start with but their authority is fast diminishing. Trump. Already in the 1940s, the Existing multilateral arrangements US Congress rejected membership lost muscle already in the 2000s and of the US-designed International the early 2010s, and the process is Trade Organisation. President accelerating. A new geography made Clinton objected to