Smell the bilateral roses.

The post-war push for integration and globalisation led to the creation of many (MANY!) supranational organisations. Chief among them the UN (1945), World Bank (1944), the IMF (1945), and the WTO (which in 1995 replaced the General Agreement on Tariffs and Trade from 1948).

These organisations have set out to integrate the global economy like never before. We are all, in a sense, still recovering from horror scenes in places like Nagasaki, Hiroshima, Normandy and Stalingrad. From the awful promise mutually assured destruction.

Mostly and until recently, these supranational organisations have been successful. Conflict is down, wealth and health are up. Trade has trumped conflict and the globe has become a lot smaller. For example, the WTO touts statistics that in the post-war era as a whole, trade grew at one-and-a-half times the rate of expansion in global GDP; in the two decades running up to the financial crisis of 2008, it expanded at fully double the rate of world growth.

However, cracks have started to appear. What seems to be an inability of organisations such as the WTO to keep up with the times has led to parties like America becoming disenfranchised with new powers (China) being treated as a ‘developing’ country, and Britain feeling stuck in its ties to the sluggish economies of the EU.

Today’s more skeptical attitude can also be felt in developing cities like Nairobi. Kenya is a centre for the UN in Africa, and anecdotally I have witnessed the ridicule of vehicles baring UN number plates. The story goes that these UN minions are out of touch, keeping to themselves in barricaded communities, spending enormous amounts on foreign goods and high salaries for foreign workers who don’t actually do very much to help Africa or the world.

At a macro economic level, the new attitude towards these supra-nationals means that when trade is liberalised, it is through bespoke arrangements between willing partners—not by across-the-board multilateral negotiations. In this new world, it could soon become hard to remember what the point of the WTO is. As stated in this excellent article:

“Even with the best will in the world, a technocratic body like the WTO is always going to struggle to deal with brute political power play. And right now, it is operating in anything but a good-will environment. The many useful things that this inherently feeble body can usefully achieve are slipping beyond its reach—because it is as strong or as frail as its most powerful members, above all America, want it to be.”

With this global backdrop, Kenya and South Africa are commonly involved in their own fair share of supra-national organisations:

South Africa and Kenya are both members of the World Trade Organisation (WTO); African Union (AU) which is in the process of negotiating a continental free trade area (CFTA) as well as members of the tripartite free trade agreement (TFTA) comprising of members of the Common Market for East and Southern Africa (COMESA), the East African Community (EAC) and the Southern Africa Development Community (SADC), … but there has been no bilateral trade agreement between the two countries….

Trump would probably argue that these supranational organisations are getting in the way of a fruitful bilateral agreement.

I would probably agree.