Wednesday, May 25, 2011

Key factors of "strength" in "post Doha" (and post WTO?) world systemics

The combination of population size & GDP (not per capita) are key factors of "strength" in "post Doha" world systemics.

What do I mean?

1) The WTO and its 180 some members have failed to reach an agreement on the "Doha Round" for almost 10 years now. While that does not mean that the existing WTO rules are not in force and that they provide for some kind of multilateral "free-ish" trade (ie with many fewer quotas & tariffs than when the GATT started post WWII), it does call into question the whole WTO/multilateral system.

2) After all, in the last few years, because of the failure of WTO to reach agreement in Cancun & Hong Kong, many bilateral and "group" (usually regional) trade agreements have sprung up as a hedging mechanism. Eg in South America, UNASUR has been gaining ground. Brazil, India & South Africa signed an agreement a few years ago. Many ASEAN members have signed an agreement with China. The TransPacific Partnership is evolving. Africa was developing its own union (although it is nor clear how events in North Africa in recent months will affect it).

3) The US and the EU have signed many on the bilateral ones (although the US had trouble signing anything trade related while the House was in Democrats' hands).

4) The G7 then G8 has now been sort of taken over by a G20.

With multilateral "globalisation" in shaky grounds, a system of sub-global entities have been evolving.

In my systemics and dynamics based POV, the following new "geography" is evolving, in terms of its major participants:

EU, USA, China, India, Brazil or UNASUR, Japan, Russia, ASEAN

Some see the BRICs (Brazil, Russia, India, China) as a group. But IMO they do maintain their own POVs.

On the other hand, countries like the UK (a member of the EU, at least for now), seems to favour a more "free agent" approach compared to the other EU members (especially with Cameron as PM).

With NAFTA not much of a success, where does that leave Canada & Mexico?
Canada is a traditional member of the G8 and now of the G20, but with some 30 milion population, where does a country like Canada fit in the new global geography?

But let's go back to my theory that a combination of population size & GDP (not per capita) are key factors of "strength" in "post Doha" world systemics and have a look at the top rankings in terms of these two parameters:

A) Population (out of 6.9 billion total)
Note: Only 11 countries have population of over 100 million

China 1.34
India 1.21
USA 0.31
Indonesia 0.24
Brazil 0.19
Pakistan 0.17
Nigeria 0.16
Bangladesh 0.15
Russia 0.14
Japan 0.13
Mexico 0.11

Note: No EU member country has population over 100 million.
3 of the 11 are in the Americas (2 of which from North America and NAFTA)
6 of the 11 are in Asia (7 if one counts Russia)
1 of 11 in Africa

The EU, with 0.5 ranks 3rd, after China & India and well above the US. Even the Eurozone, at 0.33 has a larger population than the US!


B) GDP nominal (in trillion USD) 2010 estimates (Source: CIA, World Factbook)

World 62.2
1 United States 14.6
2 China 5.7
3 Japan 5.4
4 Germany 3.3
5 France 2.6
6 UK 2.3
7 Italy 2.0
8 Brazil 2.0
9 Canada 1.6
10 Russia 1.5
11 India 1.4
12 Spain 1.4
13 Australia 1.2
14 Mexico 1.0

If one does not count individual EU members (in this case the 5 richest ( and largest in population) but only the EU as a whole, then the geography becomes:
(World 62.2)

1 European Union 15.9
2 United States 14.6
3 China 5.7
4 Japan 5.4
5 Brazil 2.0
6 Canada 1.6
7 Russia 1.5
8 India 1.4
9 Australia 1.2
10 Mexico 1.0

Population and GDP are 2 key parameters but of course other parameters play a role. Eg export (trade balance or current accounts power).

Notes:

1) Canada (1.6 trillion USD) has GDP power but (in spite its size in surface), its population size is a key handicap in being considered, on its own, a major participant in the post Doha geography. Mexico (1.0 trillion USD) and 0.11 billion inhabitants, is a candidate, albeit marginal, for the "premier league". It is thus ufortunate that NAFTA is not working that well and the potential for a North American Union (the equivalent of the EU for NAFTA) is bleak. But the US may soon find that its population may put it at No. 4 in the world, behind China, India and the EU and its GDP at No. 2 but it its way behind in the population parameter and that a USA+Canada+Mexico entity would have 0.45 bilion inhabitants and put its 1.3 trillion USD above the EU in GDP at No. 1.

2) In effect the EU, China, India and the US are the "big teams" in the above premier league that is based mostly on GDP and population.

3) The above analysis shows why a real European Union (ie united politically and with a real internal market) is an urgent need.

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BRs
Nick

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