China, Europe and the Netherlands: Opportunity Is Knocking at Our Doors

Macro Economy 
020 
  Apr. 2015
wake of globalization has fundamentally reoriented 
the global balance of power between North and South, 
East and West. These emerging powers have leveraged 
market capitalism and information technologies to re-
alize economic and social development at astonishing 
speeds and levels—although the total reduction of glob-
al poverty has not prevented rising levels of inequality. 
While these new stakeholders have adapted to glo-
balized markets, they are less inclined to accept a glo-
balized political sphere and the erosion of sovereignty 
implied by the old or, for that matter, any international 
order. Because they did not write the rules of the game, 
there is a sense that the balance of obligations between 
‘North’ and ‘South’ no longer applies, thereby under-
mining rules governing international trade and the 
environment.
The second development involves the consequences 
of the economic crisis that began in 2007 and 2008. 
First, by exaggerating the gulf in growth rates between 
advanced and emerging actors, it accelerated the “Great 
Changeover”. Second, the crisis served to undermine 
the legitimacy of the old “western” model. Finally, the 
crisis drained nations of the sort of political energy nec-
essary for global governance.
While conventional thought suggests the contrary, 
advances in international policy require immense po-
litical energy. International negotiations are, above all, 
negotiations at the domestic and national levels and 
necessitate strong domestic political leadership. The 
economic and social hardships imposed by times of 
crisis often cause public opinions to harden, weaken-
ing governments therefore leading them to neglect the 
international scene until domestic situations improve. 
They can also translate into populist reactions – of which 
the common discourse is to “blame the foreigner.” 
Thus international governance has itself entered a 
sort of crisis phase, seemingly incapable of adapting 
to the new global balance or creating new common 
ground on which to cooperate. Indeed, we have wit-
nessed no major advances in global governance since 
the inception of the ICC or the conclusion of the Uru-
guay Round, nor any reform of the antiquated UN Se-
curity Council.
We find ourselves in a context of global governance 
gridlock, to use David Held’s words; our failure to find 
solutions to this gridlock could well portend numerous 
economic, social and cultural hazards for future gener-
ations. 
Maximizing utility of existing system
But despite these difficult circumstances, I believe 
that there are some avenues that could allow us to 
bridge the gap. In order to do so, it is important that 
we abandon the idea of a “big bang” in global govern-
ance—the likes of which would only result from a major 
global conflict, which I fortunately think we can avoid. 
Instead, we should focus on maximizing the utility of 
our present system. 
This avenue entails the improvement and increased 
reliance on the existing international framework, 
namely the triangle formed by the G20, the United 
Nations system and specialized international organiza-
tions. Despite its lack of legitimacy, the G20 has the po-
tential to produce a sort of cross-cutting coherence and 
impetus for advancing global governance. Although 
lacking in efficiency, the UN can lend its legitimacy. 
With the support of these first two sides, specialized 
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Apr. 2015 
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agencies can complete the triangle by providing solu-
tions based on their specific areas of expertise. We have 
seen some success in the better implementation of this 
triangle: in the domain of global financial regulation, 
when the G20 forged the Financial Stability Board in 
2009, and in the general resistance to protectionist 
pressures throughout the crisis.
For this approach to work, more efforts must be 
made to introduce the tools and benchmarks necessary 
to monitor organizational and institutional activities 
and to measure their successes, thereby improving 
their overall accountability. In this sense, the Millenni-
um Development Goals were an important innovation 
in global governance and the new post-2015 generation 
of sustainable development goals should hopefully 
build on these successes.
Because relying on the existing global framework 
is the best option at present, we should also consider 
the potential of incremental advances. This includes, 
as suggested by Oxford Martin’s report, a gradual shift 
away from consensus-based decisions towards some 
model of majority voting within organizations, a great-
er right of initiative for the leaders of international or-
ganizations, and the insertion of sunset clauses in their 
mandates in order to ensure their relevance. At the 
same time, we must be prepared to accept small start-
ing steps in areas where our global infrastructure is 
sorely lacking, like cyber-security, migration, taxation 
and energy.
There are also opportunities for advances in gov-
ernance that are outside of the current framework. For 
example, continued regional integration has led to dif-
ferent models of “mini-global governance” in Europe 
and these, in their own way, are moving in the same di-
rection, in Asia, Africa and Central America. The crea-
tion of innovative partnerships through the inclusion of 
new actors—be they non-governmental organizations, 
international companies or megacities—could allow for 
a more effective leveraging of resources than through 
the UN system alone.
To conclude, I would like to mention one remaining 
challenge we must overcome if we are to succeed in 
adapting global governance to the needs of the 21st 
century: values. The speed with which globalization 
has reoriented economic activity and rebalanced global 
power has also served to highlight our disparate “col-
lective preferences”, or value systems. We see this as 
trade obstacles transform from policies designed to 
protect producers to more subjective, precautionary 
measures conceived of to protect consumers from risk. 
All governance systems need a foundation of aggregat-
ed collective preferences; this is also true at the global 
scale. 
Therefore, it is my view that acknowledging and 
understanding our ethical differences is a prerequisite 
to attempts to find an acceptable point of convergence. 
This attempt at acknowledging and understanding is 
probably the most valuable contribution our global sys-
tem could make to improve global economic, political, 
and social integration in order to ensure the best possi-
ble future for the generations to come. 
Footnotes provided by the author are available on request.
Pascal Lamy
Former Director-General of the WTO 
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