A new order: What we should learn from COP27 and the G20 Summit

The COP27 and the G20 Summit took place at an important juncture. They occurred in tandem with important international developments: Russia’s invasion of Ukraine, Lula’s election in Brazil, Xi’s third term, the US restrictions on semiconductor exports to China and the US midterm elections. As such, both the COP27 and G20 hint at the future of global order. While they confirm that there is still no end in sight for globalisation, they also signal that globalisation’s substance has been altered, and the global order is under reconstruction.

Meanwhile, some latent issues persist. For example, in an ideal world, trade and climate-related policies are supposed to go hand in hand. In reality, this is not always the case. Sometimes, trade policies conflict with climate-related policies. At other times, climate-related policies are merely a cover-up for countries’ protectionist trade policies.

Moreover, developed countries continue their dominating narrative. From their perspective, the solutions for the problems faced by developing countries are still about aid or implementing reforms, not about addressing the international rules and order created by them that cause these problems.

There is no doubt that the implementation will again lag far behind the stated commitments.

OPINION: The war in Ukraine has an economic domino effect fuelling global social unrest

No end to globalisation

Whenever there is military or political tension between countries, end-of-globalisation discussions begin. The Russian invasion of Ukraine or the US restrictions on semiconductor supplies to China did not prove otherwise. Of course, these discussions have valid grounds. The Russian invasion is a blow to rules-based international order. The outcomes of the war, i.e. energy crisis, food insecurity, the negative effects on international trade and sanctions are not good for global order. Similarly, the US restrictions on semiconductor exports interfere with freeing trade. Considering the US midterm elections and the candidates’ focus on trade policies, the leader of the global order sends signals that national policy agendas will outweigh the future of international trade.

Yet, countries are very well aware that globalisation has benefits, and it is needed for addressing global issues such as climate change. Loss and Damage Funding, agreed upon at COP27, is a manifestation of that awareness by presenting a collaborative action against climate change. The G20 Bali Leaders’ Declaration is another manifestation of that. The declaration mentions global challenges such as global food insecurity and supports international efforts for global recovery.

However, recent international developments and these two major events show that the world is moving toward a less globalised world. The US semiconductor export restrictions and Inflation Reduction Act prove that. Nowadays, globalisation is supported for upholding nations’ own interests. For that purpose, some rules of the globalised world are disregarded or bent. These double standards are not addressed either in COP27 or in the G20 Leaders Summit. This situation means that nations must follow globalisation’s set direction willingly or unwillingly.

OPINION: COP27 has shown we need a new taxation order in the world

Climate-related policies against trade policies

Trade and climate are intertwined. But the nature of the relationship between the two is usually controversial. Now, every country, at least in theory, acknowledges that climate change must be tackled to maintain international trade and global order. However, in practice, climate change-related policies are usually seen as a barrier to benefiting from international trade. Carbon leakage is an example of that. Carbon leakage describes situations when businesses move their production to locations with lesser costs related to climate policies.

Moreover, climate-related policies are sometimes a valid excuse for protectionist trade policies. For example, from the EU’s perspective, the recent US Inflation Reduction Act is an excuse for protectionism. A tax credit for electric vehicles is introduced by the Inflation Reduction Act, but it is ultimately dependent on the battery being sourced from North America. This position warrants a question to the EU: if the purpose is to protect the environment, why would the credit be limited in scope?

Recent international developments may help change the relationship between trade and climate-related policies. COP27 hosted the World Trade Organisation director-general for this purpose. The World Trade Report, released at COP27, endorsed trade as a cornerstone of climate change. Lula’s election in Brazil may help in this regard as well. Lula signalled his desire to tackle the deforestation of the Amazon. Lula’s tenure can reignite the Mercosur deal process, which stalled partly because of Bolsonaro’s inaction to deal with the deforestation of the Amazon.

READ: UAE president meets Saudi crown prince on sidelines of G20 Summit

The developed countries’ helping hand

Powerful countries continue to deploy the development narrative. They portray themselves as the ‘givers’ while the developing countries are the ‘recipients’. They boast that they provide the support needed by developing countries and help them to transform themselves to better fit into the system and to be in lesser need. As such, the G20 Bali Leaders’ Declaration mentions supporting developing countries many times. Meanwhile, nothing is stated about the responsibilities of the developed nations in the climate crisis. As a solution, the declaration offers to foster ’a favourable trade and investment environment for all’. Financial support, such as Loss and Damage Funding, is another example of the developed countries’ helping hand. All these initiatives show that the world is still missing the main point. A fight against the root causes, not against the symptoms, is needed to realise a lasting change. To do so, questioning existing rules and implementing a paradigm change are necessary. But the international community does not seem to be there yet.

Both the G20 Summit and COP27 saw an abundance of commitments. It is highly doubtful that these commitments will be effectively realised or that funding will be provided. However, it is paramount to remain hopeful that some genuine change will occur and that we will see some action.

READ: Turkish president to attend G20 summit in Indonesia

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.