Global Tensions and Trade Sovereignty

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Pedro Manuel Moreno
Feb, 2024
MUSIC:
It takes a world to feed a world. In the 21st century, with a global population of 8 billion, it would be impossible to feed everyone without the benefits of international trade. This principle applies equally to energy and the green transition: Today, only a handful of countries can claim true sovereignty over their food and energy supplies and are those that, strictly speaking, produce sufficient food and energy for their own needs. Hence, discussing food sovereignty or energy security inevitably leads to the concept of trade sovereignty.

Trade sovereignty is defined as each State’s capability to access the global market through supply chains that are not only reliable and cost-effective but also geographically proximate. Without fear of reprisals or unforeseen events, we could probably argue that a food-importing country only achieves food sovereignty if it also possesses trade sovereignty. This logic also extends to energy sovereignty.

Numbers and facts prove it: A study released last summer by the Food and Agriculture Organisation of the United Nations (FAO) [1][1] FAO, IFAD, UNICEF, WFP and WHO. 2023. The State of Food Security and Nutrition in the World 2023. Urbanisation, agrifood systems transformation and healthy diets across the rural–urban continuum. Rome, FAO. Available here: https://www.fao.org/documents/card/es/c/CC3017ES reveals that, since 2019, an additional 122 million people globally have been pushed into hunger. Within the energy sector, 75 million individuals who had previously had access to electricity have since lost it, and an additional 100 million now depend on biomass for cooking. This, as painfully observed during the COVID-19 pandemic, poses toxic risks and can prove lethal.

Photo_ Michaela Kash_ CC BY 2.0
The FAO report paints a worrying picture of the state of food and energy security worldwide. The global decline in both sectors is attributed partly to climatic reasons: soil desertification, natural disasters, droughts, floods and extreme weather events, and partly to an economic rationale: rising prices, increasing poverty, debt and currency issues at the macroeconomic level. But a third, less-discussed factor is trade.

We are experiencing a period of intense geopolitical tensions that, as the International Monetary Fund (IMF) itself has acknowledged, are pushing us towards geopolitical and geoeconomic fragmentation. In the most pessimistic of scenarios, this fragmentation could lead to a decrease of over 5% in the world’s Gross Domestic Product (GDP) [2][2] International Monetary Fund. 2023. World Economic Outlook: Navigating Global Divergences Washington, DC. October. Available here: https://www.imf.org/en/Publications/WEO/Issues/2023/10/10/world-economic-outlook-october-2023. This decline would equal the economic impact of two events on the scale of the Covid-19 pandemic.

Food security and energy security are declining in today’s world, due to climatic and economic, but also commercial reasons.
This means that nations are experiencing a loss of trade sovereignty due to a rise in contingencies. Unforeseen events, such as the pandemic which led to a global lockdown, have had economic and financial repercussions that persist even today. Another illustrative incident is the case of the Ever Given ship. This container ship became lodged in the Suez Canal in March 2021, halting trade worth $10 billion per day over the six days it remained stranded.

Evidently, in the contemporary world, contingencies have not only become more frequent, but the responses and retaliations have also intensified. A concept gaining widespread attention is “friendshoring”. This refers to the strategy of relocating supply chains to countries considered “friendly”. The challenge with this emerging trend is that friendship, as we understand it, does not always manifest in symmetrical relationships. The misconception that a friend of my friend is also my friend or that my friend’s enemy is likewise my enemy can lead to complications. Such assumptions become particularly perilous in times of conflict, as has been evident in Europe with the ongoing confrontation between Russia and Ukraine.


Black Grain Initiative: Global Trade in Wartime

When war broke out between Ukraine and Russia, both nations faced immense challenges in exporting their crops and fertilisers. These countries are among the world’s leading grain producers, with much of their output intended for developing nations—the world’s poorest countries.

In the year preceding the conflict, Ukraine and Russia collectively accounted for 27% of the global wheat market, 23% of all barley, 14% of maize and 53% of all sunflower oil exports. We faced a pressing food issue rooted in trade dynamics, requiring swift action.

The intervention was orchestrated by the United Nations (UN), led by its Secretary-General, Antonio Guterres; the Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), Rebeca Grynspan; alongside Turkey and key allies in Europe, Africa and North America. The initiative, initially known as the “Black Sea Grain Initiative” and later simply the “Black Initiative” to encompass fertilisers and ammonia, aimed primarily at restoring food sovereignty through trade sovereignty.

Food and life-supporting commodities cannot be the object of war or sanctions.
At the heart of the Black Initiative was a core principle in the realms of development and human rights: the belief that access to food and fundamental necessities should never be compromised by warfare or sanctions. This principle, while robustly supported by international law, proves challenging to implement in practice. The intricacies of international trade, involving complex value chains, become exponentially more complicated in wartime contexts.

Take, for instance, a mobile phone, which comprises over 34 components sourced from upwards of 200 suppliers worldwide. These range from Central American coltan and South American lithium to Korean displays, Chinese assembly, Swedish marketing and Japanese software design. This phone might reach our pockets via an intricate global journey: departing from the Port of Santos in Brazil aboard a Greek vessel flying a Liberian flag, with protection from a British insurer and financial backing from a Gulf Arab bank.

Despite wheat grain being a necessity, its supply chain, while marginally less complex, relies on approximately one hundred players. It also becomes a focal point for financial speculation on the Chicago Stock Exchange.

Thus, launching the Black Initiative required engaging with each stakeholder—insurers, transporters and others—across both government and private sectors.

Photo_ Damian Siwiaszczyk_ CC BY 2.0

We can safely say that the collective effort of the Black Initiative, which facilitated the export of over 32 million tonnes of grain from Ukraine during wartime, epitomises a triumph of multilateralism and underscores the imperative for enhanced and more comprehensive regulation of global trade. This encompasses measures to address opacity and speculation and to encourage the decarbonisation of international logistics networks.


Hungry People, Angry People: Food and Energy Security as a Sine Qua Non for Peace

Food and energy security transcend mere humanitarian concerns; they are foundational to peace and stability. As Bob Marley famously remarked, “Hungry people are angry people”. Or, as a famous Brazilian saying goes, “saco vazio não para em pé”—an empty bag cannot stand upright. It is unrealistic to expect our societies to thrive and stand strong when many of their members are grappling with hunger and poverty.

Food security and energy security are not only a humanitarian issue, but also a question of peace and stability.

This principle is deeply understood in Brazil, a country where the Amazon feeds the land, and its farmers feed the world. Last year marked the twentieth anniversary of the launch of the Fame Zero (Zero Hunger) programme, initiated under President Lula Da Silva in his first term. It stands as one of the most successful public policy initiatives in the historic battle against hunger. The programme was a pivotal moment in the realm of development, demonstrating how a nation can advance by diligently endeavouring to fill those “empty bags” not only with essential food but also with opportunities and hope.

Geopoliticising trade will neither accomplish these objectives nor contribute to enhancing food sovereignty or energy security globally. In this interconnected world, the consequences of hunger and scarcity can indeed affect us all. Today, more than ever, our global interdependence reveals that challenges of a global scale require solutions of a global scope.


Optimistic Multilateralism: Trade as a Vehicle for Welfare and Development

UNCTAD was established in 1964, concurrently with the Group of 77 (G77), serving as a counterbalance to the World Trade Organisation (WTO). Aimed at bridging the gap between the Global South and North, its mission is to facilitate the integration of less developed countries into the global economy. UNCTAD’s responsibility lies in addressing the most urgent issues related to global trade and development. For those of us engaged with the Conference, it is unequivocally clear that achieving this effectively requires a multilateral approach.

Trade, as a vehicle for welfare and development, cannot be the subject of power struggles and geopolitical divisions.
Trade, seen as a conduit for welfare and development, must not fall prey to power struggles and geopolitical rifts. This stresses the pressing need for consensus on universal regulations that embrace both development and ecological transition perspectives. Borders do not confine the challenges we encounter, nor should they confine our solutions.

It is imperative to foster international cooperation grounded in fair, transparent and equitable principles in the endeavour to build a world where, despite our differences, we might find common ground and work towards a shared future. This calls for a revitalised multilateralism that not only acknowledges but also anticipates the nuances of this century, guiding our actions towards creating a world that is fairer, more sustainable and more peaceful.

Yet, identifying the challenges is merely the first step; we must also be inventive and think “outside the box”, as they say in Anglo-Saxon cultures. We need tangible solutions that recognise the indispensability of a multilateral approach in addressing global issues.

The task is formidable, yet the successful export of 32 million tonnes of grain amidst warfare stands as a testament to our unwavering faith in multilateralism. This achievement illustrates that, with determination and dedication, change is perfectly achievable. Optimism itself is a fundamental tenet of multilateralism.

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