Cape Town - The collapse of the Doha trade negotiations has pitted the US against China in a bid to dictate new global terms of trade, with developing countries like South Africa caught in the middle.
South Africa’s former ambassador to the World Trade Organisation (WTO), Faizel Ismail, told a colloquium on China and Africa relations at UCT on Friday there was “a massive global competition for the ability to make new rules in the world trading system”.
The current rules were set up in 1947 by the victors in World War 2, the US and the UK, and later the EU, but since the collapse of the Doha round of negotiations towards a new system, the US had begun to “move on its own” – launching direct negotiations with selected countries.
These were contained in the Trans-Atlantic Trade and Partnership Agreement with the EU and Trans-Pacific Partnership Agreement with countries like Japan, Mexico and Canada. “If you like, it’s the alliance of the willing,” Ismail said, referring to the coalition put together by the US in the first Gulf War. “It’s hoping it can create a whole new set of rules on trade which will include all sorts of disciplines that it will eventually use to reduce China’s competitiveness,” Ismail said.
“By design, these negotiations are to isolate China. We know this from the literature, the statements that have been made and, even today, if you read the press in the US, the Congress people who were discussing this say these other negotiations are to isolate China, so they can create the rules for the next few decades of the world trading system, not China.”
For example, the rules set up counter-subsidies for goods from countries, like China, where state-owned enterprises were involved in production. “Never mind a whole slew of other rules on intellectual property rights, environmental rules and so on,” Ismail said.
Professor Lin Jiang, of Lingnan College’s department of Public Finance and Administration, said China’s response had been its One Belt, One Road strategy for regional integration with Central Asia along the historical Silk Road corridor, stretching into Europe, and with south-east Asia and east Africa by sea.
Infrastructure projects and financing would form the backbone of this strategy, Lin said, citing a planned Chinese-built high-speed rail project in India and the reception of Indian Prime Minister Narendra Modi by Chinese President Xi Jinping earlier this month as an example of this strategy in action.
When China had sought entry to the WTO in 2001, it had been willing to play by its rules but now wanted to determine its own.
Ismail said the challenge facing the Brics countries – Brazil, India, China and South Africa – was to “mobilise their own alliance of developing countries, offer an alternative vision about a set of rules for the world trading system which will be superior to the ones offered by the US, which offer more opportunities for balance, for sustainability, for development”.
Developing countries as a whole had little choice but to work with China to try to establish a fairer trade system.
Political Bureau