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Wednesday, 04 August 2010 09:17

Whither the Multilateral Trading System? Implications for (South) Africa

By  Peter Draper

SAIIA Occasional Paper No 64, July 2010

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Development through Trade- Now part of The Economic Diplomacy Programme

So far the World Trade Organisation (WTO) has acted as a constraint on the worst protectionist pressures building in the global trading system following the 2008–10 global financial crisis, which is a testament to the system’s constraining power. But the combination of these pressures with fundamental changes in global economic power has implications for what countries will be prepared to concede in the context of multilateral negotiations in the future, and therefore for the shape of the multilateral trading system. Overall, it appears that the current world of multilateral impasse on the trading front is likely to endure and potentially deepen if the US does not provide the necessary leadership, which seems unlikely, as the US is increasingly unwilling to underwrite the costs of maintaining the global trading system, whereas China is unwilling to step up to the plate in the short to medium term. Therefore, the future of the WTO’s negotiating mechanism lies in plurilateral agreements negotiated under its auspices and subject to a ‘code of conduct’ agreed to by the broader membership. These and the proliferation of trade-related discussions in other multilateral forums mean that the negotiating capacities of all countries will be increasingly stretched. Since South Africa in particular is viewed, and to some extent sees itself, as ‘representing’ African interests, the degree of negotiating stretch will extend further than narrow national self-interest, since the majority of poor (African) countries cannot engage across this widening front. Consequently, the South African government needs to identify its core priorities in this connected set of trade-related negotiations and organise its negotiating resources accordingly.

Author: Peter Draper