SA trade and industry minister Davies sees rising unilateralism as trade war escalates

Trade and Industry minister Dr Rob Davies speaks at a summit in July 2018. FILE PHOTO: Katlholo Maifadi/DIRCO News Service

JOHANNESBURG – South Africa, like the rest of the global economy, will continue to be collateral damage in the escalating trade war between China and the United States, trade and industry minister Rob Davies has said, predicting a worrying rise in unilateral actions by individual states.

Davies cast doubt on the World Trade Organisation’s (WTO) ability to diffuse the standoff, saying it had been hobbled by the United States government’s blocking of nominations to its appellate body, which settles disputes between member countries.

Speaking to the African News Agency by telephone on Thursday from Paris, where he attended an informal gathering of WTO ministers on the sidelines of an Organisation for Economic Co-operation and Development meeting, Davies said South Africa had already been affected by tariffs imposed by the U.S. on steel and aluminium products in the earlier stages of the trade war.

“Although we were not a major target, we were affected and I said then we were collateral damage in this trade war,” he said, adding that the tussle was really a manifestation of the race between the world’s leading economies for technological supremacy.

“It’s about leadership or hegemony over the fourth industrial revolution — whose technologies are going to be the dominant technologies,” he said.

South Africa’s stance was that it would not back one claim over another, but rather advocate for an equitable roll-out.

“We want to be able to choose whichever technologies suit us best in our own developmental challenges, in our own sovereign decisions that we may take,” he said.

“This is going in the direction of very serious wrestling between the two largest economies and I’m sure that will have all kinds of implications for the growth of the world economy and also indeed on us in various ways, some of which I don’t think we understand at this point in time exactly what they will be.”

It would be hard for the WTO to intervene as there was no established jurisprudence on national security as a justification for not observing multilateral trade rules, Davies said.

In addition, the WTO’s appellate body was unlikely to be able to function beyond December as the rejection of appointments by the U.S. meant the body would probably not have a quorum by then, he noted.

“The disabling of the appellate body will probably mean that there will not be any ( jurisprudence) in the near future and we’re likely to see a series of unilateral actions in this regard,” he said.

“That’s the situation that we’re entering into. From our point of view in general terms, like most developing countries, we think that multi-lateral rules where we all have a say — even if our say is uneven and unequal — is better than outright unilateralism.”

He reiterated South Africa’s neutral position on Huawei after U.S. President Donald Trump added the Chinese company to a trade blacklist and Google suspended some business with it.

“We don’t discriminate on these issues. Everybody who is invested in the South African economy is granted national treatment,” Davies said.

“Decisions that we will take about the use of technologies of one company or another will be based on assessment of the technology and the inherent value of the proposition.”

“We’re not looking to be boycotting anybody, but at the same time we can see that some of the implications of that are going to hit customers in South Africa in terms of their access to particular platforms when they buy certain products. We think it’s an unfortunate development.”

Davies, who has been trade and industry minister since 2009, said he was willing to continue serving in government should President Cyril Ramaphosa retain him in the new adminstration after May 8 general elections.

Davies said he was proud of how the department of trade and industry (dti) had performed under his captaincy.

“We think that we have left an institution that has performed better than it was when we found it,” he said.

“Despite all the challenges that we have gone through in government I think the dti has held up. Industrial policy has made a difference, where it has been applied.”

“The problem with industrial policy has been lack of cohesion and lack of systematic application across governments ,so I hope that the new configuration of government will be able to overcome the … lack of consequential action by everybody who needs to be involved to make things work.”

– African News Agency (ANA)