SA supports a rules-based trading system, but current rules are not ideal, Rob Davies says
The global trade war has now escalated into a full-blown trade war that requires greater co-operation especially between Brics member nations, Trade and Industry Minister Rob Davies says.
At the start of the Brics Summit on Wednesday, Davies said: "It's moved beyond the phoney war. We are now seeing the actual shots being fired."
On Tuesday, SA made a submission to the general counsel of the World Trade Organisation on behalf of the Africa group. This was also in response to several proposals that have been submitted by advanced nations calling for reform of the multilateral trading system.
Davies said of SA's submission: "The gist of it was to say that while we are in support of the rules-based multilateral trading system, it doesn't mean that the rules as they currently exist are ideal. There is a big, unfinished agenda about trade and development called for in the Doha round, particularly in the form of agricultural trade, that has not been concluded."
The minister said SA had not been able to interrogate proposals from the developed nations but had indicated that it would be applying three tests before deciding whether to support these proposals: whether the proposals advanced the objectives of developing nations regardless of the current policy space in these nations; whether the proposals addressed the fundamental issues of a lack of inclusivity, widening polarity and inequality in the world economy; and whether they allowed for participation of the caucus of developing countries (and if they enhanced interests for larger economies).
Discussions during the plenary and thematic sessions at the start of the first day of the Brics Summit largely centred on greater participation between the developing world and the five Brics nations, in the face of change to the global trading order and a move towards protectionist policies particularly by the US.
"This means that we need to find our solutions in the African continent and in our strengthening of regional integration," Davies said during a panel discussion on the role of Brics in trade and investment facilitation amid a changing global political economy.
SA was recently a signatory to the African Continental Free Trade Agreement, which has also been signed by other members of the African Union and is awaiting ratification. Davies said the agreement, when it reached full maturity with all the tariff schedules in place, would create a market of 1.07-billion people and a GDP of just over $3bn.
Aloysio Nunes Ferreira, Brazil's minister of external relations, said investment and commerce between Brics countries constituted about 5% of total commerce investment in each of the Brics member countries. "We would like to create rules that would stimulate investment in the commerce field."
He said Brazil was currently focused on creating conditions for investment in the major sectors such as oil, and it was working to reduce red tape for foreign firms seeking to invest in Brazil while also establishing rules that would apply to both foreign and domestic investors equally.
Russia intends to raise $1bn from the New Development Bank. Maxim Oreshkin, Russia's minister of economic development, said it would use the funds to facilitate more investment into other Brics countries.
Zhang Shaogang, director-general for the ministry of commerce in China, said trade and investment co-operation between Brics countries had to become more pragmatic and institutionalised. On Monday, China committed $14.7bn in investment to SA. President Cyril Ramaphosa aims to attract $100bn in investment over the next five years.
The summit’s theme is Brics in Africa: Collaboration for inclusive growth and shared prosperity in the fourth industrial revolution. It kicked off with the Brics Business Forum on Wednesday. Ramaphosa is expected to deliver a welcome message later on Wednesday, while heads of state will meet on Thursday.
Iqbal Surve, chairman of the Brics Business Council, said among the outcomes the council wanted to see was visa-free entry for businesses from Brics countries, intraBrics technology transfer, agricultural seed banks to reach finalisation and a national payment system to facilite an easier process among Brics countries.
SA took over presidency of the council in March. The business council's role is to facilitate trade and investment between businesses in the five Brics nations and to build bridges with the governments of these countries.