The Impediments Trade Agreements Pose to a South African Renewable Energy Industry

The Impediments Trade Agreements Pose to a South African Renewable Energy Industry

Jonathan Cannard | Alternative Information and Development Centre | 26 June, 2020

This is a brief excerpt from a research paper titled "The Impediments Trade Agreements Pose to a South African Renewable Energy Sector" to download the paper as a pdf click here

“The World Trade Organisation (WTO) and similar international trade agreements are ambivalent, if not hostile, to state-led efforts to alleviate the urgent, existential threat of climate change. Proponents of further trade liberalisation argue that the rising tide of increased trade will “lift all boats,” and the increased prosperity and development brought about through trade will enable states and the private sector to spend more money on climate change mitigation. However, it is more apt to say that “policy space,” industrial policy decisions, and national sovereignty have been effectively eroded by the ascendant power of the WTO and various trade agreements. Without the legal right to formulate their own environmental and development policies, states are bound by the dominant development paradigm, often known as the “Washington Consensus.” For developing countries, such as South Africa, this implies market-led and export-oriented growth and the attraction of foreign direct investment (FDI). This stifles these countries’ ability to make the radical changes necessary for sustainable development and the prevention of climate catastrophe. Deindustrialisation, the declining influence of organised labour, dependence on the Global North, and environmental degradation through fossil fuels and extractive industries are institutionally mandated as South Africa’s developmental future through the trade, investment, and finance liberalisation paradigm.

The WTO and later plurilateral or bilateral trade agreements are built upon the principles of “free trade” and non-discrimination. Proponents of free trade assert that economic development, even of the least developed economies, is best achieved through the lowering of all trade barriers and exploiting comparative advantages. The resulting global economic integration has increasingly made lower labour costs, financial deregulation, lower corporate tax rates, and weakened environmental protection into competitive factors in attracting foreign investment and manufacturing. As states compete to attract investment by deregulating environmental protection and destroying labour standards, their countries’ working classes are pitted against each other in a ‘race to the bottom.’ The race to the bottom has shifted manufacturing to lower-income countries, severely weakened the collective bargaining power of organised labour, and lowered the material circumstances of working classes worldwide.

The late twentieth and early twenty-first century liberals touted free trade as a progressive, even egalitarian agenda of global economic upliftment. Free trade has instead inflated the political and economic power of transnational corporations (TNCs), further enriched the already affluent, and endangered working-class livelihoods. The backlash to the liberals’ free trade compulsion has largely come in the form of crude protectionism and nationalism, most obscenely exemplified by xenophobic right-wing populists. In the ever-threatening face of the global climate crisis, the left must reject both free trade and nationalism, instead offering real alternatives that will save the planet from climate crisis and advance the interests of the global working class.

Most-favoured-nation (MFN) treatment requires that WTO member states treat all other WTO members the same in trade. Member states cannot trade more favourably with certain WTO members over others. If a WTO member gives a certain level of trade treatment to one of its trading partners, it must extend this treatment to all of its WTO trading partners.
There are exceptions to this within the rules, but they are limited in scope and heavily regulated, meaning that in most instances states have no policy space for choosing which countries they trade with.”

This is a brief excerpt from a research paper titled "The Impediments Trade Agreements Pose to a South African Renewable Energy Sector" to download the paper as a pdf click here