Foreign Trade Policy in New World Order

On April 5, 2013, I wrote an article “The Fallacy of Going East: Can it Replace The West”. The article highlighted the distortions of information regarding trade and investments between China, European Union, United States of America and Japan with Kenya. It demonstrated that Kenya’s core export destination of its products outside East Africa countries is Europe and United States.
These countries also have large investments and support critical social service sectors like education and health that provide significant job opportunities to many Kenyans. Kenya has to expand and deepen its trade relations with these countries while seeking new frontiers especially from emerging economies of China, Brazil, India, Turkey, Mexico and South Korea.
The East Africa’s total exports to China and India, which are often depicted as two important trading partners, is less than 2%. This is extremely unfair. Economic growth is necessary, but not sufficient in order to achieve development.
Africa desperately needs technological and engineering revolution, transformation of systems, processes and procedures for trade and investment, and developing technical capacities for effective intra-regional cooperation and integration to deepen trade, productivity opportunities, and economic diversification.
With the rise of emerging economies like India, China and Brazil, the challenge is “maintaining and strengthening the current international rules-based order that has underpinned global strategic stability and economic growth” while being alive to changing global dynamics. The emerging big economies must become “more responsible global stakeholders shouldering their share of global obligations”.
Africa is still far below its rightful position in the global economy looking at its size, population, and resource endowment. It is largely made up of low and lower middle-income countries. The GDP per capita growth rate generally follows the growth rate of commodity prices and disparities are highest after Latin America. African countries rank poorly in the rule of law.
Poor governance and leadership, fragility and inequities remain a major bane of Africa. The increasingly multi-polar global economy, competition for finite natural resources and oil, aging world, innovation and technological advancement, climate change and Africa’s larger population are major factors working favorably for the continent.
There are two levels of power transformation taking place simultaneously globally. There is transformation of power among the states, and the power shift to the non-state actors. The importance of civil society networks is rising exponentially.
In the new world order, global institutions must reform to create a new system of cooperation, which is more predictable, effective, and wide reaching. Global institutions remain appropriate if the allocation of decision-making authority within them corresponds to the changing distribution of power.
The United States of America’s domestic economy has been struggling to remain competitive. However, USA is still a strong global power with leadership in the field of global financial system and research innovation. In the global space, USA with close to 58 allies is changing its foreign and security policy. It is decreasing military footprint on the ground investing more on the deployment of sophisticated technology devices in pursuit of her security policy and developing capacity of allies.
The USA’s foreign trade and economic policy is focusing on the geo-strategic controlling of important regions like South Asia-Pacific (US Pivot to Asia initiative). It is keen on successful negotiation and implementation of three trade treaties namely Transatlantic Trade and Investment Partnership (TTIP), Trans-Pacific Partnership (TPP) and North America Free Trade agreement( USA, Canada and Mexico) forming the world's biggest trade deals with huge ramifications. The USA trade and economic strategy for Africa has four components namely Trade Africa, Light Africa, Africa Young Leadership Initiative and AGOA.
The United States key allies, European Union and Norway have quietly and steadily been developing trade policy tools to facilitate their effective adaptation to the changing world based on “the principles of multi-lateralism, anti-militarism and rule of law to attract partners”. They have taken lead in new sustainable environment friendly economic development initiatives and green energy collaborative efforts. EU countries are keen on strengthening their trade and financial markets even as they look elsewhere for uptake of their goods. The EU still speaks with a powerful, constructive voice on human rights and democracy. On Africa, Economic Partnership Agreements between European Union and Africa where the Union is offering “tariff-free access to Europe's markets” in return countries would “open up their markets to goods from the EU” for is stuck
Japan is focusing more on consolidating world peace and security as the key driver of its economic interest. Her policy towards Africa is built on the twin principle of “ownership” and international “partnership” for strategic “private sector-led growth,” “promoting human security” and “South-South cooperation.”
The Chinese foreign policy always comes second; domestic policy first. China’s global priorities are shaped primarily by domestic economic and political imperatives. Former United States Foreign Secretary Henry Kissinger notes China is “a country facing such large domestic tasks, is not going to throw itself easily into strategic confrontation or a quest for world domination.”
China, with a mixture of a developed and developing economy, is keen for cooperation with other major powers to aid its core national objective of completing the economic modernization task. China identifies Africa as an alternative source of energy and raw materials essential for the continuation of her economic modernization. China has just funded the construction of the new Africa Union headquarters exclusively from its own resources.
China wants to ensure sustained access to global markets and boosting domestic consumption as driver of its own economic growth. In contrast with American, China will only play a greater global role with a lens of its own national interest.
For EU-China relations, despite the high-level political dialogue, to China, the EU seems to be primarily an economic power, not a global military-political power. There will be more China-EU trade agreements as China feels excluded from the big trade partnership.
Writer is Executive Director, International Center for Policy and Conflict: This email address is being protected from spambots. You need JavaScript enabled to view it.