Cold War II? Elusive question of who calls the shots in global trade

Kenyan and Chinese delegates during past bilateral talks at The Sandton Convention Centre- Johannesburg, South Africa. [File, Standard]Caption

The world is changing today at a pace not witnessed before. Technology has changed day-to-day lives and, increasingly, the role technology plays in our lives is being buttressed through strategic investments in artificial intelligence (AI).

Open AI, an American artificial intelligence research laboratory, recently launched ChatGPT which has caused an uproar in all spectrums of society. Italy has become the first country to ban the use of ChatGPT over privacy concerns, an action that might soon be adopted by other European Union (EU) member states.

Second, the effects of Covid-19 and the responses from the private sector, multinational corporations, and governments, which have largely been criticized by the International Labour Organisation (ILO) for not being human-centered, are still changing every action being taken by various actors in the health sector, academy, world of work, and commerce.

This has seen huge investments in the use of platforms and algorithms as mechanisms of coordination in otherwise traditional work settings; what has since been described as the platformisation of work.

Third, the Russian-Ukraine war is morphing into a Frankenstein that seeks to redefine global politics post-Cold War era.

The People's Republic of China seems to be taking advantage of the war to advance its global political agenda of cooperation as opposed to dominance that has been at play since the collapse of the Berlin Wall. On the other hand, the European Union (EU) continues to extend its influence globally, as argued in the Brussels Effect, through a unilateral approach to the adoption of EU regulations and policies for 'sustainable and inclusive economic development'.

Key players

Consequently, international trade is changing. The rules of the game and the role(s) played by various players in the international system, political and financial, are changing. This explains the rising concerns about the use of the dollar in international trade just as there are questions on the role being played by the World Trade Organisation (WTO), World Bank (WB), and International Monetary Fund (IMF).

At the center of all this is polarity which, according to Kenneth Waltz, has remained a constant drama in the international system evidenced by the rise and fall of great powers. To Waltz, in his theory of international politics, polarity is the single most variable that can explain the level of instability, or war, in the world. Accordingly, and as Deniz Aktunc has explained, England, France, Habsburg Empire, and Ottoman Empire were almost equally great powers from 1495 to 1521 before a rivalry occurred between the Habsburgs and the Ottomans, in which Ottoman Empire had a superior position, that transformed the world into a multipolar system that will endure until 1945.

Arguably, World War I & II were as a result of the dysfunctionalities of the multipolar which, thereafter, ushered in the cold war which was a Bipolar system and war between the US and the USSR. The US has, since the end of the cold war, been recognized as the superpower, ruling over international institutions as tools to be used in the exercise of their power.

In its relations with the world, the US has, mostly, relied on dominance and identity as opposed to reciprocity. For instance, in its relations with the developing world, dating back from the reliance of the former to the latter, the invisible, and sometimes visible, Washington dominating hand has been witnessed in the policies and politics of many developing countries. This has, however, not been the case with China which has strongly relied on reciprocity with other developing countries where Beijing's relations with other developing countries have seen capsulated to appear like a mutually beneficial relationship.

Reciprocal relationship

On the other hand, the US's relations with other great powers and international organisations have mostly been reciprocal.

The EU, for example, China and Russia have enjoyed a mutual relationship with the US based on trade while international organisations have equally remained to have a reciprocal relationship with the US.

However, a 2016 article published by the World Economic Forum, argues that by 2030 the world's political landscape will look considerably different with no single hegemonic force but instead a handful of countries - inter alia, the US, Russia, China, Germany, India, and Japan - still exhibiting tendencies of dominance.

With all these changes in the international system, there is a possibility that the world might be experiencing Cold War II. And just like during the Cold War I, no one wants to, officially, admit there is a war and, secondly, enlist the parties involved. The Russia-Ukraine war might have acted as a catalyst to this war or, still, was part of the wider scheme.

There is a hypothesis that in politics nothing happens by accidence and if it does, you can bet it was planned that way.

While Cold War I was about establishing a unipolar world which resulted in the United States being a superpower, Cold War II might be about reestablishing bipolarity in the international political systems and determining who controls the international finance system and, consequently, international trade.

Bipolarity in politics

If, indeed, there is a fight for reestablishing bipolarity, then the talks in Moscow between Chinese leader Xi Jinping and Russian President Vladimir Putin give a panoramic view of what awaits. That Beijing seeks to play a more constructive role in fostering world peace is an interesting development and a matter that has not been received kindly in Washington and Brussels. According to a White House Spokesman, if there were to be a cease-fire overseen by China, this would "effectively ratify the Russian conquest and in effect recognize Russia's gains and its attempt to conquer its neighbor's territory by force, allowing Russian troops to continue to occupy sovereign Ukrainian territory."

Similarly, China has been, according to some analysts, become the ambassador of free trade while the US has continued to misuse general, security, and economic exemptions to international trade as provided for by the Marrakesh Agreement establishing the WTO. This has seen the US block the appointment of new judges to the WTO's Appellate Body, notwithstanding the fact that this body is seminal to the success of WTO.

Future of international trade

But one of the most important outcome of the talks in Moscow was what the Financial time has described as a multipolar currency world.

The pledge by Putin to adopt the use of Chinese Currency, the yuan, also known as the renminbi, for "payments between Russia and countries of Asia, Africa, and Latin America", in a bid to displace the dollar, compounded by the strategic move by China to urge other developing countries to consider trading using the yuan might change international trade as we know it.

The EU, on the other hand, is changing international trade by raising the conversation on environment and labour standards.

Brussels, by coming up with up-to-date regulations that promote sustainable and inclusive economic growth, is influencing other developing countries to change their policies and regulations to be on par with EU regulations if they would wish to access the large European markets.

Working closely with the EU, the ILO has developed a handbook on the assessment of labour provision in trade and investments to help developing economies, as well as EU member states, recognize and implement labour provisions in future trade deals. This will most likely see ILO start playing a critical role in international trade in the future as opposed to the wait-and-see approach that they have played in the past.

World problems

And with such issues dominating international trade, China might find it hard to play by the rules.

The Chinese cooperative framework that is based on reciprocity might not result in a better world considering they are low in appreciating the fact that some of the cornerstones of democracy hold the key to solving various world problems like climate change and human and labour rights violations.

On the flip side, the US President has committed to promoting democracy across the world through international trade by calling for labour and environmentalist to be included at the table in all future US trade deals. For instance, in the ongoing US-Kenya Strategic Trade and Investment Partnership negotiations, the US has included environmental and climate action and protecting worker's rights and protection among the thirteen areas of focus for this STIP.

With a dominant China on the world stage, however, the conversation on trade and investment might never encompass issues of labour and environment which are turning out to be key issues of contention in future trade deals.

What about Africa?

On the other hand, African countries might continue playing proxy to international affairs if they continue working in silos. Unity seems to be the only currency for the African states.

Kenya, being a leader in the African market and with a progressive foreign policy, is well positioned to grow in influence if the East Africa Community (EAC) works.

Recently, the EAC Secretary General noted that they are considering adding Ethiopia to the EAC, after adding Somalia. While this is a strategic move to enlarge the EAC market, it remains a double edge sword if the theory advanced by Joseph Nye on peace in parts is not given serious consideration.

Second, the sovereignty of the various EAC governments will need to be subject to serious debate if EAC is to achieve political integration. Without political integration, EAC might remain a wild goose chase.

What next?

Be that as it may, the results of the ensuing war, Cold War II, will change the relations between and among states from dominance to more cooperation and reciprocity. If the US takes a more cooperative and reciprocal view of all its international affairs, then chances are that they might continue using this soft power to influence countries on the world stage. The EU, considering it has already undertaken the cooperative approach to international trade might continue influencing the regulation and policies of other countries and raising the bar for international standards.

As for China, there is a chance that it might, this time, redefine international politics, if the resolve by Xi is anything to go by. However, for China to play a more meaningful role in international politics they have to open up their society and embrace democracy. And if they do that, they will discover that their vision of dominating global trade and politics is misplaced with everyone looking up to them for direction.

-The writer is a political scientist and an LLM Candidate in International Trade Law at the International Training Center of the ILO. He works at Cotu (K).

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