TRADE, INCLUSIVENESS, INEQUALITY AND THE WTO

The document analyzes how economic globalization and trade impact in-country inequality and social inclusion, arguing that while trade is often blamed for rising inequality, other factors like technology and political economy play more significant roles. It discusses the tension between national sovereignty for social cohesion and the multilateral rules-based order of the WTO. The author suggests that the WTO must adapt through incremental, plurilateral negotiations to remain relevant and avoid a return to mercantilist 'beggar thy neighbour' policies, while advising the South African government to balance its need for policy space with the preservation of the multilateral system.

• In-country inequality is driven by a complex combination of factors beyond trade, including rapid economic growth, technological disruptions from the 'Fourth Industrial Revolution', structural change (deindustrialisation), and political economy. In African societies, power relations, specifically 'neo-patrimonial and patriarchal relations', are central to determining distributional arrangements and inclusion patterns.
• Trade and investment influence inequality through four primary channels: imports, exports, inward foreign direct investment (FDI), and outward FDI. While imports can displace workers in import-competing companies, they generally benefit consumers through lower prices and higher quality. The impact of FDI varies by motivation: market-seeking FDI may clash with local producers, while efficiency-seeking investment in East Asia has been 'hugely beneficial for development' when managed by the government.
• The World Economic Forum's Inclusive Development Index (IDI) indicates a global decline in inclusivity, with 51% of countries seeing their score decrease over five years. South Africa ranks 69th out of 107 countries and is the lowest scoring among its G20 peers.
• The WTO is facing an existential crisis driven by the rise of populism and a shift toward bilateralism, exemplified by the 'America First' policy of the US. The author warns that if the WTO's negotiating mechanism is bypassed in favor of regional or bilateral forums, rules will be set primarily by powerful players, potentially harming poorer countries.
• The 'embedded liberalism' compromise—which allowed states to maintain welfare systems at home while removing trade barriers abroad—is under threat. There is a tension between the need for 'policy space' to address domestic inequality and the need to maintain a rules-based multilateral system to prevent a return to unstable mercantilist orders.
• The author recommends that the South African government move away from all-encompassing negotiating rounds like the 'dead' Doha Round. Instead, it should pursue an incremental approach using a mixture of plurilateral and single-issue negotiations on a handful of key multilateral solutions.

APA

Draper, P. (2017). TRADE, INCLUSIVENESS, INEQUALITY AND THE WTO. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2017/12/GA_Th3_DP-draper_20171206.pdf

Chicago

Draper, Peter. TRADE, INCLUSIVENESS, INEQUALITY AND THE WTO. South African Institute of International Affairs, 2017. https://saiia.org.za/wp-content/uploads/2017/12/GA_Th3_DP-draper_20171206.pdf.

Wikipedia

{{cite report |last1=Draper |first1=Peter |title=TRADE, INCLUSIVENESS, INEQUALITY AND THE WTO |publisher=South African Institute of International Affairs |date=December 2017 |url=https://saiia.org.za/wp-content/uploads/2017/12/GA_Th3_DP-draper_20171206.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{draper2017trade, author = {Draper, Peter}, title = {{TRADE, INCLUSIVENESS, INEQUALITY AND THE WTO}}, institution = {South African Institute of International Affairs}, year = {2017}, month = dec, url = {https://saiia.org.za/wp-content/uploads/2017/12/GA_Th3_DP-draper_20171206.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }