The final communique from this year’s G7 summit included language about getting countries to play by World Trade Organization rules, about greater regulations on state-owned enterprises, about controlling trade-distorting subsidies, and about forced labour in supply chains. And while China was never specifically mentioned in the text, these statements were clearly made with the country in mind, writes Lawrence Herman in this Intelligence Memo for the C.D. Howe Institute.
Bringing China in line with the liberal, rules-based international order is clearly a priority for these global leaders.
But, Herman writes, while public discussion of world trade tends to focus on governmental action in the forms of treaties and trade agreements, whether at the WTO or at the regional level, this is not the only tool that can be used.
While often overlooked, the private sector can be valuable in this regard as well, from setting standards to making outright rules, Herman argues. This is known as “private global business regulation.”
These influences should not be ceded to China, especially in critical technology spheres where the country is actively pressuring countries and companies to conform to their illiberal strategic ends. China’s stated aim is to dominate world manufacturing and then transition to become the centre of the world’s technological innovation.
There is much at stake, and Western industrialized countries must respond, Herman concludes. They cannot just sit back and hope for the best.
“While they can’t – or shouldn’t – interfere or attempt to direct activities in the myriad independent standard-setting bodies, there’s a need for more active public-private collaboration, a partnership between governments and the business sector to ensure full stakeholder participation to counter growing Chinese influence in this under-reported stratum of private global governance.”
