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The Politics of Our Trade Conflict

politics-of-trade

SUMMARY

• In this issue we argue that to understand the dynamics of the current trade conflict, we need to look at it through a political as well as an economic lens

• Apart from the economic gains, trade has always been an instrument to project geo-political power. Achieved either by defining the terms of trade or by using tools of trade explicitly to achieve geo-political objectives.

• The West’s belief that increased trade will inexorably lead to democratization has proven to be over-optimistic

• We believe that the pattern of opportunity and risk in trans-national trade will continue to change substantially – and will be largely driven by political rather than economic factors

• The main challenge will be how to preserve and manage a liberalised trading system as the Chinese model of political economy has started to provide an alternative to the previously dominant Western market-driven model

• As China rises to a major geo-political power, we should be thankful if its conflict with the US remains restricted to skirmishes around international trade when most previous transfers of power have ended in armed conflict

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