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The Geopolitics of Trade

The Geopolitics of Trade

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International trade has returned to the forefront of American public discourse, but to what extent are the effects of trade on the national security interests of the United States taken into account when discussing the topic? To what extent can the standing of the US and its allies benefit from trade in a rapidly changing world?

Trade is often looked at from a microeconomic perspective, but we need to zoom out to understand the long-term effects of trade on America’s standing in the world. To appreciate these effects is to look at them from a geopolitical angle.

For their economic influence in the world, the US and its Western allies rely heavily on a liberal economic institutional framework that focuses on opening up markets worldwide, promoting free market values, and strengthening an international rules-based order. This order and its influence on emerging markets has faced considerable challenges since the turn of the century. Financial crises and volatile markets in both the US and Europe have damaged the reputation of the West as the apex of global economic stability.

Rising economic powers outside of the West have openly questioned and challenged the very core mechanisms of the liberal economic framework. Members of the World Trade Organization have been trying to liberalize trade through The Doha Round since 2001, but they have only shown slight progress. The founding of the BRICS Bank -Brazil, Russia, India, China and South Africa- as an alternative to the World Bank in 2014 only proves how difficult it can be for traditional Western multilateral institutions to engage with rising powers.

So where does trade come into play? Why is it so important for the US to double its efforts in the global trade arena?

Promoting liberal democracy and free-market economics through trade have been quintessential to the establishment of American influence around the world.

The United States is presented with the opportunity to close two of the world’s largest free-trade agreements: the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP). These agreements aim to bolster economic growth both at home and abroad. But more importantly, they serve as a means to strengthen the foundations of free-market economics and a rules-based order by setting the standard for global trade practices.

Because the combined size of the participating economies is so enormous relative to the world economy, TTIP and TPP have the potential to jumpstart the stalled Doha Round negotiations, and provide the US and its allies with momentum to push forward on trade liberalization globally.

As the world’s largest economy, the US must look outward to ensure a strengthened multilateral system that raises standards, restore trust in the free-market system, signal commitment to critical allies, promote global stability and thereby serve its long-term national security interest. As US Trade Representative Ambassador Michael Froman put it: “By leading on trade, we can promote a global order that reflects both our interests and our values.”

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