International Trade As Diplomacy

A Dynamic of World Trade

International trade is no longer just about buyers and sellers, shipping and marketing, firms and distributors. Nor is it only about customs officials and border inspections, tariffs and quotas, export subsidies and import licenses.

International trade as a percentage of world economic output has increased from around 2% in the early 19 th century to nearly 35% in the year 2000. Trade today is an inescapable, indispensable component of a global economy that enables the world’s billions to work, earn a living, and consume and invest the fruits of their labors.

Without international trade, there can be no global economic prosperity. The dramatic increase in trade relative to overall global economic activity is a metaphor for the increasing necessity for people across the world to engage with one another: to deal with each other’s differences and to do business with one another.

Diplomacy: Fundamental and Essential Human Activity

Diplomacy that makes international trade possible and profitable is no longer just about nation-state governments, bilateral trade liberalization treaties, multilateral trade organizations, and FTAs. Trade since ancient times has been at the core of the agenda of diplomats. Trade has not only been a primary object of diplomatic representation and communication but also understood as the exchange of goods, services, capital, and labor.

Without diplomacy to build relationships, facilitate communication, negotiate agreements, and resolve conflicts, international trade as we know it today would not be possible. Diplomacy provides the foundation that enables buyers and sellers around the world to connect and conduct business across borders. This involves diplomatic efforts between governments, but also increasingly includes non-state actors such as firms, NGOs, and other organizations. The landscape of international trade relies on ongoing diplomatic representation and relationship management.

Trade Drives Social Change

Trade or exchange is an ongoing process. Even as it creates value by realizing economic efficiencies through the specialization of production, trade also redistributes wealth, assets, and power both within and between polities.

This process brings social change, which can redress or aggravate inequality and the distribution of wealth between economic sectors, regions, and social groups. For example, trade liberalization and growth in the past few decades has lifted millions out of poverty in emerging market countries like China and India. However, it has also led to job losses and wage stagnation in some sectors in developed economies.

Overall, international trade reshapes economic and social relationships within and across countries. Its impact on development, inequality and social cohesion is complex. Trade policy and accompanying domestic policies have major distributional consequences that must be carefully managed.

New Diplomacy Paradigm

A new diplomatic studies paradigm illuminates complex processes in international trade by focusing on the negotiation and politics of global trade agreements as well as the ongoing diplomatic communication required to manage trade relationships.

Trade agreements have diplomatic and political dimensions that shape international commerce. The politics of negotiation, ratification, and implementation of trade pacts like NAFTA and the TPP exemplify this. Ongoing diplomacy is also essential after the ink dries on trade deals. Diplomatic communication facilitates day-to-day commercial activities and resolves problems for traders and investors operating across borders. It helps translate the words of trade agreements into workable trading relationships. This involves not just government officials but also front-line private-sector actors engaging in informal diplomacy.

The emerging paradigm recognizes that trade diplomacy encompasses both formal negotiation of trade pacts and ongoing efforts to manage complex cross-border business relationships. This more comprehensive view provides valuable insights into the intersection of diplomacy, politics, and economics in the world trading system.

Non-State Actors in Diplomacy

The diplomatic studies perspective on international trade highlights new developments such as the emergence of non-state actors, such as global firms as traders and civil society organizations as diplomatic actors in their own right.

Multinational corporations have become increasingly influential actors in global trade and the international economy. These large firms organize global production chains and engage in trade diplomacy to open new markets and resolve trade disputes. Major companies like Walmart and Apple can exert significant diplomatic pressure due to their economic clout.

In addition, non-governmental organizations have emerged as important civil society actors in trade diplomacy. Groups like Oxfam and Doctors Without Borders advocate for issues like access to medicines in developing countries during trade negotiations. They provide analysis and critiques of proposed trade deals to shape diplomatic agendas.

Both multinational firms and NGOs undertake public campaigns to influence public and elite opinion on trade issues. They act as interest groups providing input to governments and international organizations involved in trade diplomacy. Their perspectives and demands have become an established part of international economic policymaking.

Thinking About International Trade

International trade diplomacy today involves new forms of diplomatic representation and communication that differ greatly from traditional state-to-state negotiations. Social media, instant messaging, video conferencing, and other real-time communication channels enable diplomats to communicate directly with foreign publics and new non-state actors in trade policy debates. This shift towards continuous diplomacy and representation is impacting how trade agreements are negotiated and implemented.

For example, during recent trade agreement negotiations there has been greater involvement of business associations, consumer advocacy groups, labor unions, and other civil society stakeholders. These groups use modern communication tools to lobby negotiators, provide input on draft texts, and shape public opinion on the agreements. This can complicate negotiations but also makes the resulting deals more inclusive of diverse interests. Overall, the emergence of new actors and communication forums is transforming trade diplomacy in ways we are still coming to understand.

Thinking about International Trade

Impact of Public Diplomacy

Public diplomacy plays an increasingly important role in trade diplomacy. With the rise of global communications and social media, public opinion shapes trade negotiations and agreements. Governments must conduct diplomacy not only with other governments but also with foreign publics to build support for trade policies. This involves communicating directly with publics abroad to explain trade rules and agreements. It also means being responsive to public feedback and sentiment.

Tradeoffs with Other Issues

Trade diplomacy often involves negotiating tradeoffs with other major issues like climate change, intellectual property, and monetary cooperation. For example, reducing barriers to trade in green technologies could support climate change efforts. But tightening patent protections could limit access to these technologies. Diplomats have to balance economic priorities around trade with broader social priorities around sustainable development and inequality. The proliferation of issues on the global agenda makes trade diplomacy more complex as it intersects with more interests and stakeholders.

Diplomacy’s Role

Diplomacy today plays an essential role in mediating between sovereign nation-states that use their power to advance their own interests. Governments are unlikely to relinquish power or make compromises unless they can be convinced it is in their interest to do so.

Diplomats face the challenge of persuading states to cooperate on issues like trade, even as governments focus narrowly on their own advantages. Skilled diplomacy involves understanding what motivates different governments and helping them see where their interests align with others. It requires building trust and channels for constructive dialog, so that over time mutual gains become apparent through cooperation.

Diplomacy serves as the bridge between competing interests, finding areas of shared priorities that states can rally around. While states start from a competitive stance, diplomacy helps transform their relationships into ones of coordination. It does this through open communication, empathizing with different perspectives, and creatively packaging proposals so they provide benefits at home and abroad. With patience and nuance, diplomacy can convince states to expand their notions of self-interest to include mutual interests.

Diplomacy Today: Support to Trade Growth

The use of diplomacy to facilitate international trade today appears as a challenging paradox.

On the one hand, international trade flourishes: trade growth is a driving force behind the explosive economic growth in emerging economies from Asia to Africa to Latin America. Trade has never been more essential to global prosperity.

Yet at the same time, much of the diplomacy that takes place within the institutional structures established to facilitate trade expansion, such as the World Trade Organization (WTO), is frustrating and slow-moving. Negotiations seem interminable as national interests collide. Progress appears elusive.

Adding to the challenge is the ubiquity of real-time communication channels, which make it much easier for non-state actors and the global public to be aware of and participate in trade diplomacy. This increased transparency and access makes conducting diplomatic negotiations more difficult. Positions taken for domestic political purposes reverberate instantly around the world. Moving too far, too fast can have immediate political consequences back home.

The paradox is that while trade expands rapidly, supporting trade diplomacy seems stuck. Crafting win-win agreements acceptable to all has never been more complex. Patience, perseverance and creative thinking are essential to resolve clashing perspectives, find common ground, and enable the win-win outcomes that continue to expand prosperity globally.

Conclusion

A genealogical exploration of how trade diplomacy has been transformed over the past two centuries is needed. Successive transformations in how and why trade diplomacy is undertaken have driven change in the international trade system in ways that are not immediately evident upon cursory examination.

Further scholarly investigation can illuminate the complex and multifaceted evolutions in trade diplomacy over time. By taking a long historical perspective focused on understanding precedents, contexts and interconnections between different eras of trade diplomacy, new insights may emerge. The devil is often in the details when it comes to comprehending large-scale global dynamics.

Meticulous analysis of specific events, agreements, institutions and relationships pertaining to trade diplomacy across the 19 th, 20 th and early 21 st centuries can uncover driving forces of change that are easily overlooked. Theories can be generated and tested against the empirical evidence gathered through in-depth historical exploration.

In this manner, the hidden significance of incremental developments in trade diplomacy and their collective impact over decades may start to come into focus. Shedding light on unnoticed or misunderstood drivers of change in the international trade system via thorough examination of trade diplomacy history is a scholarly undertaking holding great potential value. Discoveries would further comprehension of the world economy’s current dynamics and future directions.