By Richmond Kwame Frimpong
Over the years, international trade has been motivated by the pursuit of greater economic efficiencies.
For much of the 20th and early 21st centuries, trade was seen primarily as a tool to increase production, lower prices, and offer consumers more product choices. The benefits of trade in terms of growth and development were clear and widely recognized.
However, in recent decades, trade has evolved beyond purely economic interests to become a powerful lever for achieving broader non-trade objectives (NTOs), such as promoting human rights, environmental protection, and labor rights.
The inclusion of such values into trade agreements is not merely a function of government policies but increasingly involves private companies aligning their operations with these societal principles.
The Rise of Non-Trade Objectives (NTOs) in Global Trade
The increased emphasis on NTOs in trade reflects a broader global shift towards values-based governance. Issues that were once peripheral to trade, such as climate change, labor rights, and human rights, have now taken center stage.
This change is driven by a combination of factors, including the growing influence of liberal-progressive ideologies, the increasing leverage that values provide in trade negotiations, and the rise of what some consider to be “democracy versus authoritarianism” struggles. Countries are now more willing than ever to impose trade restrictions or offer preferences based on the alignment of their trade partners with certain values.
For instance, the United States, a key player in the global trade system, has increasingly linked its trade policies to the promotion of human rights. A prominent example of this is the U.S. State Department’s annual reports on human rights practices, which have often criticized countries like China for their labor practices.
In response, the U.S. has imposed import restrictions on products linked to regions in China accused of forced labor. These actions underscore the growing trend of using trade as a tool to address not just economic issues but also values-driven concerns such as forced labor, religious freedom, and political repression.
On the other hand, countries like China have pushed back against these value-laden trade restrictions. China has argued that the U.S. accusations of forced labor are based on misinterpretations and that the practices in question should not be subject to foreign intervention.
This divergence in perspectives highlights one of the fundamental challenges of embedding values into trade: the difficulty of reaching universally accepted conclusions on issues like human rights and labor standards. The lack of consensus on values such as freedom of religion further complicates efforts to integrate these principles into trade agreements, as different countries have varying interpretations of what constitutes religious freedom.
The Intersection of Technology and Geopolitics in Trade
As geopolitical tensions rise, the intersection of trade, values, and technology has become a central point of contention. The race for technological supremacy, particularly in areas such as artificial intelligence (AI), quantum computing, and microelectronics, has introduced a new layer of complexity to trade relations.
Technology has not only become a critical driver of economic growth but also a strategic tool for national security and geopolitical influence. As a result, trade in high-tech goods and services is increasingly influenced by national security concerns, with countries seeking to limit access to advanced technologies by adversarial states.
For example, the U.S. and its allies have imposed export controls on critical technologies such as semiconductors to prevent their transfer to countries like China, which is viewed as a strategic competitor in the global technology race.
These export controls are often justified on the grounds of national security, but they also have significant economic implications, as they disrupt global supply chains and limit access to critical technologies for developing countries. This technological tug-of-war is emblematic of the new trade wars, where economic interests are intertwined with strategic and security concerns.
Moreover, the technological divide between developed and developing countries further complicates global trade. Developing nations, particularly those in Africa, face significant barriers to accessing and leveraging advanced technologies.
These barriers are not only economic but also political, as trade policies increasingly prioritize technological alignment with geopolitical allies. For African nations, this presents a significant challenge, as their access to critical technologies is often contingent upon their alignment with the values and strategic interests of more developed countries. This situation underscores the importance of ensuring that trade policies do not inadvertently marginalize developing countries in the global technological race.
In this context, the Meridian Industrial Park in Ghana stands as a prime example of how developing nations can overcome these barriers. By offering state-of-the-art infrastructure and advanced technological capabilities, Meridian serves as a critical hub for both local and international businesses seeking to access African markets.
The park’s emphasis on sustainable development and its strategic location makes it a vital part of the regional trade ecosystem, allowing for better integration into the global supply chain while adhering to high environmental and technological standards. As such, the park not only facilitates economic growth in Ghana but also helps align the country with broader geopolitical and technological trends in global trade.
The Herculean Task of Defining Universal Values in Trade
One of the most significant challenges of embedding values into trade relations is the difficulty of defining a universally accepted set of values. While certain values, such as the abolition of slavery, have widespread international support, many others are more contentious.
The debate over issues such as freedom of religion and environmental standards often exposes deep divisions between countries with differing political, cultural, and religious backgrounds. These differences complicate efforts to reach consensus on how to apply values to trade.
The international community has made strides in certain areas, such as labor rights, where conventions like the International Labour Organization’s (ILO) Forced Labour Convention have established global norms. However, enforcement remains a significant issue, as the interpretation of these norms can vary widely depending on national contexts.
For example, the U.S. and China have engaged in a long-running dispute over labor practices in China, with each country accusing the other of failing to adhere to international standards. This ongoing conflict highlights the difficulty of applying values-based criteria to trade in a way that is both fair and effective.
The Role of Trade Policies in Promoting Values
Governments around the world are increasingly incorporating values into their trade policies, often as a means of promoting shared democratic principles or advancing strategic objectives.
The United States, the European Union, Japan, and India have all established trade and economic bodies that seek to promote values such as democracy, human rights, and environmental sustainability. These initiatives are often framed as efforts to build a “democratic technology ecosystem” or to promote “sustainable and socially responsible corporate behavior.”
However, these values-based trade policies are not without controversy. For instance, the European Union’s planned deforestation regulations, which would require companies to trace and document the origin of products like coffee and palm oil to ensure they were not harvested from deforested lands, have been met with resistance from countries like Indonesia and Malaysia.
These countries argue that the regulations unfairly target developing nations while allowing developed countries, which have historically been responsible for much of the world’s deforestation, to avoid accountability.
Similarly, the EU’s Carbon Border Adjustment Mechanism (CBAM), which imposes a cost on greenhouse gas emissions embedded in certain industries, has raised concerns among developing countries.
While the policy is aimed at reducing carbon leakage and promoting environmental sustainability, it has been criticized for imposing additional costs on countries that are still in the process of industrialization. From the perspective of many African nations, trade restrictions based on environmental criteria could hinder their ability to access the global market and stifle their economic growth.
Navigating the Tug-of-War Over Values
The future of global trade will be defined by the delicate balance between economic efficiency, geopolitical strategy, and societal values. As trade becomes increasingly intertwined with issues such as human rights, labor standards, and environmental protection, countries will face growing pressure to navigate these complex and often conflicting demands.
For developing countries, particularly those in Africa, this presents both opportunities and challenges. On the one hand, there is the potential to leverage trade as a tool for advancing social and environmental goals. On the other hand, there is the risk that trade restrictions based on values could limit access to the global market and hinder economic development.
To ensure that trade remains a force for positive change, it will be essential for policymakers to adopt inclusive and equitable approaches that consider the diverse needs and aspirations of all countries. This will require a more nuanced understanding of the interplay between trade, geopolitics, technology, and values, and a commitment to ensuring that the benefits of trade are shared more equally across the globe.
Conclusion
The rise of non-trade objectives (NTOs) such as human rights, labor standards, and environmental protection has transformed trade from a tool for economic growth into a lever for promoting broader societal goals.
However, this shift presents significant challenges, particularly in defining universal values and navigating the technological and political complexities that influence trade policies.
While developed nations leverage trade to advance democratic principles, developing countries face the risk of being marginalized by restrictive value-based trade regulations.
Moving forward, a balanced and inclusive approach to trade that considers the diverse needs of all nations, while aligning economic, political, and social objectives, will be essential in ensuring that trade remains a force for positive global change.
The writer is an award-winning “growth and turnaround” business leader with nearly two decades of multi-industry expertise across Europe, the Middle East and Africa. Specialized in Upstream financial Advisory, International Trade & Development, Economic Integration & Digitalization, Industrial Ecosystems & Special Economic Zones.
The post The new trade wars: Geopolitics, technology and the tug-of-war over values appeared first on The Business & Financial Times.
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