In this article, we shall discuss the role of global trade (also referred to as international trade, world trade, or foreign trade) in international relations. Global trade has become a very important aspect of international affairs; countries are not only becoming more interdependent on one another, but with the rise of globalization, and the ability to conduct more efficient world trade, countries are looking for ways to do just that. This article will discuss the history of international trade, the key international institutions with regards to global trade, criticisms of such institutions, as well as the role of state and non-state actors in continuing to promote international trade. We will also examine trade disputes, and current debates about the role of world trade. The article will then end with a list of books on the issue of global trade, as well as a list of references for those interested in additional reading on the subject.
History of Global Trade
International trade is far from a new phenomena; international actors have been trading with one another for centuries. In fact, “[t]he origins of global trade are as old as human society. Lacking complete self-sufficiency, human beings traded goods and services within their communities and gradually expanded trade with people in distant areas” (Payne, 2013: 157).
There are many historical examples of actors leaving their respective areas to go abroad and conduct international trade. For example, in the third century before the common era, various groups in China set up a trading path which has been known as the Silk Road (Payne, 2013: 158). Here, individuals were able to exchange goods with one another. Along with the Silk Road, political and religious expansion also brought along elements of global trade. For example, with the spread of Islam, we also saw significant trade throughout North Africa, as well as the Middle East (Payne, 2013). Throughout empire expansion has also come increase world trade. During the rise of European powers, many of them continued to carry out economic trade with regards to food, materials, and weapons. For example, we saw this with the rise of the Ottoman Empire in the Middle East, and then the rise of Britain and France in Europe, and the promotion of foreign trade through trade agreements such as capitulations by the Ottoman Empire to the European states to encourage them coming and selling goods in the Ottoman Empire.
When discussing international trade, it is imperative to discuss the role of free trade on the international system, both the benefits of free trade, as well as the criticisms of free trade.
Many have historically argued for increased trading, and some proponents of international trade have advocated for the importance of free trade. Those in favor of free trade argue that “Free trade is an important component of this system of economic liberty. Under a system of natural liberty in which domestic commerce is largely free from restraints on competition, though not necessarily free form government regulation, commerce would also be permitted to operate freely between countries” (Irwin, 2002: 23). Furthermore, when free trade exists, the idea sis that this will lead to a reduction in prices for a good (since different companies will have to compete without any favoritism or barriers to trade), which in turn can also lead to better quality products (Payne, 2013) (since they will not have any protections against other, similar products on the international market).
Along with this, there has been a belief by some that with free trade will also come specialization in certain products, which is understood as comparative advantage. However, some have argued that “[t]he theory of comparative advantage has been undermined by the current wave of economic globalization. The growth of transnational or multinational corporations complicates global training” (158). This has led some to suggest that we have moved from comparative advantage to “competitive advantage,” which is understood as the “[s]hift toward the production of goods and services based on cost considerations, arbitrary specialization, and government and corporate policies” (Payne, 2013: 158).
Unions and Foreign Trade
Within the discussion of international trade has been the role of unions. Unions are important as they allow workers to come together and have a unified voice for their rights, and to speak out against any unfair work practices and/or human rights abuses.