Make Trade, Make Peace!
Trade is the single most important factor that has shaped the destiny of the modern world. Cultures and goods freely crossed the silk route for centuries bridging the gap between East and West. Modern nation-states were founded upon the premise of protectionism and expansion of trade during Renaissance, and funded by finances generated from trade. The importance of trade dates back to pre-industrial and pre - nation societies. Much of our history comes from travelogues drawn by traders who traveled through the world, drawing maps and our concept of the world. It is no exaggeration, therefore, to suggest that trade is one great unifier that has fueled the establishment of a civilized world as well as modernity on its own.
Free trade Vs Protectionism
Free trade is the policy of treating foreign goods and services no different from domestic goods and services and allowing producers from overseas to freely sell their goods in the country.
Protectionism is a policy of discriminating against foreign goods and services and restricting trade by imposing tariffs on them, thereby making them costlier for the customers.
At different times in history, protectionism and free trade have dominated the trade patterns. However, most agree that free trade is the means to promote peace and economic prosperity amongst countries.
Peace through trade?
It is an established fact that free trade benefits nations by increasing their wealth and living standards. India’s own story post-liberalization is testimony to that. Countries that trade a lot with each other are less likely to go to war with each other because free trade makes countries more commercially inter-dependent giving them the economic incentive to keep hostilities at bay. India and Russia share outstanding bilateral ties. Russia has been supporting India on various international forums and vice versa. The reason is the high trade link between the two countries. India is the second largest buyer of defence equipment from Russia. It reflects in the perception Russians have for India. A good 45% of Russians view India positively and only 9% expressed negative views, according to a BBC World Service Poll conducted in 2014.
Traders or businessmen influence the government. If they are doing profitable business with other countries, businessmen on both the sides will be opposed to war. Recently China has reduced the import duty on American cars by 10% opening huge possibilities for American car makers in China. US has also blinked on its decision to slap import duty on Chinese goods to the US. It has bought truce to the two countries otherwise on the verge of trade war.
India and Pakistan share dismal bilateral trade figures which reflect in the volatile relations the two two countries share. Every time the conflict with Pakistan hits a new bottom, experts suggest that the only way to normalize the situation is to improve mutually beneficial trade ties. On several occasion when politics has failed us, trade has come to the rescue. After the Uri attack where 18 Indian soldiers were martyred, India retaliated and hostilities on both sides reached a new high. India banned Pakistani artists from working in India. Pakistan countered it by banning the Indian movies. However, within a few months Pakistani cinema owners incurred heavy losses and amidst heavy pressure, the decision was revoked. Practical considerations of money sometimes force peace and keep the hollow noises of nationalism in check!
Extensive trade links may not always be directly proportional to good diplomatic relations. Despite Indian markets being flooded with Chinese goods and a whopping bilateral trade volume of US$ 84.5 billion between the two countries, the diplomatic relations with China are not always cordial. Yet, the importance of trade in normalizing relations does not diminish. Trade does not occur in a vacuum. Trade accompanies cultural exchanges and exchange of ideas. Trade breaks the wall of mystery and stereotypes and humanizes the people one trades with. It makes the people on the other side of the border seem less demonic, making us realize that people all over are the same with same hopes, sorrows and joys. It makes us more tolerant and understanding of each other’s differences and makes the countries look more than mere lines on the map.
That is why despite the border disputes with China and Pakistan which could completely cripple the bilateral ties, trade helps to maintain some semblance of normalcy. Indian movies make mighty sums of money in China and Pakistan and Indian movie stars are widely revered there, resulting in cultural closeness. The legends of humungous popularity of twinkling blue eyed Raj Kapoor singing..... mera joti….mera joti hai japani..Sar pe lal topi rusi…. are still talked about in India and Russia. Such cultural exchanges facilitated by trade keep the tensions lower if not completely mitigate them.
Protectionism on the other hand, leads to ill feelings towards other nations.
In the 1930s, industrial nations increased trade barriers leading to spitefulness amongst countries, setting the stage for World War II.
Protectionist sentiments are stirring all over the world evident in Brexit and the ‘Make in India’ initiative in India. India has raised import tariffs to the highest in the last three decades leaving all its important trade allies including the U.S, up in arms. The U.S is already mulling over doing the same to Indian goods.
Trump’s “America- First” policy has had its repercussions on India’s important information technology industry – which generates output worth $150 billion per year.
These seemingly harmless retaliations proves to be an ammunition for the war.
French economist, Fredric Bastiat famously wrote- If goods don’t cross borders, armies will. I would humbly agree to it!
The author of this article, Richa Singh is a content writer with Investronaut. She is a voracious reader and a keen traveller.