Trade Diplomacy Transformed

Why Trade Matters for Global Prosperity

Geoffrey Allen Pigman

• Editore: Palgrave Macmillan
• Anno: 2016
• ISBN:
  9781137546654
• Argomento: Politica e relazioni internazionali
• Categoria: Commercio e tariffe

This is the first book to tell the story of the diplomacy that has made the international trading system what it is today. It reveals how three major transformations over the past two centuries have shaped the way goods, services, capital and labour cross borders, as buyers and sellers meet in the global marketplace.

Part One
International Trade as Diplomacy

1 Diplomacy and international trade: an introduction

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 licences. Over the past three millennia, international trade has moved from being a series of infrequent journeys to meet unknown peoples, to exchange the familiar for the exotic for the benefit of rulers and elites, to being today a primary driver of global economic growth. International trade as a percentage of world economic output has increased from around two percent in the early nineteenth century to nearly 35 percent in the year 2000.¹ 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 labours. 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. Alongside this great rise in international trade has been a parallel increase in another fundamental and essential human activity: diplomacy.

Until recently, diplomacy that addressed international trade issues tended to be viewed as a narrow and technical subset of diplomacy, peripheral and subordinate to international security issues. But the diplomacy that makes international trade possible and profitable is no longer just about nation-state governments, bilateral trade liberalization treaties, multilateral trade organizations and Free Trade Areas. Trade diplomacy as it has evolved to this day is about much more than that, as the following story attests. In 2008, a Canadian energy transportation company, TransCanada, proposed to build an 875-mile pipeline that would transport Canadian oil pumped from tar sands fields in Alberta, Canada south across the Canada-US border through the north central United States to a hub in the US state of Nebraska, from which it would be distributed for refining and consumption in the United States and for re-export to third countries. But in order for this trade to flow through a newly constructed pipeline, first TransCanada would have to obtain a Presidential Permit issued by the US Department of State certifying that the ‘Keystone XL’ pipeline would serve the US national interest. The national interest in this case was constructed broadly, including foreign policy, energy security, economic growth and the environment. The pipeline project soon attracted media attention as it faced opposition from civil society organizations (CSOs) contending that the pipeline’s route would traverse the environmentally sensitive Sand Hills region of Nebraska. Support for the project was deep on both sides of the border, including the Canadian government, Canada’s energy industry, the US energy industry (shale oil pumped in the Dakotas would also benefit from the pipeline), US consumers, US political supporters of energy independence from non-North American energy and pro-business, pro-trade groups. Opposition to the project, in addition to those concerned about sensitive regions that the pipeline would traverse, attracted ‘dark Green’ adversaries of US consumption of tar sands oil and fossil fuels more broadly. During the review process the Nebraska legislature approved rerouting the pipeline so it would avoid passing through the Sand Hills and their delicate ecosystem. As of early 2015, the project remained stalled awaiting the issuance of a final environmental impact statement by the State Department, which was required before the US President could make a final determination of whether constructing the pipeline was in the national interest.

US Representative Tim Griffin, a member of Congress who represented the second district of Arkansas from 2011 to 2015, became involved directly in the diplomacy surrounding the pipeline debate for several reasons. Whilst the pipeline itself would not pass through Griffin’s Arkansas district, a major pipe producer, Welspun Tubular, employed over 600 Arkansans in Griffin’s district. The job security of Welspun’s mostly high-skilled workers was dependent upon the demand for pipe that Keystone XL would bring. Welspun Tubular, itself owned by an India-based parent company, was itself an example of the economic growth and job creation that liberal international trade and investment rules can bring. Griffin, whose own policy priorities were focused on economic growth and national security, was a staunch advocate of liberal trade and of the independence from energy sourced in conflict regions of the world that sourcing more oil from Canada would bring. Griffin, a member of the US Army Reserve who had served as a Judge Advocate General (JAG) in Mosul, Iraq in 2006, was keenly aware of the importance of the multifaceted diplomatic relationship between the United States and its most important ally, Canada, in which security, trade, and investment all feature prominently. Griffin met with the Canadian ambassador to Washington, Gary Doer, and spoke directly with Alison Redford, the Premier of Alberta, the province from which oil would be exported to the US via the Keystone XL pipeline. Recognizing shared interests between Alberta and Arkansas workers, Canadian and US firms and consumers, Griffin worked with representatives of Canadian federal and provincial governments to communicate to US policy makers Canada’s interest in seeing the pipeline approved. Making the case for Keystone XL to colleagues on Capitol Hill, Griffin pointed out that, were the pipeline not approved, Canada would build another pipeline to the Pacific coast, from which it would export the oil primarily to China, at considerably higher environmental cost and with lost jobs and energy security for US nationals. At a November 2011 press conference with fellow members of the House of Representatives, Griffin argued:

We all agree that the greatest challenge facing our country is our weak economy and high unemployment. By delaying a decision on the Keystone XL Pipeline permits, the President is putting politics over paychecks. Approval of this truly ‘shovel ready’ private sector stimulus of $7 billion should be a no-brainer for anyone interested in creating jobs. We are talking about 20,000 direct and 100,000 indirect high-paying jobs.²

In addition to voting for legislation in the House that would have streamlined the approval process for cross-border pipelines, Griffin communicated with US Secretary of State Hillary Rodham Clinton urging that the State Department approve the pipeline.³

The Keystone XL pipeline and a US Congressman’s rôle as a diplomatic protagonist is illustrative both of the enduring aspects of international trade diplomacy and of how it has been transformed by successive systemic changes. International trade has traditionally been analyzed from the perspectives of economics and politics, and thus by extension political economy. The main questions addressed on the economic side have focused upon how trade works and who gains and loses from trade. On the political side, questions have focused upon how interests related to trade and commerce are articulated through domestic political systems and represented at the international level and upon how trade objectives are reconciled with other social and economic objectives through political bargaining. Yet an understanding of international trade and commerce from the perspective of diplomacy and the literature of diplomatic studies has been lacking up to now. This has meant that a number of important questions about international trade and its impact upon the polities, economies, and societies that engage in it have been neglected or marginalized.

Despite the focus of diplomacy upon issues of haute politique and security since founding of the modern diplomatic system of nation states, generally pegged at the 1648 Peace of Westphalia, and particularly during the Cold War, trade since ancient times has been at the core of the agenda of diplomats.⁴ But trade has not only been a primary object of diplomatic representation and communication. In an important sense, trade itself is a key form of diplomacy. Trade, broadly understood as the exchange of goods, services, capital, and labour, by its nature reconstitutes, redefines, and changes the subjectivities and the identities of the polities that engage in it. Trade, or exchange, is an ongoing process. The ‘we’ who are doing it become different by doing it. Even as it creates value by realizing economic efficiencies through specialization of production, trade also redistributes wealth, assets, and power both within and between polities. This process invariably brings social change, which can redress or aggravate inequality and distribution of wealth between economic sectors, regions, and social groups. For example, what we now understand as trade in services often involves the movement of persons across borders either to deliver or consume a service. A new diplomatic studies paradigm illuminates these processes by focusing not only upon the negotiation and politics of trade agreements but also upon the ongoing diplomatic representation and communication required to manage trading relationships.⁵ More broadly, the diplomatic studies perspective on international trade highlights new developments such as the emergence of non-state actors, such as global firms and civil society organizations, as diplomatic actors in their own right.

Iranian and U.S. pistachios on sale at St. Lawrence Market, Toronto

Photo: G.A. Pigman.

Thinking about international trade from the perspective of diplomacy encourages the asking of key questions that might otherwise appear peripheral. How do the ways that diplomatic representation and communication are undertaken affect the diplomacy of international trade and commerce in particular? What effects do the changing nature of diplomatic ‘actor-ness’ and the emergence of new venues and institutions for diplomacy have upon trade diplomacy? What is the impact of the rising importance of public diplomacy upon the diplomacy of international trade? How does diplomacy facilitate or hinder political tradeoffs between trade issues and other major social and economic issues on the global agenda, such as monetary coöperation, reduction of greenhouse gas emissions, intellectual property rights, etc.? How have diplomats negotiated and re-negotiated what trade means, in the sense of which issues count as international trade issues for purposes of negotiation and governance? For everyone seeking a deeper understanding of international relations and politics, global political economy and diplomacy amongst other things, the issues and questions under the purview of trade diplomacy are central. The European Union, which originated as a customs union, and the World Trade Organization (WTO), which originated as an agreement without an institution to manage it, can be seen as some of the world’s greatest diplomatic achievements. Yet the challenges for the WTO from the difficult and limited progress of its Doha Development Agenda of multilateral trade negotiations over thirteen years and for the EU from the recent financial and monetary crises besetting the euro zone represent some of the greatest tests for diplomacy ever. A fuller understanding of international trade from a diplomacy perspective will equip decision makers better both to analyze and to contribute to solving these crucial global problems.

An understanding of trade diplomacy rests to a significant degree on how one understands the reasons why international trade does, or should, take place. In a penetrating analysis of the contemporary World Trade Organization, Rorden Wilkinson argues from a normative perspective that the purpose of international trade should be to promote economic development of the less developed parts of the world and to lessen inequality. In his book What’s Wrong With the WTO and How to Fix It, Wilkinson contends that the international trading system and the institutions established to facilitate it should be reformed in such a way as to place international trade in service of these normative objectives.⁶ Wilkinson poses the challenge of trade reform fundamentally as a task of global governance. This framing presupposes global governance as something natural, in which sovereign states will eventually be willing to subordinate their powers to global social objectives. Were that the case, diplomacy would occupy a much less central and less essential place in international relations than it does.

The arguments of this book follow from very different presuppositions. The arguments herein are based upon the historical observation that trade (be it local or international) takes place when it makes the parties that engage in it better off. The increase in trade over time has brought gains to a wider range of participants in the international economy and has made the now global economy immeasurably wealthier than it would have been otherwise. Hence this book seeks to understand the diplomacy required to facilitate international trade as a worthy end in itself. Redistribution of the economic, political, and social gains from trade to less developed countries and less wealthy populations is an important project in itself, both on ethical grounds and because, economically, raising the capacity of the poor to engage in trade ends up making everyone wealthier. However, the problem faced in seeking to redistribute gains from trade and in seeking other trade objectives is fundamentally not one of global governance. Rather, it is a problem for diplomacy, which mediates between sovereign and estranged powers. The understanding of diplomacy on which the argument is based assumes that sovereign nation-states use their power on the diplomatic stage to advance their interests (as their governments perceive them). Hence the interests of larger and wealthier states are likely to prevail, ceteris paribus. Governments of such states are unlikely to transfer power to others unless they can be persuaded that it is in their interest to do so.

Thus the use of diplomacy to facilitate international trade today appears as a challenging paradox, with much riding upon its successful execution or lack thereof. On the one hand, international trade flourishes: trade growth is a driving force behind the explosi...

Indice dei contenuti

• Cover
• Title
• Copyright
• Contents
• List of Figures and Tables
• Acknowledgements
• List of Abbreviations
• Glossary
• Part One: International Trade as Diplomacy
• Part Two: Liberalization: The First Transformation
• Part Three: Institutionalization: The Second Transformation
• Part Four: Judicialization: The Third Transformation
• Part Five: Transforming Trade Diplomacy Anew?
• Bibliography
• Index