ASTK18300U The Politics of International Trade in the 21st Century

Course description

The 21st century world economy is dominated by technological revolutions, global value chains, trade wars and intense regulatory competition between trade powers. Firms’ demands rules and institutions fit for a more globalized economy. The politics of trade in the 21st century have also changed. Sovereignty concerns, security concerns and anti-globalist sentiments have fueled stronger demands for ‘fairer’ and less ‘free’ trade. Both the economics and the politics of international trade are in transformation.

The course asks whether we are witnessing a disorderly replacement of the post-war trading order as we know it. If so, in what direction is the world economy and the trading system and the world economy heading, and what are the implications, for Denmark, for Europe, for ‘the Liberal Order’, for ‘the rising powers’ and for developing countries?

The politics of international trade have erupted. Unfair trade accusations have grown powerful. Competitiveness concerns are voiced frequently. Trade wars, Brexit, and neo-mercantilist policies, such as subsidies, point to a potential disruption of globalization. Yet, this is counter-balanced by an unprecedented wave of negotiations on comprehensive trade agreements. Even Brexit ultimately hinges on such a trade agreement. If completed, these new agreements will reshape global trade. Globalization will not stop per se; it will slow down, reshaped by mix of geo-economics and geo-politics, interstate diplomacy and corporate decision-making, technological revolutions and power rivalries.

The course aims to discuss on which (and ultimately whose) premises international trade is regulated, and how to proceed forward on trade in the future.  The course introduces the basic rules of how international trade is regulated today, the main mechanisms and key issues in global trade. It offers an advanced introduction to international political economy (IPE) theories on trade. There is no consensus within IPE on trade. Liberal IPE wants to minimize political and regulatory interference in the market, leaving re-distributional aspects of trade aside. Realists understand trade as an effective power instrument, both as foreign economic policy tool and as strategic industrial strategy. Free trade critics see trade as a threat to sovereignty, global justice and equality, sustainable development and democracy. Underpinning these three core potions on trade, the course outlines four sets of approaches to the study of contemporary trade politics: 1) the conventional interests-orientated, liberal IPE approach on trade relations as an outcome of negotiations, regulation and enforcement in the international trading system, 2) a power-orientated, state-centered realist IPE approach on trade politics, 3) the critical approaches on trade relations as the product of hidden, transnational neoliberal hegemony, and 4) the constructivist approach, focusing on the social, epistemic construction of what (we think) trade is, and what policies to pursue. The various approaches are linked to particular issues and cases. For instance, the liberal approach is applied to the case of the new trade agreements of the 21st century, and to case of reforming the WTO. A realist approach examines the issue of trade wars, and new strategic trade policies pursued by state.  The critical approach is applied to the case of trade and development issue, and to social and environmental sustainability requirements in the new trade arrangements.

The course is empirically orientated but ultimately aim to facilitate theoretical-informed analysis of ongoing policy changes, ranging from the bilateral turn towards deep, comprehensive free trade agreements, the WTO crisis and possible reform, trade wars and other unilateral trade policy practices, and ask whether these tendencies are supplanting, disintegrating or reproducing the existing trade order. It will also introduce the basic setup of different national trade policies and policy processes, such as the US and RU, the legal institutional characteristics of the WTO, and the new economic theories on global trade, investment and production.

Course Structure

Introduction:

The trade crisis

• Trade wars, rising China and liberal order
• Empirics: trends and transformations
• Discussion: ‘Slowbalisation’, Dani Rodrik

Theories I:

Mainstream IPE theories: liberalism and realism

• Liberalism: liberal trade theory, liberal IPE: interdependence, institutionalism and embedded liberalism
• Realisms: mercantilism, IR neorealism, realist IPE: state-centred realism, geo-economics, strategic trade theory

Theories II:

Alternative IPE theory

• Critical IPE: marxism and neogramcianism, gender, green IPE
• Constructivist IPE: uncertainty, discourses and practices

Rules:

Core principles of GATT/WTO law

• The preamble and social purpose: Balancing sovereignty and trade liberalisation
• The liberal core-principles: Non-discrimination
• Rules safeguarding sovereignty: Exceptions to non-discrimination

Procedures of the WTO: Multilateral governance of trade regulation

• Decision-making
• Transparency
• Enforcement

Discussion: The future of the WTO

Actors I:

States

• The rule-makers: US, EU and China
• The rule-takers: the developing world, the small and medium-sized states

Actors II:

Non-state actors

• Firms
• International Organisations
• Experts and networks
• Consumers

Problems I:

Trade wars

• Visible trade wars: the return of tariffs
• Invisible trade wars: technology, regulatory and financial power clashes 

Problems II:

Policy reorientations

• the erosion of the WTO order, the turn to bilateralism and regionalism

Problems III:

Technology and the new economy

• Strategic trade policy: upgrading to the digital economy, the biotech revolution, and an era of robotics 
• Finance and trade: attracting investments, obtaining credits
• Intellectual property rights: illiberal necessity of liberalism or a development trap? 

Problems IV:

Unfair trade, unjust trade

• Value-based trade concerns.
• Mercantilist populism or legitimate protection?

Problems V:

Securitizing trade

• economic foreign policy: sanctions and geopolitics
• Competitiveness: assuring fair competition
• Harnessing globalisation: value-based trade policy
• Climate-related trade policy: unilateralism as necessity

Conclusions and Q&A session:

The IPE debates on Trade

• The IPE field: Economics or international relations?
• IR: absolute and relative gains, freeriding, strategy choice
• Trade power: hard or hidden, relative or structural
• Problem-solving and Critical IPE: Liberal order or global hegemony
• The constructivist challenge: protectionism or patriotism, preferences vs. scripts and frames, expert power