In less than a week, Lin Kai and I worked on and presented a response to the class discussion question:
How has trade policy changed from the late 20th Century to the early 21st Century?
In my opinion, our slide deck gives a succinct overview of how technological advancements have changed the way trade is conceived of and conducted, often through Global Value Chains. Such changes have given rise to new policy concerns, to which policymakers have begun responding with innovations in both trade-related policies and the process of policymaking.
Here it is: Class Presentation on Google Slides
If you are new to trade policy, I would strongly recommend the following working paper by Richard Baldwin, titled, “Global supply chains: Why they emerged, why they matter, and where they are going“.
In the class discussion following our presentation, some of the concerns that emerged had to do with:
- The disproportionately large bargaining power of the multinational companies (MNCs), their mandate to seek profits and arbitrage against labour costs, environmental standards, and governments, and whether greater scrutiny placed upon MNCs, in the forms of consumers’ expectations of established international brands, corporate governance codes and third-party accreditation and watchdog organisations, might counterbalance and shape MNCs’ interests to include not only shareholder value but stakeholder value and environmental stewardship as well (a triple bottomline, as they call it).
- The 1970s-1990s were a time of trade in goods – finished products and commodities. In the past two decades, trade policy has grown to include foreign direct investments, trade in services, intellectual property rights regimes and more. Trade+++ is what we’re seeing today. Where does trade policy even end these days? This is an important line of questioning for, as we have seen, where trade policy goes, politics follow. If we can contain trade policy at the border, we can contain the politics there as well. Else, how might policymakers effectively represent and coordinate the interests of an increasing base of stakeholders, as trade policy penetrates deeper into a country’s domestic policies – labour, environment, education and more?
- It is important to recognise that Global Value Chains (GVCs) and the MNCs behind them are out to gain arbitrage in wages, in environmental and governance standards. That said, MNCs also appreciate simplicity and stability in trade policy and their legal obligations. Yet, we’re facing a world of increasingly fragmented trade relations and mega-regional trade pacts. How might GVCs be impacted by such a development? How might MNCs conversely affect the political economy of trade policy?
- Looking forward, could we put together a clear, workable trade infrastructure, which encourages economic freedoms while encouraging firms to strive towards triple bottom-lines? Might cities, and Mega Urban Regions, be the key to governing GVCs, in a decentralised, layered manner?