Can trade aid in bringing peace?

Alan Wm. Wolff (PIIE)

February 20, 2025

Prepared remarks delivered at the book launch for Pathways to Sustainable Trade and Peace, held at the 4th edition of the Trade for Peace Week, World Trade Organization, Geneva.
 

Leaders, as far back as Pericles 2500 years ago, philosophers such as Kant, Montesquieu, Grotius, Adam Smith, trade officials and scholars, all have considered the relationship between trade and peace. It is clear to all that peace is a pre-condition for trade to flow. The question of whether and to what extent the reverse is true, that trade contributes to peace, remains unsettled.

Today’s launch of this book on trade and peace comes at a particularly fraught time. The lead article in the most recent issue of Foreign Affairs magazine is entitled “World of War”. In it, Mark Karlin, of SAIS and Brookings, writes “. . . an age of comprehensive conflict has begun. . . . What the world is witnessing today is . . . ‘total war’ in which combatants draw on the vast resources, mobilized their societies , prioritized warfare over all other state activities, attack a broad variety of targets, and reshape their economies and those of other countries.”

This is in counterpoint to the idea of continuation of what historians call the period in which we are said to be living, “the Long Peace”, the 80 years lasting from 1945 up to the present in which there has been no direct conflict between the world’s major powers, with the result that there has not been another world war. It has been an uneasy peace, including the US-Soviet nuclear standoff that ended with the collapse of the Soviet Union in 1991, and a US relationship with China that varied from exclusion of China from the world trading system in the opening years of this period to the current reciprocal application by the two partners of an increasing level of restrictions on both exports and imports in their bilateral trade.

The Long Peace has been punctuated by several dangerous conflicts in progress and others where pressure is building up that could lead to active conflict. Russia’s armed invasion of Ukraine is about to begin its fourth year, having started on February 24, 2022. Hostilities in the Middle East which boiled over beginning with Hamas’ attack on Israeli civilians on October 7, 2023, brought about an Israeli response in which tens of thousands of noncombatant Palestinians lost their lives. Risks of armed conflict are many: a few days ago, a senior US admiral warned that Chinese war games could be used to mask an amphibious attempt to seize Taiwan. North Korea continues to test long range missiles. Houthis had recently closed commercial shipping through the Red Sea.  Iran is seeking to build its nuclear capabilities.

Despite the fact that the drums of war can be heard, world trade in goods and services hit an all-time record level of $33 trillion in 2024. Seventeenth century French liberal economist, Frederic Bastiat, stated “if goods don’t cross borders, soldiers will”. That may be, but is it equally true that “if trade crosses borders, soldiers will not do so”? That is not clear from the dismal picture painted for us by current events.

And yet there are some very good examples that lead us to conclude that those who saw trade contributing to peace were not mistaken. The founders of the world trading system constructed 80 years ago saw it as a foundation for the new peace following the tens of millions in two world wars. The European Common Market, now the European Union, was designed to cement the peace in Western Europe after a long history of bloodshed. The European peace project was extended eastward to encompass 27 member countries, and it intended to include Ukraine when peace is accomplished there. Peace is a primary mission of the African Continental Free Trade Agreement (AfCFTA) “to silence the guns” on that continent.

The role of trade in maintaining peace is also evident from instances in which the fraying of trade relations can threaten an existing peace. A recent clear example is that the negotiations between the United Kingdom and the EU over Brexit had to take care not to undermine the Good Friday Agreement upon which peace depends in Northern Ireland. Now, a rejection of the continuation of open trade among allies could undermine NATO. In North America, the threat by the US to impose tariffs despite the relatively recent negotiation of USMCA is part of the current deterioration of cross-border relations. Trade measures can either undergird peace or potentially wreck it.

The world trading system envisaged in the Havana Charter for the International Trade Organization (ITO) as a peace project was preserved by the GATT and the WTO. This was and is a peace project on global scale. It does not guarantee peace. That is absolutely clear from the fact that there is a shooting war between two WTO members, Russia and Ukraine. Other motivations can overwhelm the desire to preserve trading relations.

The rhetoric that accompanied the drafting of the ITO Charter and the founding of the WTO at Marrakech addressing the hope that the world trading system would foster peace tended to disappear in the three decades since the WTO was founded. It has been revived in a vitally important respect. That the WTO can bring economic growth that in turn can lead to greater stability and a chance at having peace was recognized by a group of fragile developing countries meeting at Buenos Aires on the side of the Eleventh WTO Ministerial Meeting in December 2017. Eight G7+ members associated with WTO accessions formed what they called the G7+ WTO Accessions Group as a sub-group of the larger G7+, an association of 20 fragile and conflict-affected (FCA) states. The eight consisted of three recently acceded members (Afghanistan, Liberia and Yemen) and five then acceding governments Comoros, now a WTO member, Sao Tome and Principe, Somalia, South Sudan and Timor-Leste, also now a WTO member. In January 2019, the Group accepted Sudan (also an acceding government) as its ninth member.

Importantly, forming this Group gave a voice to countries that had first-hand experience with conflict and the need for trade to underwrite stability and thereby support their effort for peace. The participants understood the needs and challenges of conflict affected countries.

In helping least developed countries become members of the WTO, the G7+ Accessions Group is following in the footsteps of the founders of the multilateral trading system and the European Union. They are acting on their faith that raising the standard of living of the peoples through the integration of their economies into the world trading system will give them needed economic and political stability to sustain peace. This is not just a theoretical construct. It comes from a pragmatism that has historically characterized the world of trade negotiators. All WTO members wish them success.