Foreign relations and foreign trade relations have become synchronous with each other, you can only establish good trade relations with a country if you have good foreign relations, but that’s not true in all cases for example India china relation, India china relations cannot be considered good but there trade relation is top-notch, both countries are doing business with each other. In India-China relations India is in a trade deficit position, which means we are importing more than we export, which shows our dependency. In today’s article, we will discuss how countries’ relations can affect International trade relations, how sometimes political agenda is set aside to maintain business relations, and how trade can be used to maintain peace around the world.
How Countries’ Relations Affect International Trade Relations: Personal relations can facilitate trade in a much better way, that’s why India is now developing personal relations with most countries and is increasing its reach. Be it the Prime Minister’s recent visit to Austria or including Africa’s countries in BRICS, all these decisions have an impact on international trade. These relations can help you to get reduced tariffs, streamlined customs procedures, and increased investment opportunities, all of which benefit businesses and consumers in both countries. For example India and UAE recent developments. India’s strong relationship with the United Arab Emirates (UAE) has made it easier for Indian businesses to operate in the UAE.
And if personal relations are strained it can lead to trade barriers like increased tariffs, import bans, and stricter regulations. The best example is border tensions between India and China have led to calls for boycotts of Chinese products in India.
Personal relations can also impact trade indirectly. For example, a war between two countries will likely disrupt trade flows in the region, even if neighboring countries are not directly involved. Friends of both countries will automatically go against each other and will hesitate to trust completely.
How sometimes political agenda is set aside to maintain the business relation
Business is something that cannot be done with just feelings, you have to keep aside your emotions and decide in favor of profits. The best example of this is the India-China relationship. Despite political tensions, India and China have stable economic relations,
Both countries are Economically dependent on each other. China is India’s largest trading partner, and India is an important market for Chinese goods. Disrupting trade would cause enough damage on both sides. That’s why both have focused on Growth instead of enmity. Though India is trying to make its dependency less but still cutting off relations is not considered profitable. There is a limitation to this approach, we cannot trust it completely, and it can not be sustained for the long term but still, it’s better than going into a war to solve border issues.
How trade can be used to maintain peace around the world: In today’s world trade is a powerful tool and it can be used for maintaining international peace, but it’s not a magic bullet. Trade makes countries interdependent economically. If countries need each other for goods and services, then war is in nobody’s interest. Trade gets disrupted, and everyone loses. India and China – despite political tensions between the two, their economic ties with each other are a strong deterrent to war.
Equitable and mutually rewarding trade generates in the countries concerned a sense of collaboration and shared prosperity. It is in the interest of countries—to benefit from each other’s economies—to ensure that friendly and peaceful relations prevail to secure the guarantee of trade flows in the future.
Trade develops communication channels between countries. Regularly operating businesses, diplomats, and citizens are continually in touch and understanding each other to the point of trust. Routine interaction allows them to settle disputes amicably.
The concentration on shared economic gains to be derived from trade encourages countries to cooperate and work out solutions to issues likely to affect the flow of trade.
The best example of trade foster peace is
The European Union The process of the European Union is a sterling example of how trade can lead to peace. Its economically integrated member states today, pledged to peaceful resolution of conflicts, were erstwhile rivals. Same goes for
North American Free Trade Agreement (NAFTA)/USMCA: This free trade agreement between these three trading partners from the US, Canada, and Mexico has contributed broadly toward regional stability and economic growth for the three states.
As said earlier trade is not a magic bullet, Trade wars can erupt over too little of something- things like oil or water, leading to conflict rather than peaceful cooperation.
Deep-rooted political differences, historical grievances, or ideological clashes can override economic interests and therefore lead to war even if trade relations have already been established. (The recent Russia-Ukraine war has brought this point across).If coalition advice for peace could flow in through the channel of economic interdependence, communication, and cooperation, then only trade can become effective. This is most likely to work when aligned with robust international institutions, diplomacy, and tough efforts at mitigating latent political issues.
