Following his visit to Germany’s Konrad Adenauer Stiftung, Weaponised Trade team member Markus Wagner has published this thought piece in the KAS publication Periscope.

The concept of Weaponised Trade is a useful concept within the current global geopolitical environment. The existing literature has not clearly defined the consequences of Weaponised Trade. Understanding the consequences of Weaponised Trade and how the concept has evolved in recent years helps governments to develop new and strengthen existing strategies to mitigate the effects and potentially prevent future attempts to use trade as a potent weapon.

Because Weaponised Trade comes in a range of guises, there is no “one size fits all” response to the challenge. Governments have responded to instances of Weaponised Trade through various means. The USA and China have responded rather aggressively to Weaponised Trade with further Weaponised Trade measures. Middle powers such as Korea and Australia have deemed it more fruitful to respond with more defensive measures, seeking to reduce their trade dependence on China by diversifying their import and export markets. Some countries have commenced proceedings at the WTO.

COVID-19 and the war in Ukraine have exposed the vulnerability of supply chains and have shown the impact of their disruption on governments but also people’s lives. Governments have responded by attempting to re-shore or “friendshore” goods and services that have for a long time been taken for granted and are now seen as critical in times of crisis. These include pharmaceuticals, personal protective equipment, gas as well as precursor materials such as agricultural production chemicals and rare earths.

Given recent developments, these are rational responses by government actors. There is however a real risk that the already existing siloing of international relations in general, and international economic relations in particular, will continue to accelerate. This will have detrimental consequences not only for international relations but also the everyday lives of people around the world.