Marília Maciel   19 Mar 2018   Diplo Blog, Internet Governance

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Liberal trade has been challenged by a surge of protectionist measures in many parts of the world, including the United States and Europe. Recently, US President Donald Trump, wrote another chapter in this saga, when he decided to impose tariffs of 25% on steel imports and import taxes of 10% on aluminium. Although the measure is not unprecedented in US history, this decision has a more decisive significance for two reasons.

The first is related to the argument that justified the introduction of the measure. Trump refers to Section 232 of the Trade Expansion Act of 1962, which provides for action based on a threat to national security. The rationale is that America’s armed forces and other critical industries need a domestic supply of steel, and domestic production is allegedly being threatened by imports. The government also argues that the measure would fall under Article XXI of the World Trade Organization (WTO) treaty, a clause that allows a security-based exception to the principle of non-discrimination in the General Agreement on Tariffs and Trade (GATT). The article authorises a member to raise any tariffs ‘it considers necessary for the protection of its essential security interests.’

The national security argument has  rarely been invoked in the history of the WTO, and the justification presented by the Trump administration has been called ‘a sham’: most US steel imports comes from allies, such as the European Union, Canada, and South Korea, not from an economic or military rival. Invoking and misusing Article XXI – which is broad and leaves room for abuse – could lead to retaliation and de-stabilisation of the multilateral trading system. In addition, this decision may reveal a second, equally worrying trend.      

 

Beware the trade wars!

Over the past few decades, the security agenda has broadened beyond the state and military realms to encompass a range of new issues, from the environment to food security. ‘Securitisation’ is the process of socially constructing and re-defining the boundaries of security. In a nutshell, if relevant actors manage to convince others that an issue poses an existential threat to the object that they are trying to secure (e.g. the state, society, identity), then this issue moves from a common political issue to become a security issue.

This change in status has profound consequences: If an issue is successfully labelled as a security issue, then ‘all means necessary’ can be employed to curb the threat. Extraordinary measures create a ‘state of exception’ in which norms are bent or simply ignored altogether. Associating trade and national security in an undue manner could weaken the norms-based trading system. Without legal norms, trade will follow the rule of the largest, fittest, and more powerful states, to the detriment of a balanced global economic order.  

The association between trade and national security not only happens explicitly through political decisions, such as the one taken by the US government, it also happens implicitly and surreptitiously in the language that is being used to refer to outstanding cases of protectionism. The Economist warns of a looming ‘global trade war’ and calls Trump’s decision to impose tariffs a ‘massive attack’. The cover of the magazine depicts Trump’s face in the shape of a grenade ready to explode. Likewise, the World Economic Forum (WEF) assesses the risks of a ‘US trade war’.

By design or by accident, the use of military language by actors that exert an influence over public opinion – coupled with the misuse of national security exceptions – could pave the way for trade issues to be discussed under a security key, in which the national interest is the pied piper, and ‘anything goes’ to curb what is perceived as a national threat.

 

Trade policies and cybersecurity

The interplay between security and trade is happening in multiple ways, frequently away from the spotlight that follows Trump around. At the WTO, cybersecurity is an increasingly relevant topic. On the one hand, cybersecurity is regarded as a precondition for the growth of e-commerce. The development of national norms and frameworks of co-operation to fight cybercrime are constantly highlighted. On the other hand, the organisation is being used as a forum to question national cyber regulations that would impact trade. The USA has tabled two communications, raising concerns over China’s cybersecurity law (S/C/W/374), and expressing concerns over aspects of a national Chinese Regulation (S/C/W/37), which would allegedly create significant new restrictions for cross-border service suppliers, representing disrespect to Chinese commitments under the General Agreement on Tariffs and Services (GATS).

At national level, restrictions to trade have been put in place as a way of promoting a safer cyber environment. Cybersecurity is a frequent motivation for governmental authorities to impose limits on the acquisition of national businesses by foreign actors, for example. Data localisation provisions have also been enacted, some of them with the aim of protecting data from being unduly tapped into (e.g. sensitive governmental information), and to help fostering the development of national technology, such as data centres and cloud computing. Although some restrictions are guided by the pursuit of public policy objectives, their aggregated effect on the economy and on the architecture of the Internet is yet to be understood.

Perhaps the increasing interdependence of topics is the byproduct of a complex world. However, trade issues have always had a special place in liberal thinking: the growing of commercial ties has been believed to enhance chances for peace and stability. The association between trade and security should be made with caution, avoiding securitisation trends that could turn trade into a hostage of zero-sum games and power-based approaches to world politics.

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