The Palgrave Encyclopedia of Imperialism and Anti-Imperialism

Living Edition
| Editors: Immanuel Ness, Zak Cope

Global Free Trade, Imperialism and International Trade Law

  • Donatella AlessandriniEmail author
Living reference work entry
DOI: https://doi.org/10.1007/978-3-319-91206-6_97-1

Keywords

Imperialism Capitalism Free trade Protectionism International trade law “Developing” countries GATT WTO Mega-treaties Trade imbalances Multipolarity Global value chains 

Introduction

In their 1953 Economic History Review article “The Imperialism of Free Trade,” historians John Gallagher and Ronald Robinson made two points that are still relevant for thinking about the relationship between global trade, imperialism, and international trade law. First, they emphasized the informal mechanisms that, alongside formal rule, ensured British expansion throughout the nineteenth century and, by doing so, they questioned the orthodox view that divided the century in periods of imperialism and anti-imperialism, emphasizing continuities instead. Secondly, they articulated a critique of the link between free trade and anti-imperialism that was thought to characterize this period, thereby challenging the conventional view according to which “free” trade could dispense with Empire. Taking the cue from this seminal article, the first section of this entry engages with the Empire of Free Trade, highlighting the role international law mechanisms and free trade ideology played in ensuring commercial expansion; the second analyzes this role in the context of the post-war multilateral trading system, focusing on the mismatch between free trade rhetoric and actual trade practice; and the third brings the preceding analysis to bear on current international trade relations.

The Empire of Free Trade

The “Imperialism of Free Trade” was an influential intervention in the debate about nineteenth-century theories of imperialism. Despite the focus on Britain, it has since generated broader discussions about the relationship between capitalism, imperialism, and free trade. In it, Gallagher and Robinson took issue with the view that, unlike the early and late parts of the nineteenth century – seen as the apex of British imperialism – the mid-Victorian period had been “indifferent” toward Empire. Between 1841 and 1851 alone, they pointed out Britain had directly occupied or annexed “New Zealand, the Gold Coast, Labuan, Natal, the Punjab, Sind and Hong Kong.” In the 20 years that followed, it asserted control over “Berar, Oudh, Lower Burma and Kowloon, over Lagos and the neighbourhood of Sierra Leone, over Basutoland, Griqualand and the Transvaal; and new colonies were established in Queensland and British Columbia” (1953, pp. 2–3). The myth of “indifference” surrounding this period becomes more difficult to sustain if the analysis of imperialism goes beyond these examples of direct rule (i.e., annexation or occupation) to include techniques of political and commercial control, for instance, those exercised through paramountcies (in Malaya centered on Singapore) and suzerainties (in West Africa) and, importantly, through so-called free trade and friendship treaties. The latter in particular were widely used to achieve commercial expansion: between 1836 and 1861, treaties were signed with Persia, Turkey, and Japan, among other states, enabling Britain to conduct trade with these regions (1953, p. 3). Often referred to as “unequal treaties” because of the asymmetry in power relations, these agreements contained unequal obligations for the parties involved. For instance, the Treaty of Nanking signed as a result of the Opium War required China to cede Hong Kong to Britain and open five Chinese ports for trade, while also establishing a favorable tariff regime for British goods (Anghie 1999, pp. 36–37). Gallagher and Robinson’s point was, therefore, that throughout the nineteenth century, the British government had ensured the protection or acquisition of commercial interests, by “informal means if possible, or by formal means if necessary” (1953, p. 13).

This combination of formal and informal mechanisms was however not new, nor did it pertain exclusively to nineteenth-century British imperialism. It was inextricably linked to processes of capital accumulation, which in turn relied on the construction of powerful racial hierarchies enabled by, among other means, international law. As critical legal scholars have pointed out, international treaties and doctrines have been powerful techniques of commercial expansion and racialization since at least the sixteenth century (Knox 2016). Francisco de Vitoria, the famous Spanish theologian and jurist, asserted the “natural law” right to freely trade, forcefully in the event this right was denied by another country. As gold was “discovered” in America in the fifteenth century, and the feudal law of the time applied only to members and enemies of the Respublica Christiana, a different legal regime was needed to discipline relations with the native populations. According to Vitoria, the natives possessed “reason” but were also governed by a law of nations (jus gentium) which included the right to trade and the right to evangelize; and denying such rights, which were premised on the superiority of Christian civilization, could give rise to “just war.” The regime of early colonialism led by the Spanish was to give way in the seventeenth century to the mercantilist system led by the Dutch and the British (Chimni 1993). This system was centered around trade monopolies exercised not by means of formal control but through trading companies. The role played by legal doctrines to legitimate this regime was, again, crucial. Thus, writing in the seventeenth century, Hugo Grotius developed the theory according to which the sea was open to the trade of all nations. The doctrine of Mare Liberum was his response to a request by the then Dutch United East India company for a legal opinion that would grant them the right to trade in the East Indies against Portuguese claims of exclusive rights (Esmeir 2017, p. 83).

Mare Liberum therefore points to the role that trading companies have played in the development of imperial regimes as well as to their influence over the evolution of international law. Companies were granted the right to trade, make peace and war, as well as the power to exercise sovereign rights over non-European peoples, which included profiting from the slave trade and the sale of slave-produced goods (Knox 2016, p. 14); but whereas in the sixteenth and seventeenth centuries they were mainly concerned with making profits, in the eighteenth and nineteenth centuries they became increasingly involved in acquiring and governing territories (Anghie 1999, pp. 32–33). This shift reflected, at least in part, the changing circumstances of capital accumulation: as the British industrial revolution revealed the need for colonies to absorb the “flood of products pouring out of the new factories” (Chimni 1993, p. 228), direct control became the preferred means for transforming their societies into markets for manufactured goods. Positivist international lawyers enabled this enterprise by crafting the standard of “civilization” which, relying on ideas of racial inferiority, granted some non-European territories legal personality (particularly in order to sign treaties) depending on whether or not they were deemed to meet European social norms, including those which guaranteed the rights of property and the freedom of commerce (Koskenniemi 2002; Anghie 2005). Therefore, the relationship between formal and informal control as well as that between state and corporate interests is complex and has shifted over time, but it is not something limited to nineteenth-century British imperialism.

Having called into question the idea that the middle part of the nineteenth century was a period of anti-imperialism in British history, the second point Gallagher and Robinson made was about the mismatch between governments’ declarations in relation to free trade and actual policies, a point which enabled them to challenge the conventional view according to which free trade beliefs could dispense with imperialist attitudes. They noted that it was during the Gladstone government – the liberal government of anti-imperialist reason – that Britain “annexed Basutoland in 1868 and Griqualand West in 1871” (1953, p. 3). But their target was not only policy-makers and the Manchester School who had sought to make free trade principles the basis of government policy. It was also those who had seen imperialism as the highest stage of capitalism, applying historically to the period after 1880. They were referring to the exponents of the classic theories of imperialism and in particular to Hobson and Lenin who, they claimed, had seen late-Victorian imperialism as a significant shift in the nature of British expansion and a “sharp deviation” from the static liberalism of the middle of the century (1953, p. 2). Gallagher and Robinson’s argument was that, despite their differences with the Manchester School, the critics of imperialism shared the view “that mid-Victorian ‘indifference’ and late-Victorian ‘enthusiasm’ for empire were directly related to the rise and decline in free-trade beliefs” (ibid.). The views of classic theorists of imperialism (e.g., Hilferding, Luxemburg, Bukharin, Lenin) were much more varied than Gallagher and Robinson acknowledged. However, the important point they made is that, instead of a correspondence between free trade beliefs and anti-imperialism, a mismatch between free trade thinking and actual trade practice had characterized government policy in this period. Indeed the appropriate slogan for Free Trade Empire should not be “trade not rule” but rather “trade with informal control if possible; trade with rule when necessary” (1953, p. 13). In other words, free trade theory could not explain government policy; instead, commercial expansion was at issue when free trade was invoked as the basis of government action.

Now, the classic theory of “free trade” appears only in the eighteenth century when French physiocrats and British classical political economists reject the economic assumptions of the mercantilist system that had dominated over the past two centuries, posing instead the universal applicability and desirability of what were to become the twin pillars of free trade: international specialization (Smith 1776) and comparative advantage (Ricardo 1817). According to these principles, provided each country specializes in the production of the goods it can produce more efficiently (i.e., at a lower cost), and exchanges them for those it cannot produce efficiently at home, all countries benefit from trading with one another. In other words, international specialization guided by the “law” of comparative advantage promises to deliver world prosperity. There are however two observations scholars have made with regard to the global dimension and universal assumptions of the theory.

The first is that historically British trade policies followed free trade prescriptions at a particular point in time and only to a very limited extent. The system of protection practiced since Henry VIII was certainly a crucial factor in English industrialization (Chang 2007) as were the vast territories on which Britain exercised formal and informal control to extract raw materials. By the beginning of the nineteenth century, however, the protective legislation of other countries became an obstacle to further expansion of British trade: protection at home was unnecessary given the competitiveness achieved by English manufacturers, although it continued to benefit the landed aristocracy. However, protection of agricultural goods desired by the latter meant the price of labor in the manufacturing sector had to be kept at a certain level to allow workers to reproduce; so the repeal of English import duties on food and grains provided an opportunity to lower its cost through cheaper imports and consequently to further increase the competitiveness of manufacturing.

The unilateral repeal of the Corn Laws (i.e., tariffs on food and grains) in 1846, often portrayed as the foundational act of faith in free trade by a European government, can be seen in a different light: it came at the end of a struggle between the landed aristocracy and the industrial capitalists, with the latter prevailing. The intellectual superiority of free trade that was invoked at this point in time was also to affect a particular international division of labor, one favorable to British manufacturing interests. As Engels put it (1888, p. 2): “To convert all other countries to the gospel of Free Trade, and thus to create a world in which England was the great manufacturing centre, with all other countries for its independent agricultural districts, that was the next task before the English manufacturers and their mouthpieces, the political economists.” Such division of labor concerned the relationship with other European nations as well as that with the colonies. The Cobden-Chevalier treaty signed by Britain and France in 1860 to reduce tariffs between the two countries is one example of the bilateral treaties signed between European states, supposedly under the influence of free trade theory. These treaties however applied selectively to specific goods rather than across the board. Free trade theory was also invoked to persuade former colonies to continue specializing in the production and export of agricultural goods; but, as Chang (2007) points out, it was Hamilton’s rejection of free trade “wisdom” that paved the way to US industrialization. This possibility however was not open to other colonies, particularly those racialized as “uncivilized” and in need of assistance by European states (article 6 Berlin Conference, 1885). There is therefore very little evidence in the nineteenth century of free trade theory being “applied” uniformly, with all countries benefiting from trading with one another.

The second observation regards the conceptual apparatus of free trade and can be derived from Marx’s critique of classical political economy. Marx challenged both Say’s law, which excluded the possibility of excesses in the market as it assumed supply generated its own demand – thereby obliterating the role that colonial markets performed in absorbing such surpluses; and the principle of comparative advantage, which naturalized an unequal division of labor between countries. Both postulates can be found in Ricardo’s writings. Marx (1848, p. 1) focuses on the conditions that await the working class “under the reign of perfect Free Trade” and asks:

What is the natural normal price of the labor of, economically speaking, a working man? Ricardo replies, “Wages reduced to their minimum – their lowest level.” Labor is [therefore] a commodity as well as any other commodity … [With free trade] “that labour being equally a commodity, will equally sell at a cheaper price” – that you will have it for very little money indeed, just as you will have pepper and salt.

“Freedom” in “free trade” is therefore for Marx freedom of capital but his is not a defense of protectionism, which he describes as the “artificial means of manufacturing manufacturers” (1867, p. 921); it is only because of his assumption that free trade could lead to international labor solidarity that he declares himself in favor of free trade (1848). The broader point deriving from his analysis is that the pitting of free trade against protectionism is misleading: what is at stake is selective and strategic liberalization, with different capitals articulating different interests and exercising different pressures on governments. The power to enact strategic liberalization, however, clearly depended on the country at issue. As shown by the Berlin Conference convened in 1884–1885 to settle European rivalries over the so-called scramble for Africa, free trade and liberalization “meant nothing other than the naked exploitation of raw materials from the colonies” (Dembour and Stammers 2018, p. 174; see also Rodney 1972). And while the need for the colonies to keep their markets open to the trade of all nations was enshrined in the early legal instruments contemplating their future self-determination (articles 22 and 23, League of Nations, 1920), the imperial powers continued to protect their domestic markets.

The mismatch between free trade theory and government practice was to provide one important continuity between the Empire of Free Trade of the nineteenth century and the international trade relations of the twentieth century, although the old imperial regime was to give way to a new multilateral trade system.

Free Trade and the Post-war Multilateral Trading System

The assumptions about the universal beneficial effects of trade liberalization were refined at the beginning of the twentieth century when Ohlin (1933) introduced the neo-classical reformulation of free trade theory. For them, international trade arises not because of the differences in labor productivity alone (as Ricardo had thought) but because countries are “endowed” with different supplies of the factors of production, and different supplies entail different prices. The policy prescription of the “factor-endowment model” is that countries that are endowed with large supply of labor should specialize in the production of labor-intensive products, while countries rich in capital and/or technology should specialize in the production of capital and/or technology-intensive goods. The post-war international division of labor is said to be based on these “universal” principles, which are then supposed to have been translated into multilateral law with the entry into force of the General Agreement on Tariffs and Trade (GATT) in 1947. The GATT, which applied to trade in goods, did not eliminate tariffs and other forms of government intervention overnight but contained legally binding obligations for contracting parties to progressively reduce these measures. This commitment to liberalization was deemed necessary to enable “market prices” to reflect “real prices” as closely as possible, thereby facilitating the operations of comparative advantage on the world market.

The problem with this view of the post-war international trade system is that it cannot explain why sectors of major export interest to the soon-to-be independent countries – taking the logic of the factor endowment model at face value – were excluded from liberalization. Agriculture and, in the 1960s, textiles were not subject to the same liberalization rules that applied to manufacturing and remained largely protected in industrialized countries through tariffs, non-tariff measures, and subsidies. In other words, the free trade principles were said to inform that legal system could not, once again, explain trade practice. This differential treatment was enshrined in the law of the GATT despite the concerns articulated by the seven so-called “less developed” countries which denounced the double standards embodied by multilateral trade rules (Brown 1950). Expressed in part through arguments about the past of colonial exploitation that had shaped the state of their economies, these concerns were dismissed because the conference, it was claimed, dealt with purely “economic” matters, while “political” claims in relation to colonialism and “development” were best dealt with within the United Nations. Former colonies, however, gradually acquired independence (except Latin American countries which had become independent in the nineteenth century) and by the 1960s could count on their numerical superiority to articulate their discontent with the international trade system. “Developing” countries saw the GATT as “structurally” disadvantaging their trade for at least three reasons. First, GATT law treated industrial products differently from primary products, enabling protection of the latter and therefore curtailing the earnings newly independent countries were expected to make according to free trade theory. Secondly, as more and more independent countries came to specialize on raw materials and primary commodities (the other sector of export relevance to their economies), their prices started to plummet because of the “rigid” demand from industrialized countries, again compromising their export earnings. And finally, as GATT law did not allow developing countries to support their “infant” industries, their manufactures were unable to compete with goods from industrialized countries.

These concerns were articulated in terms of dependency, core-periphery, and world systems theories (e.g., Prebisch 1959; Frank 1969; Cardoso 1973; Amin 1976; Wallerstein 1979). Despite their differences, these schools placed their emphasis on the structural inequalities generated by the international economic system, of which the trading regime was an integral part. Their insight was that past colonial and capitalist relations had generated an international system in which those countries which were the centers of capital accumulation still relied on the economies of other countries to export goods and capital and extract cheap materials to sustain underconsumption or overproduction at home. This system in turn generated unequal relations concerning technological development and terms of trade (Fischer 2015). Raul Prebisch, one of the major exponents of the dependency school, became the first Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), around which many countries coalesced in the 1960s to demand structural change of the international system as a whole. UN resolutions such as the one on Permanent Sovereignty over Natural Resources, the Charter of Economic Rights and Duties of States, and the one launching the New International Economic Order extended beyond trade and contained proposals for reforming international economic relations, including those concerning foreign investment. Trade and investment law and policy were indeed seen as closely connected as they concerned the regulation of the movement of goods and capital. Originally, when the rules of the post-war international economic system were designed, the International Trade Organization (ITO) was meant to administer both trade and investment rules. It never came into force due to the refusal of the US Congress to ratify the Charter, and what was instead adopted was its chapter on trade, which then became the GATT.

The attempt to obtain multilateral rules favorable to foreign investors was however never abandoned. As Sornarajah has pointed out, the emerging international law on foreign investment, a creature of the post-colonial period, represented an attempt by capital exporting countries to argue for the existence of international norms and standards that allowed for the protection of foreign investors beyond the level provided by the domestic laws and courts of the newly independent states (Sornarajah 1994). These efforts were successful to an extent, particularly as bilateral investment treaties signed between capital importing and capital exporting countries contained high standards of protection, including the obligation to not discriminate between foreign and domestic investors. But they did not succeed at multilateral level as capital importing countries resisted both the call to adopt a Multilateral Agreement on Investment (MAI) that would have provided uniform high standards of treatment (Picciotto 1998); and also attempts made through arbitration to universalize these standards by deeming them to have acquired the status of customary international law (Sornarajah 1994).

Reforms were however achieved within the multilateral trade system. Developing countries’ engagement with the structural inequalities of the GATT resulted in their right to not reciprocate when industrialized countries made tariff concessions (GATT, Part IV). This exception to the reciprocity principle of the GATT prepared the ground for so-called Import Substitution Industrialization (ISI). While for some scholars non-reciprocity – together with the refusal to extend national treatment to foreign investors at the multilateral level – resulted in considerable levels of industrialization in the 1950s and 1960s (Rodrik 1997), others point to the fact these countries would have achieved better results had full liberalization been rolled out (Lal 1983). And the second argument seems to have prevailed in the 1990s when the neo-liberal revolution of the multilateral trade regime took place (Lang 2011).

There were however important material factors that played a role in such a transformation, including the end of Cold War with the respective spheres of geo-political influence (Faundez 2017); the debt crisis that many countries in the Global South which had borrowed from the United States experienced as a result of its decision to increase interest rates; the structural adjustment policies that were imposed to reschedule their debt requiring countries to liberalize their tariff regimes (Gowan 1999; Tan 2014); and, importantly, the loss of competitiveness that the old industrial centers (United States, Europe, and Japan) witnessed as newly industrialized countries took the lead in manufacturing. Indeed, if in 1972 North Western European countries and the United States were still responsible for over a half of world exports, the situation had changed greatly in the 1990s as Asia had increased its share “from about a sixth to a third, at the expense of all other continents” (Federico and Tena-Junguito 2018). The search for new comparative advantage in the three industrial centers was therefore on and it accelerated at the end of the 1980s: the loss of competitiveness in manufacturing, it was thought, could be compensated by the gains to be made through the liberalization of services and capital, on the one hand, and the protection of intellectual property rights (IPRs), particularly those on technological innovations, on the other (Preeg 1995).

The post-war multilateral trading system could not “liberate” the new comparative advantage because it only dealt with trade in goods – and mainly industrial goods given the fact that agriculture continued to be protected. The World Trade Organization (WTO) established in 1995 accomplished such an objective: it extended free trade universal assumptions to areas not covered by the GATT, including services, investment, and intellectual property rights. But there was also a qualitative change in the way the multilateral trade system was to approach the regulatory powers of members states. Whereas the GATT had embodied a system of negative regulation in that it prevented states from discriminating against foreign (industrial) goods for protectionist purposes, the WTO enacted a system of positive regulation (Ostry 1990) detailing what states had to do to comply with WTO norms and mandated standards such as those relating to sanitary and phytosanitary measures and so-called technical barriers to trade. As Lang (2011) has pointed out, “ideas,” particularly those articulated by trade lawyers, played a role in this transformation. Chief among these was the adoption and elevation of the world market as a “free” market, a space unencumbered by obstacles, particularly those posed by government regulation, that may disturb the conditions of “perfect” competition. The key move, he has argued, was “to define a barrier to trade primarily in terms of its economic effects, rather than its form or intention. In this approach, a governmental action constituted a barrier to trade if – and to the extent that – it ‘distorted’ the conditions of competition … as compared to the conditions of competition which would exist in an imagined ‘free’ market…” (2011, pp. 226–227).

The imagined “freedom” involved in this global market was, as Marx noticed with respect to “free” trade, that of capital: when the rules on the uniform protection of IPRs and the liberalization of services and investment are considered together with those requiring countries to adopt standards and regulations which had been set in the three industrial centers – the WTO emerges as a powerful legal structure, supported by an effective dispute settlement system, that provides ample support for foreign investors and their capital (Alessandrini 2010). And while the WTO agreement on services also provides for the liberalization of “natural persons,” the movement of labor, particularly unskilled labor, continues to be impeded, and agricultural goods continue to be highly protected in the Global North (Hunter 2003; Orford 2015).

The mismatch between free trade theory and practice is therefore a characteristic of the post-war multilateral trade system. This discrepancy is made possible, at least in part, because the economic and legal regimes of “developing” states continue to be regarded as “inadequate” or “deficient.” Within the GATT, developing countries’ economic policies, especially those relying on import substitution, were seen as failing to deliver higher volumes of trade, comparable to those of industrialized nations, and improved standards of living. With the WTO, the “lack” of appropriate institutional arrangements is considered responsible for the ineffective working of the markets so that in addition to the new standards (Intellectual Property standards, sanitary and phytosanitary standards, technical standards, and regulations) developing countries have to implement mechanisms such as the Trade Policy Review Mechanism (which monitors countries’ compliance with WTO norms) and the Integrated Framework (which provides assistance to those least developing countries that integrate trade in their growth plans) have been put in place to ensure that countries’ legal regimes are kept in check.

Global Free Trade and Imperial (Dis)continuities

What does this very limited excursus into the evolution of the post-war multilateral trade system say about imperialism and the ideology of free trade with which Gallagher and Robinson were concerned? By considering the complementarity between formal and informal rule, together with the mismatch between free trade theory and actual practice, they came to the conclusion that imperialism was “a sufficient political function of th[e] process of integrating new regions into the expanding economy; its character [being] largely decided by the various and changing relationships between the political and economic elements of expansion in any particular region and time” (1953, p. 5). There have been more recent attempts to engage with their work. Desai, for example, has called for an understanding of these complex and changing relationships in terms of “uneven and combined development” where past dominance by single powers, whether actual or attempted, is being replaced with a multipolar system in which powerful countries attempt to “maintain unevenness and resolve the contradictions of their capitalisms at the expense of weaker ones – but are less likely to have their way in the face of more numerous and stronger contenders and larger populations capable of aspiring to more than bare survival” (Desai 2013, p. 17).

The evolution of the post-war international trade system points to ceaseless attempts by leading trading powers to maintain economic dominance through a discourse about “free” trade and its universal validity and desirability which finds correspondence neither in the international trade law that is supposed to translate it nor in the practice of the multilateral trade system that is supposed to give it effect. In this sense there is continuity in the way “free” trade rhetoric is invoked as universally beneficial while selective trade interests are being pursued instead. From this angle “free” trade and international trade law can be seen as informal mechanisms of control and capitalist expansion which remain important areas of analysis for studies of imperialism (Gracott and Grady 2014) together with the way in which “development” discourses continue to order societies and prescribe courses of action in the name of a superior economic rationality (Anghie 2000). However, there are also arguments about discontinuities that merit attention.

It is, for instance, argued that the non-reciprocity developing countries obtained through their denunciation of the structural imbalances created by the GATT left them relatively free to not comply with its obligation to reduce tariffs on manufactured goods, even as industrialized countries reduced theirs. The claim is that GATT rules allowed for policy space, and scholars make a similar point with regard to the flexibilities built in the WTO system (Santos 2012). It is however important to acknowledge that this freedom was relative for, while developing countries were allowed to support their industries under the GATT, their exports continued to be hindered and the associated earnings continued to be compromised. Also, as soon as the conditions of competitiveness changed against “old” industrialized countries, charges of “unfair” trade practices were levied against newly industrialized countries, anti-dumping duties were imposed on their products to protect domestic markets, and non-reciprocity was eventually withdrawn in favor of an “equal” playing field that required all countries to reciprocate (Gibbs 1998, p. 3). This freedom was relative also because, while it became possible to talk about exceptions from the norm the multilateral trade system embodied (i.e., trade as a means to accumulate capital in order to “develop”), the norm itself was never open to challenge: countries could opt for more or less liberalization but they had to industrialize, grow, and “develop.” Indeed, “development” has played a crucial role alongside the myth of free trade in the transformation of entire societies in the wake of decolonization (see Escobar 1995; Pahuja 2013). And, finally, the policy space of individual states continues to be relative because regulatory autonomy is always affected by (trans)national arrangements that shape the global economy, not only trade and investment arrangements but also those concerning global finance, whether states are formally part of them or not (Linarelli et al. 2018).

Another argument concerns the shift in the global balance of power that is associated with the rise of China and other emerging economies, which are increasingly seen as leading sites of capital accumulation capable to resist the demands of powerful trading nations. For instance, during the first and only round of WTO negotiations, the Doha Round, developing countries have formed coalitions to block attempts by the United States and the European Union in particular to negotiate multilateral rules providing further protection to foreign investors (Faundez 2017). The inability to pursue this agenda at WTO level is seen by some as having contributed to the surge of mega-treaties like the suspended Transatlantic Trade and Investment Partnership (TTIP) – with which the United States and EU would have agreed to enhanced liberalization of trade and protection of foreign capital; and the now defunct Trans Pacific Partnership (TPP), with which the United States has attempted to get countries relying on access to its market to agree to higher standards of protection of foreign capital, thereby also trying to curb the rising influence of China (O’Donoghue and Tzouvala 2016). The US administration has abandoned such efforts in favor of direct trade action against China, allegedly because of her “unfair” trade practices, in a move that is reminiscent of US actions against newly independent countries in the 1980s (Gibbs 1998, p. 3). China has indeed become a permanent concern for leading agencies of capital accumulation. This seems to be confirmed by recent trade data which shows that: “Until the early 1990s, the fall in the share of ‘old rich’, from 56% to about 40% of world exports, was compensated by the relative increase of exports from the ‘other OECD’ countries – most notably Japan. [However] In the last 15 years, exports from the advanced countries decreased further to slightly over a third, the other OECD countries returned to a sixth, their level for the 1970s, and the ‘rest of Asia’ (mostly China) jumped to a quarter of the world market” (Federico and Tena-Junguito 2016, pp. 1–2).

The dominant position that former imperial states enjoyed within the multilateral trade system in the post-war period is thus no longer taken for granted; however, whether changes in trade imbalances conclusively point to a shift in the global balance of power is an open question. Scholars have, for instance, pointed out that, although capitalism has always been transnational, since the 1970s production has become increasingly more fragmented, taking place through global chains and networks, which makes it difficult to ascertain the value produced by each firm operating along these chains as well as that captured by states where these firms are supposed to reside (Hamilton and Gereffi 2009). From this standpoint conventional trade data, particularly that concerning trade balances, says very little about global power relations. One particular issue, as Fischer has argued, is that the current system of international accounts is still based on an outdated conception of the post-war world where capital flows were restricted and international trade consisted of national economies exchanging final goods and services with one another. As he points out: “The difficulties such a system faces in accounting for activities between a transnational parent company and its foreign affiliates, for instance, help to explain the dissonance between the deterioration of recorded US trade balances and the increased profitability of US companies operating in the global market” (2015, p. 721). These difficulties call into question the argument according to which shifts in geo-political power are reflected neatly into trade imbalances; at the same time, they point to the need for more thorough investigations into the ways in which economic value is produced and distributed along these chains to understand how commercial expansion and capital accumulation take place in the global economy.

The pitting of “free” trade against protectionism, which can be traced back to the nineteenth century and the debates Gallagher and Robinson examined, does little to address these complexities so to explore those “changing relationships between the political and economic elements of expansion” that give imperialist processes their character (1953, p. 5). The multilateral trade system appears today more complex and fragmented than it was in the post-war period. Taking a longer historic look at these changing relationships, however, reveals that “imperial formations” are constantly shifting and have never been “steady states” in the sense of being securely bounded, regular or well regulated within stable geographical boundaries (Stoler 2006, pp. 135–136). For its part, international trade law has provided and continues to provide a powerful mechanism through which these formations are articulated; it does not simply translate free trade theory into, acting as conduit for, international trade practice.

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Authors and Affiliations

  1. 1.Kent Law SchoolUniversity of KentCanterburyUK