Turku School of Economics,
University of Turku,
Global trade has been facing vast changes through the past two decades: the opening up of new economies in Eastern Europe, Asia, and South-America and the expansion of free trade and open market policies together with technological advances have enabled the development of wide business ecosystems and supply chains. In addition, the new emerging economies have grown rapidly to shake the traditional global economic powers and question the liberal trade policy principles as well as global structures built to support and enforce global trade.
The developments of the US and China relations have reverberated across the globe influencing multiple key actors through the wide ecosystems and supply chains, while the protectionist measures used have greatly influenced the trade and income of both of these nations. In Europe, Brexit has shaken the united lines of the EU and brought up new insecurities for businesses regarding the development of EU – UK relations as the trade agreement between the two parties is currently negotiated. In addition, the role of WTO as a means to enforce and govern global trade has been questioned and the need for restructuring is clear.
These changes were already pushing global trade and its policy approaches to find a new direction. Now, the unfolding Corona pandemic has disrupted global economy as well as multiple business and social structures (read an interesting series of blog posts by Milla Wirén from Turku School of Economics’ Disruption Lab). The economic influences of this pandemic are unknown. However, they are expected to be severe as the policy action taken to tackle the virus are strong including social isolation, closing national and regional borders, and closing down business activities except for necessities, including grocery stores and pharmacies. All of these actions have direct economic influences. If these restrictions continue long enough, they will slow down or even paralyze global trade and investments, and have far-reaching consequences. This turmoil has played into the hands of the increased protectionist actions. The globalized world with open economies and free trade makes our systems fragile in the face of crises like this. Thus, the question remains to which direction will the disruption caused by the Corona pandemic push the emerging change? Will we follow the protectionist path, find a new common ground to restructure global governance, or will something different emerge?
In addition to the sudden disruption due to the Corona pandemic, other global pressures outside the economic sphere have been pushing the need for changes for trade policy. Among the main influences are climate change and technological development, including AI. Climate change, most significantly the acute need to stop the overconsumption of our limited natural resources and cease polluting our planet, has questioned the possibility of continuous growth. Continuous growth has historically driven economic growth as well as the growth of welfare in developed countries. However, it seems that now we need to find other ways to “live happily ever after” than being able to produce, trade, and consume increasing amounts of goods. In contrast, technological development has created opportunities to change the game. For example, if cheap labor is no longer needed in factories as production is done by robots location of the production will be driven by different criteria as for now, or if large quantities of goods can be produced locally on demand through 3D printing. This would also diminish the need for long transportation chains and worldwide business ecosystems at least in the form we currently understand them. Tackling these changes requires global co-operation and openness, as like viruses, neither pollutions nor changes in the atmosphere recognize national borders.
However, although the world seems to be borderless for viruses and pollution, it is not so for numerous other core elements of current societies. For example people, hygiene supplies, money and to some extent, information still knows borders. For the past few decades, global trade has been founded on an agreement-based governance system constituted of multiple levels ranging from global to regional and bilateral. This has enabled an exceptionally long period of peace on the global scale. Thus, the decisions we make to tackle the rising issues challenging our current governance systems have wide impact on development, greatly exceeding economic influences.
These challenges cannot be solved by a single nation, company, field of science, or technology. The challenges themselves are complex, connecting multiple nations and crossing multiple disciplines and industrial fields. Thus, looking for the answers requires multidisciplinary approaches. Therefore, future trade policy experts need to be able to identify trade as a part of the society, and pay attention to the influences trade developments might have on other aspects of our social order.
Similarly, future business managers will need the ability to understand wide-ranging changes in the business environment. This will heighten the importance of managers’ capabilities to estimate the consequences of these changes in their businesses, as well as to identify and create business opportunities. Both business students and business practitioners need to understand the meaning and consequences of changing trade policy.
At the Pan-European Institute, we launched a project titled Trade policy experts and know-how to Finland (Kauppapolitiikan osaajia ja osaamista Suomeen, KAPPAS) in November 2019. The KAPPAS -project is a three year initiative (November 2019 – October 2022) funded by a grant from The Union of Industries and Employers Foundation (Teollisuuden ja Työnantajain Keskusliiton -säätiö, TT). The aim of the project is to increase the trade policy related expertise of economics students and business actors. This will be done in active cooperation with expert organizations such as the Finnish Foreign Ministry and the Confederation of Finnish Industries.
During the first year of the project we will develop a new course for our master’s degree students at Turku School of Economics focusing on bridging trade policy and international business. In addition, we are working on establishing a multidisciplinary study module on trade policy that would combine courses from multiple disciplines and faculties related to trade policy theme. To build the expertise of the business sector, we will organize networking events that gather business actors, associations, researchers and trade policy experts together to discuss current topics. The first event will be held in November 2020 in Helsinki (postponed from June due to Corona pandemic). During the project, there will be three of these events, and additional round table discussions. In addition, during the project we will build further research projects on trade policy and edit a trade policy themed book, as well as this special BRE issue on Trade Policy.
It seems, that we are facing increasingly rapid changes that influence trade, economy and societies on global scale. Therefore, we need trade policy experts and business leaders that understand global trade as a part of the society, and have wide array of tools and networks to tackle the challenges they face.
Expert article 2752