Trade not just globalised but now weaponised : S. Jaishankar

Speaking at the Kautilya Economic Conclave here, the External Affairs Minister stated that the conflicts in Ukraine and West Asia have shifted the focus of global politics away from crucial issues

Amid rising protectionist measures in India and the West against the rapid surge of Chinese imports in crucial sectors, External Affairs Minister S. Jaishankar said on Sunday that one of the impacts of globalisation over the past 25 years has been job losses and dissatisfaction with the quality of life in many societies, as trade has not only been globalised but also weaponised.

Speaking at the Kautilya Economic Conclave here, the minister stated that the conflicts in Ukraine and West Asia have shifted the focus of global politics away from crucial issues such as reforms of Multilateral Development Banks (MDBs), climate change, and the India–Middle East–Europe Economic Corridor (IMEC), which was conceptualised during the G20 meeting in India last year.

• “On the one hand, the world is becoming more deeply globalised, with supply chains increasingly transnational. Hardly anything significant is made entirely in one country anymore, except perhaps in very large nations. This has led to increased interdependence. On the other hand, there is a social and political backlash against globalisation because the way it has been managed over the past 25 years has resulted in job losses and dissatisfaction with quality of life in many societies, which has, in turn, influenced politics,” Jaishankar said.

Rising protectionism:

• Jaishankar’s comments come a week after steep US tariffs on China took effect amid concerns that a fresh wave of Chinese products in clean energy and high-tech sectors – dubbed China Shock 2.0 – could cause job losses in several regions, including India. The first shock occurred when cheap Chinese goods flooded global markets following China’s entry into the WTO in 2001, resulting in job losses worldwide.
• In response to protective measures abroad, India has also increased anti-subsidy measures on Chinese products. In 2024 alone, India imposed over 30 anti-dumping measures against China, the highest number for any country. The targeted products include industrial items such as plastic processing machines, vacuum-insulated flasks, welded stainless steel pipes and tubes, soft ferrite cores, and industrial laser machines, among others.
• Indian businesses seeking multiple extensions of anti-dumping duties argue that China is not a market economy and harms Indian industries by employing predatory methods to eliminate competition.
• “Trade is not just globalised; it’s also weaponized. When trade and finance are weaponized, countries take defensive measures. This is one of the reasons for protectionism or, at the very least, for caution regarding supply chains. National security has become a pervasive lens through which economic transactions are now viewed. As economic transactions increasingly involve technology, this national security filter will only grow stronger,” Jaishankar said.
• He added that countries are willing to compromise economic efficiency for the sake of national security, privacy protection, and, in some cases, keeping jobs at home, as the narrative of job losses is a powerful one in many regions.
• “So, in essence, the realities of globalisation are going to clash with the forces of protectionism,” he said.

IMEC & MDB reforms:

• Jaishankar also reiterated that the conflicts in Ukraine and West Asia have diverted global political attention from critical issues such as MDB reforms and climate change.
• “Tomorrow marks exactly a year since the terrorist attacks on Israel, and as a result, the focus we expected on the IMEC has not materialised. However, this does not mean that the IMEC is dead, discarded, or even shelved. I’ve visited both Saudi Arabia and the UAE, and we currently have ongoing projects with the UAE on IMEC, as well as feasibility studies initiated with Saudi Arabia,” he said.
• He further noted that with rising risks due to the proliferation of various technologies and other factors, the case for IMEC has only grown stronger, and India expects the development of the corridor to accelerate.
• “The reality is that in global politics, there is limited bandwidth. One or two issues tend to dominate the agenda. Over the past two and a half years, it has been Ukraine, and over the past year, the Middle East. During my meetings with G20 colleagues at the UN General Assembly (UNGA), I have to admit that the expected push for MDB reforms was lacking. Instead, the Middle East was the top priority, followed by Ukraine, and even climate change has dropped in importance,” Jaishankar said.

About IMEC:

The India–Middle East–Europe Economic Corridor (IMEC) is a landmark infrastructure initiative announced during the G20 summit in September 2023. This project aims to strengthen trade, energy, and digital connectivity between India, the Middle East, and Europe, forming a strategic economic corridor that could reshape global trade routes.

Key Objectives of IMEC:

1. Boost Trade and Connectivity: IMEC is designed to facilitate smoother, faster, and more efficient trade between Asia, the Middle East, and Europe. It provides an alternative to existing sea routes, significantly reducing transportation time for goods.
2. Energy Security: The corridor will serve as a vital channel for energy transfers, especially for oil and natural gas, between energy-rich Middle Eastern nations and energy-importing regions like India and Europe.
3. Digital Connectivity: Alongside physical infrastructure, IMEC aims to enhance digital infrastructure, enabling high-speed internet and data flows across the regions it connects.

Structure of the IMEC:

The corridor will consist of two main routes:

• Eastern Corridor: Linking India to the Middle East.
• Northern Corridor: Connecting the Middle East to Europe.

The IMEC is planned to be a combination of railways, shipping lanes, and road networks, creating a multi-modal transport network.

Countries Involved:

• India: As one of the key initiators and participants, India sees IMEC as a way to enhance trade with Europe while also boosting energy cooperation with Middle Eastern countries.
• Middle Eastern Countries: Key participants include Saudi Arabia, the United Arab Emirates, and other Gulf nations that will play a crucial role in connecting India to Europe and providing energy exports.
• Europe: European Union countries will benefit from improved access to Middle Eastern energy supplies and Indian markets. Italy and other Mediterranean nations are expected to play central roles as gateways to the European market.

The IMEC project is being supported by the United States and the European Union, further highlighting its global significance.

Key Components of IMEC:

1. Rail Network: The IMEC will establish an extensive rail network across the Middle East, connecting ports in India to key logistics hubs in the region, and then extending this connection to Europe.
2. Shipping Routes: Modern shipping lanes will be developed to connect Indian and Middle Eastern ports, reducing shipping time and costs.
3. Energy Pipelines: The project may include the construction of energy pipelines that could transport oil and natural gas between Middle Eastern suppliers and European consumers.
4. Fiber Optic Cables: IMEC will also focus on laying down high-speed internet cables to boost digital connectivity between the regions, facilitating data exchange, e-commerce, and technological collaboration.

Trade is not just globalized; it’s also weaponized:

The phrase “Trade is not just globalized; it’s also weaponized” refers to the strategic use of trade policies and economic measures by nations as tools to achieve geopolitical objectives. In the modern global economy, trade relationships extend beyond just commerce and economic interdependence—they can be used as leverage to exert pressure, influence, or even weaken other nations.

1. Economic Sanctions: Countries impose sanctions to punish or pressure other nations. These can include trade restrictions, financial penalties, or embargoes. For instance, the U.S. and European Union have used sanctions against Russia to weaken its economy during the Ukraine conflict.
2. Tariffs and Trade Barriers: By imposing high tariffs on imports, a country can make foreign goods less competitive, hurting the economies of exporting nations. The U.S.-China trade war saw both countries weaponizing tariffs to target each other’s key industries.
3. Control over Supply Chains: Nations may control key global supply chains to gain an upper hand. For example, China’s dominance in rare earth minerals gives it leverage over industries reliant on these materials for manufacturing technologies.
4. Technology Export Controls: Countries may restrict the export of advanced technologies or components, limiting the access of other nations to critical industries like defense, communication, and AI. This was seen in the U.S. blocking the export of semiconductor technology to China.
5. Resource Diplomacy: Nations rich in natural resources, such as oil or gas, may manipulate the supply of these resources as a geopolitical weapon. Russia, for instance, has used its gas supplies as leverage over Europe.
6. Currency Manipulation: Nations may engage in competitive devaluation or currency manipulation to gain an unfair trade advantage by making their exports cheaper.

Weaponized trade has consequences for global stability, often leading to economic uncertainty, disrupted global supply chains, and escalated geopolitical tensions. While trade liberalization and globalization sought to create a more interconnected and peaceful world, the weaponization of trade reflects the increasing use of economic measures as tools of power politics.