Trading Relations between Canada and the US and Political Interventions - Coursework Example

Business Environment Analysis and Research - Political Trade Arguments Introduction Political intervention has become a common practice in today’s trade relations. Each international political dispute has its own arguments and justifications provided by parties at dispute. They use their rationale for justifying their intervention strategy in their bi-lateral and multi-lateral trade relations. Since each dispute has different background and justification, it would be very challenging to reject or accept any argument. However, if certain arguments insist that the uninterrupted trade relations would add acts of terrorism, international stability, then in that case, the justification would be valid. In the following parts of the essay, first an example of stable trade and political relations has been included in which Canada and the United States’ growing trade relations have been highlighted. It is followed by the trade relations between Iran and the United States have been mentioned, highlighting the type of political relation and its fallout on the past and existing trade relations. Before the conclusion part, Most Favoured Nation (MFN) status and current standoff between India and Pakistan have been discussed besides their arguments and justifications have also been evaluated. Trading Relations and Political Interventions International trade is dominated and influenced by strong international countries, such as the United States of America. It is a clear and established fact that the international trade, which is mainly run and administered by the operational framework of the World Trade Organization, between countries, regions and international independent trading partners is considerably affected by the bi-lateral relationship between the trading partners. For example, it has been observed that stable and strong bi-lateral, cultural and political relations play a very important role between the countries. Consequently, stable political relations enable them to develop and retain trade relationships as well. For example, the trade between Canada and the United States of America is considerably higher and growing as well because both countries have stable political relations whereas unfriendly political relations between the United States and Iran clearly demonstrates limited trade between these countries. In addition, due to the current animosity between the United States and Iran, bilateral trade between these two countries is not growing instead the United States has imposed bilateral trade restrictions and the same attitude is also reflected when Iran enters into bilateral trade agreements with other international countries (U.S. Department of State, 2013). Their relationships turned soar after the Iranian revolution in 1980 in which 52 American were made hostage and this point compelled the US authorities to break diplomatic ties with Iran and terminate all kinds of trade between both countries (U.S. Department of State, 2013). Furthermore, the United States believes that Iran supports terrorists in the Middle East; thereby, it is highly essential that it must be penalised for its pro-terrorism policy in the Middle East (U.S. Department of State, 2013). This point looks also justified as well. Historically, both (the United States and Iran) have uneven political and diplomatic relations particularly after 1980. And it is this issue that largely casts shadow on their trade relations as well. However, in the recent history between these countries, the relations have experienced a twist in which both countries aspire to work and cooperate closely against terrorist organization (Islamic State of Syria and Iraq [ISSI]). In other words, it is clearly established that the political stability is highly essential for mending trade ties and this situation is clearly demonstrated by the US-Iran relationship. Similarly, the relations between the United States and Russia are not favourable as well. Particularly, after the Ukraine situation, both countries have used trade sanctions as a way to show their discontent against each other. In order to punish Russia for its alleged role in Ukraine, the United States and the European Union have taken number of punitive measures against Russia including reducing reliance on the Russian gas used by various European countries (Korte, 2014). Additionally, the European Union sanctions disallow the European entities to provide financial loans to five specific Russian banks and the European nationals or entities are also not allowed to supply any equipment for Russian oil as well besides imposing travel ban on 24 close associates of Russian President from entering into European countries (Korte, 2014). Based on this specific situation, it can be highlighted that the provided justification for trade restrictions on Russia looks reasonable as the supporters of this argument clearly mention that Russia clearly violates the international law by interfering in the internal affairs of Ukraine and consequently this gross violation to the international law enables the international countries, including the United States and the European Union, to take appropriate political and economic measures for punishing Russia for its unjustified interference in the internal issues of Ukraine. World Trade Organisation (WTO) has developed Most Favoured Nation (MFN) status for all member countries; the article I of General Agreement of Trade and Tariff (i.e. GATT) necessitates that all member states should extend the MFN status to all WTO member status; within the context of GATT, the MFN status compels members to provide equal treatment to all imports of similar products and the country should apply non-discriminatory tariff policy in which any tariff concessions applied to one country should also be given unanimously to all other member countries (McBeth, p. 2010; Organisation for Economic Co-operation and Development, 2008). Promoting fair and competitive trade relations have been pursued through implementing and promoting the MFN status. Through this mechanism, the WTO member states will be in a position to avail a number of advantages including, tariff reduction and minimized trade and quota barriers and other restrictions that are imposed by other trading partner country. Numerous countries have signed and agreed to give MFN status to WTO member countries and other non-WTO trading partners as well. However, there are certain countries where political animosity is far deeper than the trade relations and no progress has been reported on trade and business relations. For example, Pakistan and India, two sub-continent nuclear states, have not been able to bypass the bad memory of past political history. Till this point of time, both countries have failed to mend their trade and business relations even after 66 years since their independence; instead they have fought three wars and have caused massive loss of human development, prosperity and other socio-economic factors. Till this point of time, both countries have strained border and territorial disputes, particularly on the issue of Kashmir, which is a disputed region between these two countries. For last two decades, an attempt has been underway to develop a consensus and extend an MFN status to India. However, all efforts have failed to generate any progress on this issue. For example, it has been highlighted that MFN status will enable India to export more than 6,800 items and both countries are endeavouring to decrease the impact of their strained relations by increasing trade to $6 billion in coming three years (Dawn, 2014). Based on this information, it can be deduced that both countries have strong potential for using trade to reduce poverty, unemployment, border tensions and bring economic progress and development in the region. However, so far unstable political relations have not enabled both countries to avail this opportunity. For example, Wall Street Journal (2014) highlights that Pakistan has further delays extending MFN status to India. In this regard, it is important to highlight that Pakistan has its own justification for its decisions relating to the MFN status issue with India; Pakistan insists that the issue of disputed Kashmir region should be amicably resolved through implementing the UN resolutions on this issue whereas India is insisting that trade ties should be developed first so as to decrease trust deficit and increase confidence building measures. The issue of Kashmir should be resolved first. In this regard, Pakistan is not saying that Kashmir should be handed over to Pakistan instead it is insisting that the Kashmir people should be given right to decide the fate of their future; this argument is mainly raised by the fact that India has been allegedly committing gross human rights violations in the disputed region of Kashmir. This looks a serious human rights issue and it would not be incorrect to say that trade relations are not above the human rights. Thereby, it is highly essential that India should resolve this issue and subsequently it should pursue trade ties with Pakistan. Conclusion Without stable political relations, trade will not grow but will always remain under the threat. The example of Canada-US trade relations clearly demonstrates that stable political relations are highly significant for maintaining steady and growing business and trade relations. On the other hand, the examples of Iran-US and Pakistan-India relations have highlighted that the trade relations will not increase or stabilise until the trading partners have stable political relations and positive historical relations as well. As both Pakistan and India have failed to construct stable political relations because of disputed Kashmir issue, their trade ties, including giving MFN status to India, have not remained stable throughout their history. And Pakistan’s justification is valid as it requires that the Kashmir issue should be resolved through implementing the UN resolutions on the issue. References Korte, G. (2014, September 11). U.S. to impose new sanctions on Russia, Obama says. USA Today. Retrieved: http://www.usatoday.com/story/news/politics/2014/09/11/new-russia-sanctions-obama-ukraine/15449511/ McBeth, A. (2010). International Crisis Management. New York, NY: Routledge. Organisation for Economic Co-operation and Development, (2008). OECD Glossary of Statistical Terms. Paris: OECD Publishing. Dawn, (2014, July 25). Pakistan working to give MFN status to India. Dawn.com. Retrieved: http://www.dawn.com/news/1121496 U.S. Department of State, (2013). U.S. Relations with Iran. U.S. Department of State. Retrieved: http://www.state.gov/r/pa/ei/bgn/5314.htm Wall Street Journal, (2014, April 1). Pakistan Delays Granting India Most-Favored-Nation Status. The Wall Street Journal. Retrieved: http://blogs.wsj.com/indiarealtime/2014/04/01/pakistan-delays-granting-india-most-favored-nation-status/ Read More