Technology & Trade
Commentary

Trade and Security: A Potent Force in 2015

in Program

In the U.S., North America, and beyond — 2015 could be a big year in trade. Sooner or later, that could make for a big impact on the global security environment.

That would not necessarily be good news. Recent history is replete with examples of how this trade-security nexus can undermine both the public security interest and legitimate commerce. Opaque, far-flung business networks spread across disparate regulatory environments have fed corruption and enabled trade-based money laundering. Front companies have duped unsuspecting manufacturers and government regulators into sales of sensitive equipment. And criminals and terrorists have trafficked in illicit goods ranging from weapons components to counterfeit t-shirts.

In the coming years, as investors and export-minded players in industry and governments ramp up overtures to the next wave of emerging markets, these challenges will multiply – and traditional countermeasures will only be further outpaced. It will be crucial to strengthen cross-border governance mechanisms and find more effective ways to harness the private sector’s expertise, resources, and reach. That in turn will require teeing up economic efficiency and enhanced security as mutually supportive goals when possible.

Increasingly, governments are taking heed of the trade-security nexus. Indeed, many of them now see an imperative – as well as an opportunity – to advance national security and economic competitiveness as complementary goals in their trade agendas.

In its new National Security Strategy, the Obama administration pledges to “make it easier for businesses of all sizes to expand their reach” through a range of regulatory cooperation initiatives pursued with private sector and international stakeholders. The administration is using a variety of tools to make good on that pledge – domestically, in the wider North American neighborhood, and beyond.

Domestically, a major priority is implementing a so-called “Single Window” through which U.S. exporters and importers can submit required documentation to government regulators. The varied technology platforms, data requirements, and administrative processes currently seen across agency systems have caused major inefficiencies for both government and industry. This month marks the one-year anniversary of an Obama administration executive order mandating the Single Window’s full deployment by December 2016.

The February 2014 executive order also improves the U.S. government’s internal coordination on trade facilitation and enforcement. More specifically, it codifies and elevates the role of the Border Interagency Executive Council, expanding its purview to include a number of important responsibilities related to both imports and exports.

Regionally, longstanding U.S.-Canada and U.S.-Mexico bilateral initiatives, as well as a maturing suite of trilateral projects, continue to integrate the continent’s economies and harmonize regulatory frameworks.

On the global level, 2015 will be the year that implementation of the World Trade Organization (WTO) Trade Facilitation Agreement begins in earnest. The pact mandates that countries set up “authorized operator” programs giving concrete benefits to exporters/importers whose internal management processes meet certain criteria. By distinguishing high-performing firms from the rest of the pack, these programs enable governments to better target oversight and enforcement. The competitive advantage created for participating firms is multiplied when countries align various aspects of their trade regulations.

Not coincidentally, other parts of the agreement advance international harmonization of key trade-related policies and programs. For instance, the pact would set a reasonable global baseline for streamlining government-industry and government-government exchanges of trade data, including protections for sensitive information.

Last, but certainly not least, are negotiations for two major free trade agreements known as the Transatlantic Trade and Investment Partnership (T-TIP) and Trans-Pacific Partnership (TPP). T-TIP would be a U.S.-E.U. agreement. TPP has taken shape in talks among the U.S. and eight other primary Asian-Pacific negotiating partners.

Many trade watchers think these issues stand to be an exception to the general rule of political stalemate in the U.S., particularly given the Republican majorities in both the House and Senate. That view will certainly be put to the test as negotiations for T-TIP and TPP enter crucial phases. The end-game for TPP will likely play out first.

These varied initiatives address a vast range of subjects, many of them quite esoteric. But it is important not to lose sight of what is in the balance: an important part of a 21st-century governance toolkit for emerging security issues, especially those tightly interwoven with the global economy.

As U.S. Trade Representative Michael Froman has said, “trade has emerged as one of America’s most important foreign policy tools — both for increasing our strength at home and for exercising it abroad… By leading on these issues, the United States can launch a race to the top, rather than be subject to a race to the bottom that we cannot win and should not run.”

 

Watch Nate Olson discuss below or here.

 

Follow Nate Olson, Stimson’s Managing Across Boundaries initiative and Stimson on Twitter.

Photo credit: cfarivar via flickr.

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