Is Using Trade Policy for Foreign Policy a 'SNO Job'? on Linkage, Friend-Shoring, and the Challenges for Multilateralism

Abstract

Using trade policy to achieve foreign policy objectives, such as stable international relations, has a long history, from Kant to the founders of the GATT. Punishing enemies and rewarding 'friends' by granting or withholding market access is also not new, and sanctions or blockades are a venerable form of trade policy used as foreign policy. A more recent form is influencing the domestic policy of another country with non-commercial provisions in trade agreements. All these tools are based on linkage, on the assumption that a desired outcome can be achieved by interventions that would increase or decrease trade. The latest instance is so-called 'friend-shoring', which would in principle isolate enemies, although it will be difficult in practice and risks undermining multilateralism. The cost of these interventions is susceptible to economic analysis, even if the conclusion is that it is worth paying. Influenced by Alan Winters who referred to national security as a motivation for agriculture protection as a 'so-called non-economic objective' or SNO, I argue that using a trade policy tool for a foreign policy purpose as if there is no cost is a SNO job, an attempt to justify an intervention aimed at one objective by framing it as being valuable for another.