{"id":40985,"date":"2025-04-11T19:27:42","date_gmt":"2025-04-11T13:57:42","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=40985"},"modified":"2025-04-11T19:27:59","modified_gmt":"2025-04-11T13:57:59","slug":"weaponization-of-trade-and-finance","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/11-04-2025\/weaponization-of-trade-and-finance","title":{"rendered":"Weaponization of Trade and Finance"},"content":{"rendered":"\n<p><strong>Syllabus<\/strong><strong>: GS2-International Relations \/ GS3-Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Defence Minister of India highlighted the erosion of global order and multilateralism, driven by the weaponization of trade, finance, and emerging technologies.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is Weaponization of Trade and Finance?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Weaponization of trade and finance refers to the<strong> strategic use of trade policies and economic measures<\/strong> by countries to <strong>exert political or economic pressure<\/strong> on others.\u00a0<\/li>\n\n\n\n<li>This practice departs from the traditional role of trade and finance as instruments of cooperation and globalization.<\/li>\n\n\n\n<li><strong>Tools of trade weaponization:<\/strong> Tariffs and Sanctions, Restrictions on exports of critical technologies or materials, Currency Manipulation etc.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Recent incidents of trade and finance weaponization<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Tariff War 2.0:<\/strong> The ongoing US-China trade friction has seen high tariffs and investment restrictions being imposed to gain strategic advantage and secure supply chains.<\/li>\n\n\n\n<li><strong>Financial Sanctions:<\/strong> The West&#8217;s exclusion of Russia from the <strong>SWIFT network<\/strong> and freezing of its central bank reserves post-Ukraine invasion is a classic case of financial weaponization.<\/li>\n\n\n\n<li><strong>Technology Denial Regimes:<\/strong> Restrictions on semiconductor exports to China and controls over AI or quantum computing hardware highlight technology weaponization.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Consequences of Economic Weaponization<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Erosion of Multilateral Institutions: <\/strong>The WTO&#8217;s dispute settlement mechanism is losing credibility amidst unilateral tariff impositions.\n<ul class=\"wp-block-list\">\n<li>Institutions like the<strong> IMF or World Bank<\/strong> face legitimacy crises as they&#8217;re perceived as Western-dominated.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Decline of Rules-Based Global Order:<\/strong> Growing unilateralism is leading countries to ignore international norms and treaties in favour of national interest.<\/li>\n\n\n\n<li><strong>Economic Fragmentation: <\/strong>The world is witnessing \u201cgeo-economic decoupling\u201d with regional trading blocs, such as RCEP or IPEF, gaining importance.<\/li>\n\n\n\n<li><strong>Global Inequality: <\/strong>Supply chain disruptions, like those witnessed during the pandemic and Ukraine war, have further deepened global inequalities.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Steps taken against trade weaponization<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Regional Trade Agreements: <\/strong>Countries are forming regional trade agreements (RTAs) to enhance cooperation and reduce reliance on major economies.\n<ul class=\"wp-block-list\">\n<li>Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP),<\/li>\n\n\n\n<li>Regional Comprehensive Economic Partnership (RCEP) etc.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Alternative Financial Systems:<\/strong> Russia\u2019s SPFS, China\u2019s CIPS, and proposals for a BRICS payment system are alternatives to the SWIFT network.\n<ul class=\"wp-block-list\">\n<li>Development of <strong>Central Bank Digital Currencies (CBDCs)<\/strong> is being pursued to gain monetary independence.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Mineral Security Partnership (MSP) <\/strong>to diversify and stabilize global supply chains of Critical Minerals.<\/li>\n\n\n\n<li><strong>Reform of the WTO: <\/strong>Ongoing discussions to reform the World Trade Organization (WTO) aim to enhance its dispute resolution mechanisms and address the challenges posed by unilateral trade actions.<\/li>\n\n\n\n<li><strong>Indo-Pacific Economic Framework (IPEF):<\/strong> It serves as a countermeasure to economic coercion by countries that use trade as a tool of influence, promoting a more equitable and rules-based trading system.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concluding remarks<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The weaponization of trade and finance signals a new era of geopolitical contestation where economic interdependence is no longer a guarantee for peace.\u00a0<\/li>\n\n\n\n<li>For India, which has always championed multilateralism and global cooperation, navigating this fractured world order requires strategic clarity, resilient institutions, and a robust technological foundation.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/news\/national\/in-era-of-grey-zone-cyber-attacks-tools-to-achieve-politico-military-aims-rajnath-singh\/article69434398.ece\" rel=\"nofollow noopener\" target=\"_blank\"><strong>TH<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">The Defence Minister of India highlighted the erosion of global order and multilateralism, driven by the weaponization of trade, finance, and emerging technologies.<\/li>\n<p><\/p>\n<h3><strong>What is Weaponization of Trade and Finance?<\/strong><\/h3>\n<li class=\"ms-5\">Weaponization of trade and finance refers to the strategic use of trade policies and economic measures by countries to exert political or economic pressure on others.\u00a0<\/li>\n<li class=\"ms-5\">This practice departs from the traditional role of trade and finance as instruments of cooperation and globalization.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/11-04-2025\/weaponization-of-trade-and-finance\" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-40985","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/40985","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=40985"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/40985\/revisions"}],"predecessor-version":[{"id":40998,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/40985\/revisions\/40998"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=40985"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=40985"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=40985"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}