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BUSI 605 DB4 Reply to Cameron
Hayes
International Business (Liberty University)
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Political Forces That Affect Global Trade: Reply to Cameron Hayes
Collin G. Holmes
School of Business, Liberty University
Author Note
Collin G. Holmes
I have no known conflict of interest to disclose.
Correspondence concerning this article should be addressed to Collin G. Holmes.
Email: [email protected]
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Political Forces That Affect Global Trade: Reply to Cameron Hayes
Many difficulties come to companies who wish to trade in foreign economies. These difficulties
are exacerbated when dealing with economies with conflicting political ideas from the company's
home economy. As displayed in your discussion, countries like Russia and China, while they
have become key players in international trade, have political systems and values that differ from
those in the west. While there always are political risks for companies to engage in international
trade, the usual assumption is that when governments increase the ease of trade between two
countries, the countries can build better ties and relationships. However, this is not always the
case, and certain factors cause this.
An example is the unprecedented trade interdependence between China and other
countries, hurting the public perception of China. A study done on the perception of china by
people in countries sharing strong economic ties with China has shown that people are more
likely to blame China for their country's economic distress (Huhe & Tang, 2021). This public
perception shows how China continues to face global criticism despite its strategy to develop a
positive global image (Huhe & Tang, 2021).
Another example is the access to energy in Europe and the conflict in Ukraine. Though
major political crises, such as lasting war and economic shocks, the energy trade between Russia
and the larger portion of Europe remains and has for the past 50 years (Moravcsik, 2022).
Despite political factors, the demand for energy remains the same, and the investment into
physical infrastructure in Europe has been centered on the availability of natural gas from Russia
(Moravcsik, 2022).
However, interdependency cannot guarantee that countries will continue to allow political
forces to fly unchecked. An EU-wide ban on Russian oil arriving by sea has recently been put in
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place with the plan to end sea imports of Russian oil by the end of 2022 (BBC, 2022). Poland
and Germany also pledged to end pipeline imports, meaning between these two decisions, 90%
of Russian oil would be blocked (BBC, 2022). However, as Russia supplies 40% of Europe's
natural gas, there is currently not much talk about stopping importing natural gas from Russia
(BBC, 2022).
The political factors that play a role in international trade are hard to ignore as there will
always be politics in international trade. However, sometimes, companies must decide if the risks
or moral factors outweigh the benefits of trading with a foreign economy.
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References
BBC. (2022, May 31). Russian oil: Eu agrees compromise deal on banning imports. BBC News.
Retrieved July 24, 2022, from https://www.bbc.com/news/world-europe-61638860
Huhe, N., & Tang, M. (2021). Business is business: How does trade relationship fail to boost
image of china? The Journal of Contemporary China, 30(129), 417-433.
https://doi.org/10.1080/10670564.2020.1827354
Moravcsik, A. (2019). Power of connection: Why the Russia–Europe gas trade is
strangely untouched by politics. Nature (London), 576(7785), 30-31.
https://doi.org/10.1038/d41586-019-03694-y
