“Trade” has suddenly started developing a rather poor reputation. Political leaders and citizens from the UK to the United States to Oceania are voicing increasingly louder dissatisfaction with the impact of trade on their lives. Much of the commentary, however, confuses trade and globalisation and seems to miss the extent to which trade has become bound up in everyday existence.
Trade does not just benefit the “1%.” It is not just for people who own stocks. Trade does not affect just the people who work in places that directly export to foreign countries. International trade matters to everyone, probably every single hour of every day.
Take just the first hour of my day, for instance. My alarm rings at 6:25 in the morning. I use an alarm on my iPhone. The alarm tone—the sound itself—was created by Apple in California. So was the design of all the software, like the icon I need to swipe to get the alarm to stop. The manufacture of the physical iPhone is more complicated.
The final assembly of the iPhone was done in China, at the well-known Foxconn factory. That is what most people talk about when they talk about our phones being “produced in China.”
By my count (and sources differ), the companies that supply subcomponents to Apple are headquartered in at least seven different countries including the USA, China, Germany, South Korea, China, Japan, Switzerland and Taiwan. Each of these companies used other subsidiaries to supply labour or parts from many additional countries.
For instance, the glass screen of an iPhone 6 is manufactured by Corning, an American company. Corning itself uses inputs from around 26 other countries, which it assembles in yet more.
I’ve been awake five seconds, am still not fully conscious, but have already been most of the way around the world.
I’m lying on cotton sheets from Ikea, a Swedish company. The cotton they use primarily comes from India, Pakistan, Turkey, China, the USA and Brazil. The sheets were also assembled in China, and then sent to me in Singapore.
Extrapolate similar design, assembly and manufacturing, retail and marketing processes for the other items I use in just the first hour of my day, and you get the picture. The tiles I walk on to the bathroom; my water bottle, toothbrush and toothpaste; shampoo, body wash; a razor and shaving cream; a cotton towel; the mirror I look into as I shave; the faucet and the bathroom bench and sink; the clothes I put on; the cereal I eat, the milk and banana I put on top; the bowl and spoon I use to eat them; the table and chair where I sit; the dishwashing liquid and sponge I use to clean the bowl and spoon; my blend of coffee with beans from South America and Africa, made in a French press. The bus I catch to work, the card I tap to pay the driver. I could go on.
All this, in just the first hour of my day, and not a single one of those items was fully made or manufactured in the country in which I presently live.
Depending on the item, many of these products I have used this morning may not have been fully made or manufactured inside a single country either—many incorporated parts, components or ingredients sourced from multiple countries.
The services attached to these products also crossed country borders. They were often designed in one location, marketed in another, and sold in a third. My after-sales service on my iPhone could be handled from a different market. My billing could have been processed elsewhere again.
And Facebook, which I use to message friends while on the bus, is integrally related to trade too—in how it supports itself through advertising with local advertisers here in Singapore, to how it stores and transfers my and my friends’ data. The digital world is trade too, though it’s all too easy to forget that.
All of those items I touched in my first hour today also had to get from where they were assembled to me in Singapore, mostly by ship. And though it might seem distant from the sheets I lie on and the alarm I’m turning off, the countless parts of that ship that were all produced around the world are integral in my having this product. This is why looking in depth at trade can be a proverbial rabbit hole—it’s necessary even to look at the trade that went into producing the raw materials that produced the ship that transported the eventual good to you.
Trade is what enables me to live life as I know it. It is not just luxuries, like an iPhone, for which I rely on trade; rather, trade touches nearly everything I consume, from my shoes to toilet paper and everything in between.
I could try to “buy local” and shift my own consumption to avoid trade. I could start buying only food grown from near me, but I would still be eating that food off plates from somewhere else, with a fork and spoon likely made overseas. I could, I suppose, try to find locally made sheets for my bed— they don’t make cotton here, though, and even if I could manage to find something, I would be paying a lot more. There are often high costs attached to changing trade patterns.
The relationship between trade and globalisation is fraught and often misunderstood. Two key factors have contributed to increasing globalisation: technological advances “that have lowered the costs of transportation, communication, and computation to the extent that it is often economically feasible for a firm to locate different phases of production in different countries”; and “increasing liberalization of trade and capital markets,” according to the World Bank.
The latter, the liberalisation of trade, is what we are focusing on here. Trade—and the agreements that enable trade to flow more freely—is a factor contributing to globalisation. To be clear, though, trade is not synonymous with globalisation; globalisation encompasses much in the realm of culture and ideas that have nothing to do with trade in the strict sense, and technology has as much to do with increasing globalisation as trade does. If more were clear on these distinctions it would be far easier to separate the dislike of foreign cultures and depictions in popular media from trade agreements. The dislike of the former has virtually nothing to do with the latter, but gross misconceptions bring the two together.
All the ways that trade affects the first hour of my day demonstrates one contributing factor to globalisation. But these benefits to me from trade—my ability to use an iPhone alarm, to shower and shave, and to drink good coffee—are trade most simply, not globalisation itself.
A decision like Brexit, a desire to decouple from trade or to “build a wall” will not eliminate trade or the ability to enjoy these products; it will merely make them more expensive. It would not eliminate foreign ideas and cultures from permeating society, for those have little to do with trade itself.
At its most simple level—taking just the first hour of one’s day—trade is, in short, the ability to enjoy life as we know it. It is the ability to wake up to an alarm while lying on cotton sheets, to walk on tiles and to shower and to catch the bus to work. We misunderstand and underestimate trade at great costs to ourselves and to society.
***This Talking Trade blog was written by Michael Moore-Jones, Asian Trade Centre, Singapore***