Introduction: From Gentle Commerce to Geoeconomic Rivalry

The concept of doux commerce, popularised by Montesquieu in the 18th century, posited that trade fosters peace by making conflict economically costly. This idea underpinned the post-Cold War era of globalisation, where economic interdependence was assumed to reduce geopolitical tensions. However, since the late 2010s, rising protectionism, strategic export controls, and nationalist trade policies have eroded this assumption, transforming global trade into a domain of geopolitical rivalry and economic vulnerability.

The Doctrine of Doux Commerce: Historical and Theoretical Foundations

• Doux commerce means "gentle commerce," theorised by Montesquieu to suggest that trade civilises societies by promoting mutual benefit and reducing incentives for war.
• It assumes that economic interdependence raises the cost of conflict, aligning national interests towards cooperation.
• This theory influenced liberal economic policies and multilateral trade regimes post-World War II, including the establishment of the General Agreement on Tariffs and Trade (GATT) and later the World Trade Organization (WTO).

Legal and Constitutional Framework Governing Trade: India and Global Context

• Article 301 of the Constitution of India guarantees freedom of trade, commerce, and intercourse throughout India.
• The Foreign Trade (Development and Regulation) Act, 1992 empowers the Central Government to regulate exports and imports; Section 28 permits export restrictions for national security.
• The Customs Act, 1962 governs tariffs and duties on imported goods.
• Globally, the WTO Agreements, especially GATT 1994, regulate tariffs and non-tariff barriers, aiming to promote free trade and resolve disputes.
• Export controls, such as those enforced by the US Bureau of Industry and Security (BIS), exemplify legal instruments used to restrict trade for strategic reasons.

Economic Data Illustrating the Changing Trade Landscape

• Global merchandise trade volume grew by 3.4% in 2023, recovering from the pandemic slump (WTO, 2024).
• However, average global tariffs increased by 1.5 percentage points since 2018, indicating rising protectionism (WTO Tariff Profiles, 2023).
• India’s merchandise exports reached $450 billion in FY 2023-24, growing 15% year-on-year (Ministry of Commerce, India).
• US semiconductor export controls in 2022 affected $600 billion worth of trade, targeting Chinese technology firms (US BIS, 2022).
• ‘Buy National’ policies in the US and EU have increased domestic procurement mandates by 20% since 2020 (OECD Trade Policy Reviews, 2023).
• Global Foreign Direct Investment (FDI) flows declined by 12% in 2023, reflecting economic nationalism and decoupling trends (UNCTAD, 2024).

Key Institutions Shaping Global Trade and Strategic Controls

• WTO: Oversees global trade rules, tariff bindings, and dispute settlement.
• UNCTAD: Provides data and policy analysis on trade and investment trends.
• BIS (USA): Implements export controls on sensitive technologies, e.g., semiconductors.
• DGFT (India): Regulates India’s export-import policies and enforces trade restrictions.
• OECD: Monitors trade policy developments, including ‘Buy National’ mandates.

Comparative Analysis: US-China vs EU Trade Strategies

Why Doux Commerce is Losing Ground

• Rising Protectionism: Tariffs and non-tariff barriers have increased globally, reversing decades of liberalisation.
• Geoeconomic Competition: Trade tools are weaponised to achieve geopolitical objectives, e.g., export controls on semiconductors.
• Supply Chain Vulnerabilities: COVID-19 and the Ukraine war exposed risks in overconcentrated supply chains.
• Strategic Export Controls: Critical technologies and rare earth elements are restricted to maintain national security advantages.
• Economic interdependence now creates asymmetric vulnerabilities rather than mutual trust.

Implications for India’s Trade Policy

• India’s export growth of 15% in FY 2023-24 reflects resilience but also exposure to global uncertainties.
• The Foreign Trade (Development and Regulation) Act, 1992 allows India to impose export restrictions for security, aligning with global trends.
• India must balance integration with diversification to reduce overdependence on vulnerable supply chains, especially in electronics and rare earths.
• Active engagement in WTO reforms is critical to address new trade challenges and prevent erosion of multilateralism.
• ‘Make in India’ and Atmanirbhar Bharat initiatives reflect efforts to enhance strategic autonomy in trade.

Way Forward: Reconciling Trade and Security

• Recognise that economic interdependence is neither inherently peaceful nor stable; it requires strategic management.
• Strengthen supply chain resilience through diversification, stockpiling, and domestic capacity building.
• Engage multilaterally to update WTO rules to address export controls, subsidies, and digital trade.
• Develop calibrated ‘Buy National’ policies that protect strategic sectors without triggering retaliatory protectionism.
• Enhance India’s role in shaping global trade norms that reflect the new geopolitical realities.

Jharkhand & JPSC Relevance

• JPSC Paper: Paper 2 - Indian Economy and International Trade
• Jharkhand Angle: Jharkhand’s mineral wealth, including rare earth elements, makes it strategically important amid global supply chain realignments and export controls.
• Mains Pointer: Highlight Jharkhand’s role in India’s strategic autonomy in trade and the impact of global trade tensions on local mining and industrial sectors.