Trade and mutual economic interdependence are increasingly recognized as critical avenues for fostering peaceful relations and reducing the likelihood of conflict. The nexus between trade and peace has occupied the attention of statesmen and philosophers for over two millennia, from Pericles and Grotius to Montesquieu and Adam Smith. Today, this dialogue continues among scholars, diplomats, and trade officials seeking durable solutions to geopolitical instability. Immanuel Kant's "Perpetual Peace' (1795) hypothesised that trade, along with democracy and economic interdependence, sustains peace and reduces the likelihood of war.While it is widely acknowledged that peace is a prerequisite for trade to thrive, the reverse is also true: fair and transparent trade regimes can actively promote peace by strengthening the rule of law, enhancing good governance, and fostering institutional development—core pillars of lasting stability. Proponents of economic interdependence argue that trade not only stimulates prosperity but also cultivates cooperation, builds mutual understanding, and establishes formal mechanisms for resolving disputes. A compelling illustration of this dynamic is the European Union, where deepening trade ties have been closely associated with several decades of sustained peace and integration among its member states.The 19th-century French economist Frédéric Bastiat famously warned, "If goods do not cross borders, soldiers will." Yet the inverse—whether cross-border trade can ensure the absence of war—remains debated. Despite record global trade volumes reaching $33 trillion in 2024, the world continues to witness violent conflict and geopolitical instability.Recent events—from the Russia-Ukraine war to the ongoing conflict in Gaza, rising India-Pakistan tensions, and Thailand-Cambodia disputes—challenge the assumption that trade alone can secure peace. These developments suggest that while trade may be a contributor to peace, it is not a guarantor. This debate has gained prominence in recent years, especially following former U.S. President Donald Trump's framing of trade as a tool for peacebuilding in the context of multiple regional conflicts. Yet the so-called "Long Peace"—a post–World War II period with relatively few major wars between global powers—now appears increasingly fragile.
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Nevertheless, historical and contemporary experiences offer hope. The architects of the postwar trading system—including the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO)—viewed trade as a foundational mechanism for peace. The European Economic Community (now the EU) emerged from the ruins of war to promote peace through economic integration. Likewise, the African Continental Free Trade Area (AfCFTA) aims not only to create a unified market but also to "silence the guns" and resolve conflicts through prosperity. The WTO's Trade for Peace programme echoes this vision by advancing the idea that trade can promote peace and security, especially in fragile and conflict-affected regions. However, trade is no panacea. Critics highlight unresolved trade disputes, perceived inequities, and political tensions that can overshadow commercial relations. For instance, despite significant trade between India and China, unresolved border tensions continue to erupt.  Bilateral trade between the two countries crossed $135 billion in 2022, making China India's largest trading partner, yet, border clashes occurred in Galwan (2020) and Arunachal Pradesh (2022). Similarly, India-Pakistan trade normalisation has repeatedly stalled due to broader political and security concerns. Moreover, protectionist measures—such as tariffs and sanctions—can disrupt trade flows, exacerbate inequalities, and inflame tensions. The Trump administration's unilateral trade actions against allies and rivals alike highlighted how trade policies can become instruments of coercion rather than cooperation. Additionally, the distributional impacts of trade—when skewed—can generate social unrest and deepen grievances. In conflict-affected regions, trade disruptions and commodity dependence can exacerbate fragility through volatility in revenue streams, reduced state capacity, and increased incentives for violence.Yet, when designed inclusively, trade can contribute to peace at both national and community levels. By generating income, creating employment, and addressing regional disparities, trade reduces economic grievances—often key drivers of conflict. Moreover, inclusive trade promotes vertical cohesion (trust in institutions) and horizontal cohesion (equality across social groups), both essential for peacebuilding. Toward a Peace-Positive Trade Policy To ensure that trade contributes positively to peace, policymakers must understand and manage these dynamics within specific contexts. Businesses, particularly those engaged in trade, play a crucial role in post-conflict recovery and the consolidation of peace. Small and medium-sized enterprises (SMEs), in particular, are vital engines of employment, economic revitalization, and social interdependence. By operating across local supply chains and engaging diverse communities, SMEs help bridge identity divides and promote grassroots peacebuilding. Yet, despite their potential, SMEs are frequently underrepresented in formal peacebuilding strategies.In fragile and conflict-affected regions, businesses must adopt conflict-sensitive approaches—ensuring that their operations do not inadvertently exacerbate tensions but instead contribute to addressing underlying drivers of conflict. Local firms can act as conveners, fostering collaboration across divided communities and enhancing societal resilience.Cross-border trade, in particular, offers a compelling entry point for peacebuilding. Unlike state or civil society actors, businesses often adapt swiftly to shifting realities, maintaining economic linkages even amid political instability. In some instances, economic cooperation has increased during conflict, as commercial actors recalibrate operations to sustain livelihoods and supply chains. Such interactions are now recognized by the peacebuilding community as important opportunities to build trust, dismantle stereotypes, and lay the foundation for mutual interdependence.Importantly, trade itself is neither inherently peaceful nor violent—its impact is contingent upon the context in which it operates. As a strategic instrument, trade can either bridge societal divisions or deepen existing inequalities. The key lies in deliberately aligning trade policies with peacebuilding objectives. This requires addressing protectionist tendencies to ensure fair benefits; supporting fragile and conflict-affected states in developing inclusive trade capacity; prioritising conflict-sensitive frameworks; empowering local and cross-border businesses, and embedding trade within a broader strategy for institutional resilience and social cohesion. Such conscious alignment of trade with peacebuilding goals can make trade a catalyst for sustainable peace. In an increasingly polarised and volatile world, a more inclusive and intentional approach to trade is not just desirable—it is essential. By prioritising trade initiatives, we can open avenues for cooperation, mutual understanding, and shared prosperity, ultimately contributing to a more harmonious and thriving society. When guided by such intentionality, trade can become a powerful catalyst for sustainable peace. In an increasingly polarised and volatile global environment, a more inclusive and strategically aligned approach to trade is not merely beneficial—it is imperative. By prioritising peace-sensitive trade initiatives, we unlock pathways for cooperation, mutual understanding, and shared prosperity, ultimately contributing to a more harmonious and resilient global society.