Just Trade: When, If Ever, Are Trade-Related Incentives Morally Permissible?

In today’s geopolitical environment, states are increasingly using trade-related incentives as a foreign-policy tool. For instance, China has offered African states preferential trade agreements if they do not recognize Taiwan. The European Union, by contrast, is using trade-related incentives to promote human rights compliance. Despite their real-world importance, the ethical dimensions of trade-related incentives remain philosophically underexplored (for exceptions, see (Pattison 2018; Armstrong 2019; Theuns 2020; Ip 2022)). Perhaps this is due to the fact that trade is often understood as a “matter of offers, not threats” (Blake 2001, 292). Yet, when, if ever, are trade-related incentives morally permissible? In this paper, I argue that there are at least two types of trade-related incentives. Further, I argue that different moral constraints apply to these two types of trade-related incentives. To argue for this conclusion, I proceed as follows. In Section I, I begin by providing some background on trade-related incentives. I first distinguish trade-related incentives from related foreign-policy tools, like economic sanctions and conditional aid. Drawing upon the empirical literature, I then show that trade-related incentives are effective at promoting justice and less costly than other foreign-policy measures. In Section II, I consider whether we have reason to think that trade-related incentives are always morally impermissible. Such a view—espoused by Michael Walzer and John Rawls—claims that trade-related incentives are morally impermissible because they violate state sovereignty (Walzer 1980; Rawls 1999). I argue that there are two ways to interpret this objection. On the strong view, sovereignty furnishes us with decisive reason against outside interference, including trade-related incentives. I contend that this view is counterintuitive and should be rejected. On the weak view, sovereignty furnishes us with a strong reason against outside interference. Conceptually, the weak view leaves open that, because trade-related incentives can promote justice, the sovereignty-related prohibition might be outweighed (Tan 2010; 2011; Rafanelli 2021). In Section III, I argue that we can distinguish between two different types of trade-related incentives. 1. Providing incentives: State A offers state B a trade-related incentive to which state B was never entitled. 2. Non-providing incentives: State A offers state B a trade-related incentive to which it is entitled. In Sections IV and V, I consider what moral constraints apply to these different incentives. I argue that minimal moral constraints apply to providing incentives. For instance, they need not advance justice, and they need not meet a proportionality constraint. This is because state A exercises a liberty right when offering state B the trade-related incentive (Hohfeld 1923). I further maintain that more stringent moral constraints apply to non-providing incentives. This is because state A unilaterally alters state B’s normative situation with these incentives, making its entitlement conditional on the satisfaction of further conditions. As such, stringent moral constraints must be met for non-providing incentives to be morally permissible. For instance, they need to advance justice, and they need to meet a proportionality constraint.