How did the Cold War alter trade relations between East and West?

The Cold War significantly polarised trade relations, leading to economic isolation between the Eastern and Western blocs.

The Cold War, a period of geopolitical tension between the Soviet Union and the United States and their respective allies from the end of World War II until the early 1990s, had a profound impact on global trade relations. The ideological divide between capitalism and communism led to a significant polarisation in trade relations, with each bloc establishing its own economic sphere of influence.

In the West, the United States led the creation of a liberal international economic order, promoting free trade and open markets. This was facilitated through institutions such as the General Agreement on Tariffs and Trade (GATT), and later the World Trade Organisation (WTO). Western Europe, Japan, and other allied nations were integrated into this system, leading to a significant expansion of trade within the Western bloc.

Conversely, the Eastern bloc, led by the Soviet Union, pursued a policy of economic autarky and established the Council for Mutual Economic Assistance (COMECON) to coordinate economic policies and trade among socialist countries. Trade within the Eastern bloc was characterised by barter agreements and was largely insulated from global market forces. The Iron Curtain, a political, military, and ideological barrier erected by the Soviet Union to seal off itself and its dependent eastern and central European allies from open contact with the West and other noncommunist areas, further solidified this economic isolation.

The Cold War also led to the use of trade as a tool of foreign policy. The United States, for example, used trade embargoes and economic sanctions as a means to exert pressure on the Soviet Union and other communist nations. The CoCom (Coordinating Committee for Multilateral Export Controls) was established to restrict the export of strategic goods and technology to the Eastern bloc.

In essence, the Cold War resulted in a bifurcated global trade system, with the Eastern and Western blocs largely operating in isolation from each other. This had significant implications for global economic development, contributing to economic disparities between the East and West that persist to this day.