What is the core ethical dilemma that globalised trade creates for a company that wants to behave well?

Behaving ethically costs money, and in a market without a common rulebook that cost is a competitive disadvantage — so the firm that does the right thing is punished by the market for doing it.

Globalisation deepened the international division of labour and produced real cooperation gains. But it arrived without an institutional framework to match, and the consequences split into two groups:

• Old ordering problems left unsolved: absolute poverty and hunger, organised crime and human trafficking, missing protection of human rights.
• New problems actively amplified: global environmental damage, corruption, and elementary deficits in occupational safety.

The dilemma itself is a straightforward piece of economics with an uncomfortable moral conclusion. Ethically sustainable conduct carries costs. Higher production standards in industrialised countries therefore reduce export competitiveness — at least as long as foreign competitors do not adopt them too. So where fair or ethically defensible trade stands in direct competition with commercial ambition, the decision will, under pressure, tend to go against the ethics.

This is why the serious proposals in this area are nearly all about changing the rules rather than exhorting the players: supply-chain due-diligence laws, sector-wide agreements, import standards and mandatory disclosure. They work by removing the competitive penalty — if the standard binds everyone in the market, meeting it stops costing you the market.

Go deeper:

• bpb / APuZ: Ethik und globaler Handel — Habisch & Popal on exactly this dilemma — the article this account of global trade follows (German).
• BMAS: The German Supply Chain Act — what »change the rules rather than exhort the players« looks like once it is law.