It will also explain the benefits and setbacks experience in the trade blocs over the decades and how these factors affects the economies of the participating nations. Alejandro Foxley (2010) explains that middle-income countries have pursued regional trade Agreements since the 1960s because of the global economic crisis that curtails demand from major markets such as the United States and other major markets. Trade blocs such as the European Union (EU), provides a market to over 80 percent of the goods produced by the member countries. Kelly Chase explains that to understand the formation of trading blocs and their external effects one requires examining of the domestic systems and national policy-making process. He continues to argue that it is because trading blocs’ formation is driven by domestic political pressures from organized interest groups in the society.
It then tried to explain why the increase in protectionist measure even during the sharp contraction of 2008-2009 was fairly modest. This paper then finally concluded by providing insights on why international trade/ business is essential for the development and prosperity of a country.
This is because industries in developed countries need protection from the free trade as it acts as a threat to theses industries and holds them back from developing. “The African textile industry has lost to the high-wage workers of America, who live in a land of such plenty that clothing is given away for free” (Rivoli P. 240) Due to free trade and free market, when America sends over bales of clothes, it is taking away from the potential the African textile industry had, therefore putting the industry out of
Sharing technology with developing nations will help them grow effectively. For small countries but stealing our technologies and IP has become a big problem with our larger competitors like China. The Cons of free trade i. Facilitates the flow of illicit trade: It is not a stretch to idea based on scanty evidence that as borders come down and the flow of goods, services and people is facilitated across nations, illicit goods can more easily get through the porous borders as well. ii. Increased security threats: While the Free Trade Agreement may allow better coordination between security arms of member governments, the relaxation on borders and free movement of people may allow the entrance of individuals from terrorist organization’s as well as criminals to penetrate easily and expand their activity beyond the borders of one country into another.
It was a token of difficult times to come. Reduction in tariffs combined with economic crisis in the 1970s and 1980s and it led governments to find other protection methods for sectors facing raised foreign competition. Apart from that, high unemployment rates and continuous factory closures resulted in looking for bilateral market sharing arrangements with competitors in Western Europe and North America. In the end, these two reasons undermined GATT´s reliability and efficiency. The reason was not only deterioration in the trade policy environment.
A good example of this is with Mongolia. After being released from the Soviet sphere, the government adopted a capitalist system with little trade barriers, with the notable exception of wool. After pressure by the Asia Development Bank, the tariff was removed. However, soon after, wool manufacturing moved to China and Italy. Thus, while free trade generally produces good outcomes, there is a time and place for protectionist policies (Haas 20-1).
Interests Affected Globalization as a process carries its value that has been promoted by the United States since the postwar period. Broad consensus has been reached among policy-makers and scholars to establish neoliberal international trade policies for the promotion of open world market and the determination of the dollar value through the market. America received striking benefits soon. Domestic industries began to compete with foreign ones in the result of significant reduction in cost and rise in financial flow. For example, the US World merchandise has increased from less than 10% of the world GDP to nearly 20% of it from 1950s to 1990s.
One of the main reasons for this condition is the current trade policy. The newly emerged free trade policy is helping the western countries with easy access to resources of poor country and low labor wage with maximum production. Under the free trade policy
They have an incentive to lobby for trade liberalization, in order to keep protectionism from causing unfavorable changes or incurring costs to them. What can be anticipated is the knowledge and technology-intensive (KTI) industries of developed country tend to gain ascendancy on negotiating platforms. Eventually, these global businesses surveil and evaluate the political and legal climate of the international fora. For instance, US business alliances, such as the Business Software Alliance (BSA) and the International Intellectual Property Alliance (IIPA) tenacious reminded the Offices of the United States Trade Representative (USTR) of the trade losses they experienced in other markets of the world (albeit the agency cast a slight doubt). Professor Drahos would argue it was also because the Japanese triumph of the industrial progress in the 80’s, which stirred up worries of the US industries and
Research has found that trade is apparently beneficial to some facets of the environment quality, however, not all. The effects are especially favorable for some measures of air pollution like SO2. There is limited evidence that trade has a damaging impact on the quality of the environment. The findings reject the hypothesis of a global race to the bottom driven by trade where countries engage in pollution-intensive activities in order to compete in the global market. Additionally, there is a lack of evidence to support the pollution haven hypothesis claiming that trade pushes some counters to specialize in environments that are dirtier.