Comments by Oct. 19, 2014
The following is a brief description provided by the WTO of a forum that they held earlier this month. Those of you who find some of these ideas interesting can go to the WTO web pages where the audio of many of these discussions can be found. The audio though is often about 2 hours per round.
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Why trade matters to everyone
This year, the Public Forum will tell the human story behind trade. It will showcase the
myriad connections between trade and people's daily lives and demonstrate how trade
impacts and improves the day-to-day lives of citizens around the globe, whether in
developed or developing countries.
"No nation was ever ruined by trade, even seemingly the most disadvantageous", wrote
Benjamin Franklin in 1774 in a pro-trade pamphlet. Imagine what Franklin might say about
today’s globalized world: trade has become such a pillar of the global economy that we often
do not even realize how often we interact with products and services that come from beyond
our borders. Even a seemingly simple product like your favourite pair of jeans may originate
in one place, be produced in another and shipped from a third country before finding its way
into your local shop. This international production of goods and services contributes to the
development of poorer countries and to the growth of the world economy. Similarly, millions
of products are transported every day across continents and borders to fulfil needs of
consumers from all corners of the world.
Trade creates social and economic opportunities, for consumers, citizens and economic
players. But are these benefits inclusive enough?
Under this thematic umbrella, the following three subthemes will be discussed: trade and
jobs – trade and consumers – trade and Africa.
Trade and jobs
The global economic crisis of 2008 left a lasting impact on the labour market leading to the
elimination of around 50 million jobs. As the world recovers from the economic turmoil, the
rate of job creation has lagged behind. According to ILO figures, global unemployment in
2013 reached almost 202 million and about 400 million more jobs must be created between
2012 and 2022 to keep it from rising further. In this context, how can trade help foster growth
and jobs? Are regional trade agreements the solution? Could the promotion of decent work
create fairer trade and better distribution of the benefits of globalization?
Many global initiatives are currently underway that are designed to promote growth. Free
trade agreements, investment treaties and aid for trade all promise job creation, higher
wages and opportunities for alleviating poverty. Proponents of globalization highlight the
importance of trade in achieving international convergence of labour rights and work
environments. 2
Most economists though believe that trade holds the possibility of both job creation and job
destruction. There is considerable evidence pointing both ways. In 2011, trade between the
United States and the 11 other countries participating in the Trans-Pacific Partnership
negotiations supported nearly 1.2 million jobs in Texas. But some critics also suggest that
NAFTA is responsible for the loss of US jobs.
Some countries have experienced improved standards of living for their people but not all.
What seems clear is that trade alone is not sufficient. A mix of domestic policies in support of
workers, better infrastructure, higher educational performance and sound legal infrastructure
are essential to create the right climate for job creation though trade.
Trade is an integral but not unique instrument of generating growth and employment. What
can therefore be an ideal policy mix for re-stimulating the labour market slump?
Trade and consumers
When tariffs were the major barrier to trade, liberalization was unquestionably beneficial to
consumers, who would benefit from lower prices, greater variety and higher quality. But now
that the world has been stripped off most of tariffs, the non-tariff measures (NTM) in the
forms of sanitary requirements or technical specifications are becoming an obstacle to free
trade. Should regulations which protect consumers, their food, their health and environment
be scaled back? Does the growing number of regional trade agreements pose a threat to the
welfare of the consumers? Or are these standards used by national governments as a form
of neo-protectionism? How best can the balance between free trade and consumer
protection be reached?
In a day and age where e-commerce is booming; flow of Information technology is not
effectively regulated in the global context and neither is international investment. Goods and
services not only flow physically across national borders but are transmitted through optical
fibres and satellites. We are buying things from people we don't know in a currency all of us
don't completely understand, and yet there is no single custodian for the rules that govern
these transactions. How can these gaps be filled? And how can the interests of the
consumers be best protected?
Subjects for discussion may also focus on how intellectual property benefits consumers;
competition policies and consumer protection; services; trademarks and fair trade. The
discussion on trade and consumers is limitless and every angle makes for an important
conversation.
Trade and Africa
Africa is the new frontier for development and the African economies are transforming. In
the last decade Africa has grown steadily at more than 5 per cent, a rate above the
worldwide average. Foreign direct investment has tripled and consumer spending will double
in the next ten years. Economically, this renewal is driven mostly by exports of natural
resources, commodities and improved macroeconomic policies. African countries are as
diverse as they are similar. Most of the continent relies on agriculture but infrastructure and
opportunities are better in some countries than in others. 3
The rule of law is firmly established in some places while in others political instability is all
too common. Yet all of Africa shares an important asset; a young workforce.
Trade has become a necessary tool for development and poverty reduction but what do
Africans get out of open trade? Is growth in Africa inclusive enough? How can value-added
manufacturing be promoted in Africa? How beneficial have the aid for trade initiatives been?
Which policy prescription will allow Africa to enter a new age of economic reforms? What is
the potential benefit for south-south cooperation and intra-Africa trade?
According to the World Bank, in most African countries, women make a major contribution to
trade so can gender equality, education, and health be improved by trade? The possibilities
for discussion are as wide ranging as the diversity of the continent.
Rounding up the Doha Round
A special half day session will be devoted to the Doha Round Roadmap.
After the adoption of the Bali Package at the 9th Ministerial Conference, members’ attention
is now turned to the rest of the Doha Round.
Within the next months, the WTO will build a work program towards the completion of the
Doha Round and this session will gather thoughts and ideas from the Forum's participants on this issue.
One of the first concepts we learned about trade is that trade must benefit both parties. If it doesn’t, then the country that would incur losses from trade would simply decide not to trade. So I agree with Benjamin Franklin when he said, "No nation was ever ruined by trade, even seemingly the most disadvantageous." Trade creates opportunities for all the players involved. For instance, trade that can help generate growth for the labor market in developed countries. “In 2011, trade between the United States and the 11 other countries participating in the Trans-Pacific Partnership negotiations supported nearly 1.2 million jobs in Texas” However, trade can also create job loss. The key to making trade work to our advantage is by integrating domestic policies in our trade agreements. In terms of trade and consumers, one of the benefits of trade is a cheaper price for goods. However, again we see that domestic policies must be implemented in our trade agreements in order to make sure trade is actually benefiting the consumer. Is a cheaper price really a good deal for the consumer if the product is harmful? For this reason, I believe that certain restrictions must be implemented. For instance, a country must allow for the inspection of its meat before it is allowed to trade that meat with other countries. Likewise, trade significantly helps developing countries grow. For instance, the article states that in the last decade Africa has steadily grown at more than 5%. There has been in an increase in foreign investment and consumer spending. The African countries can continue to see growth if women are encouraged to join the workforce. Not only will this impact economic growth for the country but we can also see improvement in gender equality and in education and health as income increases and more people can afford it.
ReplyDeleteIn a global context, trade is a vital aspect of the international relations now established between many foreign countries. Trade allows for the exchange of goods between countries, typically commercial transactions. Logically speaking, there really can be no harm caused by trade, hence why it is very important, so Benjamin Franklin's quote of, "No nation was ever ruined by trade, even seemingly the most disadvantageous" stands true. Trade can only benefit a nation, and if it appears that a nation will incur a loss in its productivity growth by trading with so and so country, then the trade agreement does not have to be fulfilled, and the country can choose not to continue trade relations with so and so country. The reason why trade is so important lies in the one simple answer that trade is a key feature in the economic growth and development of a nation. It provides countries with resources unattainable in their land, and provides economic welfare. Also, if domestic supply is short of domestic demand, by importing, trade allows for the demand to be fulfilled. Another reason why trade is so important is that it allows for the flow of capital from one country to another to yield the best return.
ReplyDeleteThis excerpt from the World Trade Organization poses a lot of valid questions without offering any answers to these questions. After reading, I found myself very concerned and curious about a lot of the statements made on the topic of balancing trade policies with consumer protection policies. The WTO states that “A mix of domestic policies in support of workers, better infrastructure, higher educational performance and sound legal infrastructure are essential to create the right climate for job creation through trade”. I agree with the previous statement 100%, but it is much easier to identify the kinds of policies that must be enacted in order to attain safe and symbiotic trade relationships than it is to construct and implement such policies. The concepts inspire me to ask some questions of my own. For example, how can developed/industrialized nations be prevented from exploiting impoverished countries through trade? Unfortunately, I do not know the answer to this question. A few weeks ago we looked the TTIP trade negotiations, and I believe that world trade initiatives like the TTIP are the answer to globalizing the world economy in a way that can benefit all involved parties. Luckily, almost every country has something to offer when it comes to globalized trade. While the United States is not rich in natural resources, we are a leader in information technologies. Similarly, many African nations are not up to par technologically, but they are very rich in natural resources that fuel our consumer wants and needs. To me, this screams opportunity! Globalization and international trade are essential to the possibility of a harmonious future in this world. The more that countries work together through trade, the greater ties between countries will hopefully become.
ReplyDeleteThis excerpt has significant points that go in hand with the question of whether trade is in fact beneficial, or detrimental to any country. In my opinion, trade creates many opportunities for consumers, citizens and economic players at large. We live in a globalized world where people can move from one location to another in search for economic prosperity, so why shouldn't a country do the same for it's people? In Africa for example, the GDP is highly reliant on the export of raw material (i.e oil), however, they lack the technology and infrastructure needed to maximize production and increase the living standards of African citizens. The U.S. on the other hand, has the technology necessary to lead in any market. As we previously learned from our lectures, comparative advantage is acceptable between two countries and if the U.S. and Africa have unique specializations they should trade and expand their growth. However, it is important to understand that trade agreements and investment strategies are not sufficient on their own, other factors such as higher educational performance is very important. Programs established in small communities in Africa for example (i.e. teaching people how to allocate resources such as medicine, education, food), can reap higher returns in the long run. The US can even trade business knowledge, an intangible asset that can be beneficial to the African people. The fact is that, its only up to a country to decide on what to trade, as long as there is transparency and fair trade is practiced.
ReplyDelete“No nation was ever ruined from trade” said Benjamin Franklin. Trade has always had an overall positive effect on the development of poorer countries and growth of the world economy. However, the drawback of trade is its potential to create unemployment. Trade alone is not enough to yield improved standards of living in developing nations. Domestic policies that produce a more capable workforce is what is needed, coupled with better infrastructure to keep nations floating even during economic downturns. Today, producers must meet non-tariff measures to be granted free trade. Free trade should never have lax regulations when concerning matters of health, safety and protection. Free trade should never sacrifice quality.
ReplyDeleteThe growth in Africa is an example of how trade has been sustained over a long period of time. Africa has been home to many of the world’s most underdeveloped countries either due to factors of geography, climate or political instability. Africa as a continent has grown and is expected to continue doing so with increases in FDI and consumer spending. A young workforce remains the most valuable asset for the continent and trade is seen as a key tool in poverty reduction. Trade, like all things, has its benefits and disadvantages but coupled with human development policies, it can reshape societies that need it most.
There's no doubt that global trade contributes to greater economic growth, development and welfare. As Adam Smith stated in his much revered book, "The Wealth of Nations", trading entails that a particular country sell its surplus goods and services to another country who may lack the necessary input (resources, capital, skills, labor etc.) that produce these products. Countries benefit from trading in a variety of ways such as generating revenue and increasing assets, goods and services, diversifying their dependence on global markets, attracting foreign investments, creating jobs, and taking advantage of the ability to expand business ventures. I think an important benefit to trade is the exchange of ideas and practices, assuming that the country's laws and regulations permit adaptability to changing times. The article states that Africa possesses a large population of young workers. This allows for a greater demand of education, jobs and a greater infiltration of women in the workforce. Fulfilling these advantages can lead to poverty reduction and greater consumer spending, among others.
ReplyDeleteOf course trading has its disadvantages such as increasing pollution, labor exploitation (long hours, low wages, child labor),and the benefit of large corporations that enjoy economies of scales; weakening small companies. However, trading should be practiced by every country, whether developed or not.
Unfortunately, there is still a wide gap between developed and underdeveloped countries, despite the increased flow of trade. I believe a major contributor to this are the enforced trade limitations, such as tariffs, that impede the growth of these nations (keeping domestic issues constant). Countries need to work together to have strong and effective policies that stimulate global growth and reduce the negative externalities of trade that follow.
It is certain that trade is vital for the survival of the countries. It is important for both developed and developing nations in terms of improvement of the economy. It is obvious that trade itself improves day to day lives of citizens all around the world. Nations are not ruined by trade but trade just becomes the pillars of global economy. We just do not realize how we are in a relationship with products and services but it is obvious that we need these services and products to live. We all have some favorite products we love. Even the jean we wear originates in one place and it is produced in another place and it is shipped from a third country before it finds its way into the local shop. As long as there is international production of goods and services, there will be contribution of this system to the poor countries and growth of world economy. We witness that millions of goods are transported every single day across continents and borders for meeting the needs of consumers. We are part of this system and we need it. Economic opportunities are provided through trade for consumers and citizens. When there is any crisis, people and economies are affected by that badly and we all witness the results of the crisis. People lose their jobs as a result of global crisis of 2008. There are some solutions offered to solve the problems related to crisis. Trade agreements attract attention in that sense. I think they are useful though many economists criticize it. NAFTA is a trade agreement between Mexico, USA and Canada and it is signed in 1994. American people lose their jobs but new opportunities are created and people need to see this.
ReplyDeleteEvery interpersonal action is either voluntarily or not. If not, at least one side perceives it negatively. For example theft is involuntary and the thief ends up better of in expense of the victim, which ends up worse off.
ReplyDeleteWhen trade occurs, both sides of the transaction undertook the action voluntarily because it was perceived to have a positive expected value. No one is getting wealthier in the expense of another, but both sides profit. Keeping in mind that value is subjective, with every trade a wealth is created. The more trade is, the more wealthy society is.
This logic is valid on every level, from purchase a drink from vending machine to a large international transactions.
It has nothing to do with a judgement whether an unemployment is too high or low. That falls back to the fallacy I described in the previous blog post. We should keep in mind that employment is a trade like any other. Worker is selling his time and labor in exchange for wage.
Trade is opposite of conflict. If one is restricted than the other grows. Not only that “No nation was ever ruined by trade, even seemingly the most disadvantageous,” but also as Bastiat said, "if goods don t cross borders, armies will.”
Trading exist because trade is the basic human activity of gaining what we want.
ReplyDeletebefore the currency exits, people trade using item to trade item. It was call bart.
Nowadays, trading and exchanging happen billions of times large than the ancient bart.
For example, developed country trade their technology and patent with developing countries with their cheap labor. Developed countries get to produce their product at a lower cost. And developing countries get to get people their jobs and gain incomes.
International trade has flourished over the many years due to the benefits it has to offer to different countries across the globe. The positives of international trade have been the major drivers of growth. Nations with strong international trade relations have become prosperous and have the power to control the world economy. The global trade can become one of the major contributors to the reduction of poverty. The article states “Many global initiatives are currently underway…free trade agreements, investment treaties and aid for trade all promise job creation, higher wages and opportunities for alleviating poverty.” While some countries feel that trade has brought about positives, job creation is still taking some time to build from the global economic crisis of 2008. “Global unemployment in 2013 reached almost 202 million and about 400 million more jobs must be created between 2012 and 2022 to keep it from rising further…” This just shows that there is an importance behind international trading. The fact that 1.2 million jobs were created in Texas because the United States was conducting business with 11 other countries within the Trans-Pacific Partnership is such an astonishing number. Another interesting detail to look at is the effects of trading on Africa, “In the last decade Africa has grown steadily at more than 5 per cent, a rate above the worldwide average. Foreign direct investment has tripled and consumer spending will double in the next ten years.” Since Africa has always been known to have many countries that struggle economically, it is great to hear that these underdeveloped areas in the world are able to sustain themselves and grow. The article later states that since Africa has a young workforce, that is a important aspect in reducing poverty for the country. While there are many disadvantages that trading internationally can cause, I believe that the advantages outweigh them, which will improve the financial state of the world.
ReplyDeleteRegulations which protect consumers, their food, their health and the environment should not be scaled back. With the high frequency of international trade, it could potentially be very dangerous to the consumer and to the country as a whole to relax international trade regulations. The growing number of regional trade agreements potentially poses a threat to the welfare of the consumers if regulations were to be lightened. That being said, trade laws should not become so strict that they disincentivize trade among countries, as trade is "...unquestionably beneficial to
ReplyDeleteconsumers, who would benefit from lower prices, greater variety and higher quality." Although the post cites that, "...now that the world has been stripped off most of tariffs, the non-tariff measures (NTM) in the forms of sanitary requirements or technical specifications are becoming an obstacle to free trade," I do not think consumer health and safety should be compromised by attempting to support the concept of free trade. While restrictions inherently restrict trade to some degree, a certain degree of restriction is necessary when dealing with world trade.
This article talks about a concept repeatedly seen in the text, that trade encourages job growth. The articles says that “free trade agreements, investment treaties and aid for trade all promise job creation, higher wages and opportunities for alleviating poverty”. With increased production and productivity from these international investments and trade there should definitely be increased employment in developing countries. Although globalization offers to increase employment and create a universal standard of labor laws, there are still many developing countries that have poor labor laws and unfair treatment of employees. Increased globalization could cause producers from developed countries to take advantage of these workers, causing high unemployment in developed countries. The article also talks about trade and the consumer. Ultimately the consumer benefits from lower prices due to free trade. I do not think that scaling back on international regulations for goods is in the consumer’s best interest. The standards set may cause some increases in prices but the consumer’s safety is worth the potential price hike. Africa is a good example of how countries can benefit from trade. Africa has seen steady increases in GDP. However, the advances are not equally distributed, countries that are politically stable receive more benefits than those that are not. I think that with a more political stability, investments in infrastructure, and equality amongst workers Africa can stand to benefit a lot more from trade.
ReplyDeleteTrading between nations is an essential process in our society. The lack of certain resources in different geographical regions means that trading is necessary in order for everyone to attain the widest range of choices. All types of economies benefit from this process regardless of their state. However, this is not to say that one cannot benefit more than another, as imbalance is something all things in life must struggle with. The question of how it affects unemployment is a difficult one due to the fact that there are many factors that affect unemployment depending on the situation, and trade is merely one of many that must be considered. As for trade and consumers, regulations are necessary to some degree as long as they seek to protect the consumer and are not overbearing. And much like everything, there will always be gaps to fill in order to maximize the efficiency and quality of the trading process. Seeing as though Africa has so many resources and a large supply of labor, international investment and trade seem to be the best thing to help its development.
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ReplyDeleteTrade is an extremely important part of the global economy, perhaps the most important part. International trade allows people the opportunity to buy and sell in a market that has prices set by competitors all over the globe. This obviously benefits the consumers, because the competition will force sellers to better their products and their prices. As trade spreads throughout the globe, we will see improvements in some people’s standard of living, but there is no way to tell to what extent, or if there will be no adverse effects. Africa is a good example of how this can benefit a country. Africa has increased their exports and bettered their economic system, and it seems that they are experiencing very positive changes in their standard way of life. This is great, but as the article states, this is not the only potential outcome; it can also, possibly, destroy jobs and diminish standard of living.
I don't know what it will ultimately turn out to be, but I absolutely believe that scaling back regulations, in terms of quality control, should not be an option. To protect the consumers, regulations, like these, need to be tight. While all of the other topics, to me, are debatable, this one isn't.
This article talks a great deal about how trade has an extensive amount of power in many areas around the world. It has the power to create jobs and the power to destroy employment. However, in this article it talks a great deal about how it can give job opportunities for developing countries. This seems to be beneficial as there are many people without income and their nation’s economy does need a bust. Yet, the article did not touch upon how they will also regulate fair employee treatment. Many of the countries that participate in trade offer their labor at a very cheap price to large companies, which in return take advantage of this labor and the employee’s work in horrible conditions. There are no such organizations as worker unions or protection. I do not believe that trade has the ability to take away and provide employment, I believe that there are other variables and it completely depends on the situation of the matter.
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