Should global trade come to a complete halt?

Alfonso Llanes, Master Degree in International Development

Positive and negative features of international trade under current practices

For the most part enthusiasts of globalization argue that it has the potential to make this world a better place to live and prosper; while solving many of the deep-seated economic world problems like unemployment and poverty.

POSITIVE ISSUES

· Free trade is supposed to reduce obstacles such as tariffs, value added taxes, subsidies, and other barriers between nations but as long as currency manipulation is not restricted it tilts the balance of trade that favors violators.

· The advocates of free trade contend that it promotes global economic growth; creates jobs, makes companies more competitive, and lowers prices for consumers.

· The Competition among countries is supposed to drive prices down. In many cases however, this does not happen when countries manipulate their currency to obtain trade advantage.

· Open global commerce also provides poor countries, with infusions of foreign capital, technology, and opportunity to develop economically and spread prosperity. It is also suppose to create the conditions in which democracy and respect for human rights may flourish. This is an fragile goal which hasn’t been achieved in most countries

· It must be a worldwide market for companies and consumers who have access to varieties of products from different countries with diverse quality and price levels.

· With trade, there is more interchange of information among countries, which do not have anything in common whether culturally or economically. As a result, there is cultural intermingling and each country learns more about the other.

· Since we share the same planet financial interests, corporations and governments are trying to sort out ecological problems for each other.

· Labor can move from country to country to market their skills and universities as well as industry can take advantage of diverse know-how and a variety of intellectual capacity.

· Transnational companies installing plants in other countries provide employment for the people in those countries often getting them out of poverty making them consumers of goods from the parent country.

NEGATIVE ISSUES

• The general complaint about globalization is that it has made the transnationals richer while making the labor workers in the capital exporting company poorer.

• Globalization is supposed to be about free trade where all barriers are eliminated but there are still many barriers on either by distorted taxation methods or by imposition of tariffs.

• The biggest problem for developed countries is that jobs are lost and transferred to lower cost countries and a pace in which a dislocated number of workers in the labor force are left with little time for retraining in other skills or occupations.

• Workers in developed countries like the US where pay for work favors employers using the threat of exporting jobs overseas in order to keep wages low. This has created a culture of fear for many in the labor force who have little leverage in this global game.

• Large multi-national corporations have the ability to exploit tax havens in other countries to avoid paying taxes and therefore their own nations fall short of the revenue needed for retraining of displaced workers and provide safety nets.

• Multinational corporations are accused of social injustice, unfair working conditions, as well as lack of concern for environment, mismanagement of natural resources, and permanent ecological damage.

• Multinational corporations, which were previously restricted to commercial activities, are increasingly influencing political decisions. Corporatocracy, is a latest term used to denote an economic and political system controlled by corporations or corporate interests. It is most often used today as a term to describe the current economic globalization, especially, in the United States. Many think there is a clear and present danger of corporations ruling the world because they are gaining power, due to the shifting balance of economic and political control in the global sphere of corporations.

• Making high-tech products overseas puts the property of technologies at risk of being copied or stolen when countries do not respect patents or copyrights.

• The anti-globalization activist claim that global trade is not working for the majority of the world. During the most recent period of rapid growth in global trade and investment inequality worsened both internationally and within countries. “The UN Development Program reports that the richest 20 percent of the world's population consume 86 percent of the world's resources while the poorest 80 percent consume just 14 percent”.

• Globalization has led to exploitation of labor in many countries. Prisoners and child workers are used to work in appalling conditions. Safety standards are non-existent to produce cheap goods for a more robust bottom line of the corporation.

• Social welfare schemes or “safety nets” are under great pressure in developed countries because of deficits, job losses, and other economic consequences of unrestricted global trade with a maze of loopholes that provide escape routes and avoid paying due taxes or worker’s benefits.

We need progressive leadership and politicians who are willing to confront the swindlers. Most of the many practices are illegal under WTO rules so there are sound legal basis to put some kind of levies on transnationals and its corporate bosses.

As long as trade is only good for Wall Street and the multi-national corporations that eliminate jobs in America and expand their fortunes— everyone else will have to carry the deficit of free trade. Moreover, national treasuries will be stretch to the limits by greedy corporations with its supporting infrastructure of banks and financial institutions that are“laundering” ill-gotten profits.