Global Trade Term Paper

Pages: 6 (2015 words)  ·  Style: MLA  ·  Bibliography Sources: ≈ 7  ·  File: .docx  ·  Topic: Economics

Global Trade

There are a variety of elements that play a role in World Trade negotiations. The fact that many different countries from both the developed and developing world are involved in these negotiations tend to complicate the issues. Indeed, each country has different interests and focal points in mind when negotiating. Developed countries for example tend to focus on their profit margins rather than the reduction of worldwide poverty, while developing countries have their own industrial upliftment in mind. This is the core of the reasons for the latest failures in Global Trade negotiations.

The Cancun Ministerial Conference of the World Trade Organization is a specific example of where a basic lack of focus on one issue at a time collapsed the negotiations. The key issue during this conference, which collapsed for the first time in 2003, was the reduction of agricultural subsidies to farmers in wealthy countries. The basic problem with these subsidies is that it provides rich farmers with the means to sell their products at competitive prices worldwide. Farmers from poorer countries then find it extremely hard to compete with these prices and still make a living from farming.

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The problem of agricultural subsidies manifest themselves not only in the marketplace competition between rich and poor countries, but also between large and small farmers within the same country. Indeed, these subsidies are focused towards large farmers or corporates, which provide them with a very high income and consequently they have the competitive edge in the global marketplace. The design of this system is focused on making the already rich even richer and to maintain the poverty level of the small farmer and those farmers in poor countries who attempt to compete in the marketplace. Furthermore, agricultural subsidies in industrialized countries are much higher than the amounts allocated for development assistance to poorer countries. Surely the injustice involved in this is obvious.

Term Paper on Global Trade Assignment

It is this injustice that was the initial focus of the Trade negotiations mentioned above. The main reason for its collapse is the lack of focus mentioned above. The negotiations on the issue itself was also problematic: Brazil and India resisted opening their agriculture markets. This is understandable, as the ability of wealthy countries to provide competitive prices in the marketplace is facilitated by the large subsidies their farmers receive. Furthermore, the United States and European Union failed to agree on tariff and subsidy reductions. When no agreement could be reached on the focus issue, delegates attempted to focus on a new issue: that in Singapore. Specifically, the Singapore issue included elements such as trade and investment, competition policy, government procurement transparency, and trade facilitation. This led to a complete breakdown in the negotiations.

Delegations from the European Union and Japan wished to negotiate right away on all the issues, while a group of 21 developing countries wanted to focus on agricultural subsidies until they were resolved, before moving on to the Singapore issue. This is indicative of the focus of importance for the countries involved. Poorer countries wanted to focus on issues that would reduce poverty and provide their farmers with equal opportunities to compete in the marketplace, while wealthy countries wanted to focus on more general issues of world trade. Ironically, the complete breakdown of talks means that no resolution was found for either Singapore or for poverty reduction and economic recovery through a reduction of farmer subsidies. The most recent collapsed meeting of this round of talks occurred in Geneva during July 2006.

Specifically, in terms of tariffs and subsidies, export countries such as Brazil and Australia want concessions on tariffs from Europe and subsidy cuts from the United States. Such actions would make it possible for poor countries to compete and eventually help to reduce their poverty and unemployment rates.

Another factor responsible for the collapse of negotiations that has not been mentioned before is the food aid issue. The issue here is the conflict between food aid programs and cash grants. Certain WTO members feel that cash is better than food aid programs, and that the latter should be limited only to emergency cases. Others again feel that a combination of food aid and cash can best meet the specific needs of food insecurity areas. This is a position taken by World Vision and the United States. The argument is for the flexibility of this combination in order to respond quickly and efficiently to the need in any area.

One of the most important potential results of globalization is the fact that it can reduce the abject poverty that some countries are forced to live in. Economic poverty and hunger are not the only problems faced by these countries. Indeed, the fact that they are poor have repercussions that affect the entire globe. In terms of the ecology for example, poor countries do not have the means to invest in ecologically friendly farming practices. One of the solutions to such problems can be the Global Development Program.

Through this Program, grants will be made available to reform multilateral trade rules that make market access difficult for developing countries. Domestic farm support payments within the United States will then be shifted towards productive uses and support for poor countries rather than provide the already rich with the means to become even richer at the cost of not only the poor, but also of the future of the earth. This issue is therefore wider than only poverty reduction or the redistribution of funds. It also relates to the very future of humanity. Poor countries need aid on both the short- and long-term. Short-term help relates to providing direct financial aid for critical investments. In the long-term, the lives of the poor can be improved by increased trade. If poor countries are offered the opportunity to enter international trade, this would mean a sustainable income for these countries, and therefore economic growth and a reduction in the need for foreign aid. While foreign aid is therefore a worthy endeavor, it is much more sustainable and beneficial for all involved to uplift poor countries towards the international marketplace. These countries can then themselves become involved in alleviated the poverty of additional countries, relieving the economic stress upon developed countries.

The problem is however, as seen above, the conflict of interest between the developed and developing world. The developed world, understandably, is unwilling to change its way of conducting business on the international platform. This self-interest is demonstrated in the collapse of the World Trade negotiations. While the interest in poverty reduction is widely advertised, it is less prominent at the point where practical application is at issue. Particularly, this issue relates to agriculture. The major product focus for poor countries is farm produce. The major problem that these countries face in the international marketplace is trade barriers against their farm produce. If these barriers were to be removed, the world's poor would earn farm more than from foreign aid and development assistance. Barriers that limit access to the world market include tariffs, export subsidies, and the direct support payments to already high-income farmers, as mentioned above. Such subsidy policies artificially lower the market prices for farm products, making it impossible for developing countries to compete fairly.

Another repercussion of programs to reduce trade barriers and remove subsidy policies could be the facilitation of negotiations such as those mentioned above. The current barriers and tariffs have not been opposed outside of the attempted negotiations. If they were to be opposed by official programs and publications, this would strengthen opposing forces to help poor countries improve their economy and lower their poverty level.

Another important paradigm in developing programs to reduce poverty is to do so in a way that would also benefit farmers in developed countries. Such an option is using subsidies for the purpose of developing renewable energy farming. Not only would this increase the level of earth-friendly practices both within the United States and in port countries; it would also benefit American farmers and those in developing countries. Resentment and resistance to the redistribution of subsidies would therefore be reduced or eliminated, and all involved can work together for social and environmental improvement.

Trade liberalization is a practice that focuses on reducing trade barriers. The initial purpose of trade barriers is to protect domestic business people from foreign competition. In addition to tariffs, trade barriers can take the form of quotas and non-tariff barriers. Quotas mean that a limit is placed upon the number of goods that can be imported into a country, while non-tariff barrier relate to regulations and legislation relating to import goods. These can be designed to make it very difficult for foreign countries to sell their goods. Trade liberalization focuses on reducing all these barrier types.

Promoters of trade liberalization have developed the theory of comparative advantage, according to which trade liberalization holds advantages in terms of trade gains for all concerned. The problem is however that many trade barriers are extremely complex, and would take a large amount… [END OF PREVIEW] . . . READ MORE

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Global Trade.  (2007, August 4).  Retrieved September 20, 2020, from https://www.essaytown.com/subjects/paper/global-trade/4614

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"Global Trade."  Essaytown.com.  August 4, 2007.  Accessed September 20, 2020.
https://www.essaytown.com/subjects/paper/global-trade/4614.