Globalization and the Impact Onus Manufacturing Term Paper

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GLOBALIZATION and the IMPACT on U.S. MANUFACTURING

Ten years ago, the debate surrounding manufacturing leaving the United States had as its focus the jobs that were being pulled southward into Mexico. Today, this issue is more urgent than previously however, the source of worry is not only focused on south of the border in Mexico. Manufacturing is increasingly relocating to Brazil, China, India, Bulgaria and Malaysia. It has been estimated by the website Economy.com, an economic consulting firm in West Chester, Pennsylvania that 1.3 million manufacturing jobs have been moved abroad since the start of 1992 and that the bulk of this has occurred in the past three years with the majority of jobs moving to Mexico and East Asia. The Trade Resource Center relates that there are 'myths and realities of trade liberalization'. For example, a myth exists which states that "liberalization undermines environmental protection laws and harms the environment" however the truth is as follows:

1) Trade agreements do not dictate U.S. environmental law or undermine U.S. environmental laws. International trade agreements require the United States only to apply the same standards to imported products that it applies to domestic products. Trade agreements do not prevent other countries from applying the same environmental standards to U.S. goods that they apply to their own goods;

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2) to achieve environmental sustainability, countries need good environmental laws and effective enforcement of those laws. Liberalized trade produces higher incomes and economic growth that make it possible for countries to improve their environmental laws and law enforcement;

TOPIC: Term Paper on Globalization and the Impact Onus Manufacturing Assignment

3) the U.S.-Singapore and U.S.-Chile Free Trade Agreements require the governments of the United States, Chile and Singapore to (a) effectively enforce environmental laws, (b) ensure that they do not weaken their environmental laws to encourage trade or investment, and - ensure that violations of their respective environmental laws are subject to sanctions by legal procedure; and 4) Liberalized trade helps improve environmental protection by lowering the barriers to the sale of environmental technologies; enabling new investments in environmental infrastructure; and making it easier for environmental scientists, engineers and technicians to provide services to developing countries. (Trade Resource Center, nd)

The second stated myth by the Trade Resource Center to exist is the myth that posits that liberalization of trade "undermines protection for labor" however, according to the Trade Resource Center, the following statements are actually true:

1) Trade agreements do not require the United States to change its labor laws or undermine U.S. laws protecting labor rights;

2) Trade liberalization does not undermine worker rights. In fact, the opposite is true. In a study of 44 developing countries that engaged in significant trade liberalization, the Organization for Economic Co-operation and Development (OECD) found that "there was notably no case where the trade reforms were followed by a worsening of association rights" and that freedom-of-association rights improved in 32 of the countries after trade liberalization; and 3) the U.S.-Singapore and U.S.-Chile Free Trade Agreements require the governments of the United States, Chile and Singapore to (a) effectively enforce labor laws, (b) work to ensure that International Labor Organization (ILO) principles are protected by their domestic laws, - ensure that they do not weaken their labor laws to encourage trade or investment, and (d) ensure that legal proceedings are available to sanction violations of labor laws. (Trade Resource Center, nd)

The Trade Resource Center states that a third myth is one that holds that trade agreements "undermine U.S. sovereignty by giving international bureaucrats the power to strike down U.S. laws." (nd) the actual truth, according to the Trade Resource Center is as follows:

1) Only the U.S. Congress and the U.S. president can make U.S. law, no international institution or foreign country can change U.S. laws;

2) Decisions by the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA) dispute panels cannot override U.S. law. Those panels can only issue recommendations, and these recommendations have no force in the United States. Only the Congress and the president can decide whether to implement a panel recommendation. They can (a) revise U.S. law, (b) compensate a country harmed by a U.S. law through reductions in tariffs or other trade barriers, or - do nothing -- and accept the risk that the other country may retaliate by raising tariffs or other barriers to U.S. exports; and 3) the United States may withdraw from the WTO, NAFTA, free trade agreements and all other trade agreements at any time. (Trade Resource Center, nd)

The Trade Resource Center states that a myth exists that holds that "trade liberalization increases U.S. trade deficits." (nd) the truth, states the Trade Resource Center is that trade deficits existed for the United States prior to the existence of the WTO. The trade deficit for merchandise can be witnessed to grow as the economy grows and alternatively to shrink when the economy shrinks. The trade deficit is due to the prosperity of Americans and the strength of the economy in the United States evidenced by the ability of consumers to purchase goods that are competitively priced and the access of low-cost inputs available to producers.

Fifth and last is the myth which holds that trade liberalization."..cause good U.S. jobs to move overseas." (Trade Resource Center, nd) the facts include the fact that good jobs in the United States are created by trade with ten percent or approximately twelve million jobs in the United States depending upon exports. The Trade Resource Center states that one out of every five factory jobs are dependent upon international grade and that these jobs generally pay approximately 13 to 18% higher than the average wage in the United States. Also stated as truths that make this fifth and final myth null and void are the following:

U.S. plants that export increase employment 2 to 4% faster annually compared to plants that do not export. Exporting plants also are less likely to go out of business;

U.S. firms that are deeply integrated in worldwide markets are more likely to succeed in generating good jobs at home. Such jobs pay an average wage in the United States of $15,000 more than jobs in firms that are less globally integrated, or $50,000 versus $35,000; and Contrary to the predictions of a "giant sucking sound," NAFTA has created good jobs in the United States. In the first eight years of NAFTA, the number of U.S. jobs supported by merchandise exports to Mexico and Canada grew from 914,000 to 2.9 million. Between 1993 and 2000, U.S. employment grew by 20 million. Real hourly compensation in the U.S. manufacturing sector increased by 14.4% in the 10 years following NAFTA implementation, as compared to 6.5% in the 10 years prior to NAFTA. (Trade Resource Center, nd)

This however, is not the reality of the whole picture. The World Trade Organization presents statistics and states that studies which show the findings as follows are "culled to demonstrate that current trade liberalization rules and policies have led to increased poverty and inequality, and have eroded democratic principles, with a disproportionately large negative effect on the poorest countries." The findings spoken of include those as follows:

The numbers of people living on less than $2 per day has risen by almost 50% since 1980, to 2.8 billion -most half the world' population. And this is precisely the period that has been most heavily liberalized. (World Bank, Global Economic Outlook 2000

Recent evidence suggests that the numbers of people living on less than $1 per day is growing in most regions of the world (with the notable exception of China). (World Bank, Global Economic Outlook 2000)

The world' poorest countries share of world trade has declined by more than 40 per cent since 1980 to a mere 0.4 per cent. (UNCTAD), Conference on Least Developed Countries 1999)

The poorest 49 countries make up 10% of the world' population, but account for only 0.4% of world trade. This disparity has been growing. (UNCTAD, Conference on Least Developed Countries 2001)

51 of the 100 largest economies in the world are corporations. The Top 500 multinational corporations account for nearly 70% of the worldwide trade; this percentage has steadily increased over the past twenty years. (CorpWatch)

The U.N. estimates that poor countries lose about U.S.$2 billion per day because of unjust trade rules, many instituted by our organization 14 times the amount they receive in aid. (UNCTAD, Conference on Least Developed Countries 2001)

In 59 countries, average income is lower today than 20 years ago. (United Nations Human Development Report, 1999)

Poor are getting poorer in both relative and absolute terms, as one UNICEF study has commented: 'A new face of 'apartheid' is spreading across the globe. As millions of people live in wretched conditions side-by-side with those who enjoy unprecedented prosperity. (UNICEF figures based on World Bank "World Development Indicators 1997")

In almost all countries that have undertaken rapid trade liberalization, wage inequality has increased 20-30% fall in wages in some Latin American countries. (UNCTAD 1997)

This is by no means an exhaustive… [END OF PREVIEW] . . . READ MORE

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