Globalization and Free Trade - Research Paper Example

INTERNATIONAL S Labor refers to the combination of both man’s physical and mental energies to aid in goods and services’ creation. A primary production factor, labor and especially a country’s labor force size helps determine population and the extent to which this population is working or are prepared to render their services for a salary or a wage (Bardhan, et al. 45-6). On the other hand, free trade refers to a government policy that helps to avoid discrimination against imports or any kind of interference with imports through application of tariffs to (imports) and/or subsidies to (exports). It aims at getting rid of unfair trade barriers in the global market plus aims at helping raising the economy in both developed and developing countries. Free trade has highly devastated American industries and American jobs at large. The Senator Barrack Obama in 2007 indicated his believe in free trade (Raskin, et al. 42). He however acknowledged that the burdens that came with this trade highly outweighed the benefits especially for millions of Americans. The trade has contributed to adverse working conditions. Underdeveloped countries will want to cut down on costs in a bid to benefit from price advantages but on the other hand, many employees in the respective countries end up facing low pay, bad working conditions and forced labor including abusive child labor. As underdeveloped countries attempt to cut costs to gain a price advantage, many workers in these countries face low pay, substandard working conditions and even forced labor and abusive child labor. Yet the WTO states that it does not consider a manufacturer’s treatment of workers reason for countries to bar importation of that manufacturer's products. The WTO however notes that developing countries insist any attempt to include working conditions in trade agreements is meant to end their cost advantage in the world market. This trade often contributes to environmental damage. An increase of corporate farms in developing countries tends to increase pesticide and energy use, and in turn host countries ignore costly environmental standards. The Global Development and Environmental Institute, however, find the environmental impact mixed. The WTO is criticized for not allowing barriers to imports based on inadequate environmental standards in countries where goods are produced (Richardson 76-9). Yet the WTO points to its ruling in the 1990s allowing a U.S. ban on shrimp imports because fishing methods threatened endangered sea turtles outside U.S. borders. The extent to which environmental standards should be considered in free trade is an ongoing debate within the WTO. The trade agreements tend to draw protests from the U.S. public as a result of feared job loss to foreign countries with cheaper labor. Yet proponents of free trade say new agreements help to improve the economy on either side. There is no clear picture of whether the trade significantly affects U.S. employment levels, given all the economic forces that affect job rates. Proponents of free trade contend that even if the economies of developing nations improve under free trade, those economies are still too small to have any real effect on the U.S. economy and job market (Goldstein 21). Unions have strongly criticized the North American Free Trade Agreement (NAFTA) between the United States, Mexico and Canada as critically harmful to workers and the U.S. economy. The AFL-CIO argues NAFTA has harmed consumers and workers thereby contributing to a loss of jobs and drop in income while strengthening the clout of multinational corporations. The unions contend that the increased capital mobility facilitated by free trade has hurt the environment and weakened government regulations. The Council on Foreign Relations (CFR), reports that many economists agree NAFTA has caused some overall improvement in U.S. jobs but with harmful side effects. Free trade can cause turbulence in sectors of a domestic economy, such as long-established manufacturing segments already vulnerable to global competition. According to Edward Alden, a senior fellow at CFR, wages have not kept pace with productivity of labor, and income inequality has increased--trends hastened to some extent by free trade (Bertho & Fogarty 56). International trade could adversely lead to low pay for employees. Bearing in mind that products will be coming in from another country, chances are high that companies bringing in the goods will dictate first the prices of goods and second the salaries to be given for each employee (Ohmae 122). This could however not match the amount of workload employees could be subjected to. In most instances, international traders come with their salary scales. This tends to limit employees bargaining for better pay. WTO, EU and NAFTA could help in reduction of labor’s bargaining power by ensuring there’s totally no discrimination. A WTO member has to grant the most favorable conditions under which it allows trade in a certain product type to all other WTO members. In that case, nationally imported goods should be treated in the same manner as locally produced goods (Ellwood 78-9). Effecting policies to look into both sides will help avoid any strains from traders of either goods for import or those for export markets. Transparency by the bodies would help too. This is achievable when the bodies publish out distribute their trade regulations. It goes a long way in helping other members and participating bodies in quickly understanding the regulations in order to help in trading. Binding and enforceable commitment tariffs made by members in trade negotiations are enumerated into schedules. The schedules help in coming up with bindings after having made negotiations with trade partners. This binding helps to deal with compensations or refunds at the end of the day should trade negotiations go sour (Appadurai 134). In certain instances, governments are forced to come up with trading restrictions. The bodies could effect labor bargaining especially in instances where they would come up with means to protect animal health, environments, public health and plant health. The bodies made it possible for U.S. manufacturers to move jobs to lower- Mexico. The remaining manufacturers in turn lowered their wages to allow them compete in the industries. On the other hand, most farmers were put out of business by the subsidized products (Fischer 89). The provisions of these bodies were never strong in a way to exploitation of workers. In conclusion, the international trade is a developing force in today’s world and it is playing different number of roles. The illustrated trade agreements above (WTO, EU and NAFTA) provide a big assistance to the developing countries including settling disputes. They also ensure that the developing countries function efficiently and effectively in the global trade. Moreover, they also provide a structured system to ensure that the global world function smoothly. In addition, some members benefit more from trading through WTO than others. As it is, developed countries flourish in global trade when trading through WTO. However others such as the LDCs emerge to be exploited further by the WTO. Given that it has been functioning in same capacity since 1995, it is untimely to say whether WTO will be a beneficial to the global trade or not and therefore the world has to simply watch and wait. Works Cited Appadurai, A., Disjuncture and Difference in the Global Cultural Economy, Public Culture, 2005. Internet. Bardhan, A. D., Jaffee, D. M., & Kroll, C. A. Globalization and a high-tech economy: California, the United States and beyond. Boston [u.a.: Kluwer Academic Publ. 2004. Bertho, M., Crawford, B., & Fogarty, E. A. The impact of globalization on the United States. Westport, Conn: Praeger. 2008. Print. Ellwood, W., The No--?Nonsense Guide to Globalization, Verso, London, UK, 2002. Fischer, Thomas C. The United States, the European Union, and the "globalization" of World Trade: Allies or Adversaries? Westport, Conn. Quorum Books, 2000. Print. Goldstein, N. Globalization and free trade. New York: Facts on File, 2007. Mann, Catherine L, and Jacob F. Kirkegaard. Accelerating the Globalization of America: The Role of Information Technology. Washington, DC: Institute For International Economics, 2006. Print. Ohmae, Kenichi. The Next Global Stage: Challenges and Opportunities in Our Borderless World. Upper Saddle River, NJ: Wharton School Publishing, 2005. Print. Raskin, P., T.Banuri, G.Gallopin, et al. The Great Transition: The Promise and the Lure of the Times Ahead, Tellus Institute, Boston, MA, 2002. Richardson, Martin. Globalization and International Trade Liberalization: Continuity and Change. Cheltenham, UK. Elgar, 2000. Print. Read More