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Politics of international trade policy - Essay Example

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This essay talks about the politics of international trade policy.It has important consequences on the citizens. The effect can be not uniform at times. This is the case when a country opens its domestic economy through liberalization policies by the decision to join certain trade organizations…
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Politics of international trade policy
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Full Politics of International Trade Policy (Its Two Components) 13 June (estimated word count = 679) Politics of International Trade Policy
The international trade policy of a country has important consequences on its citizens because it affects everybody, although admittedly, the effect can be not uniform at times. This is the case when a country opens its domestic economy through liberalization policies by the decision to join certain trade organizations, such as the World Trade Organization or WTO. It is incumbent on the member-country to agree to certain conditions to become a member and a primary consideration is the requirement to open up its economy to imports from all the other nations. The WTO is based on the twin principles of non-discrimination in trade and so-called national treatment obligation with regards to imports (to treat imports similar to local produce with regards to import duties, charges, fees, taxes, levies, etc.) under the sub-principle of most favored nation (MFN) status mandated by the World Trade Organization from all its members. A lofty aim of the WTO is to remove trade irritants and barriers which are the major causes of two world wars, when countries vied for scarce resources and market dominance.
However, the president or any head of state of a country, has to balance all competing interests with regards to economic liberalization. There are actually two components to policy formulation when it comes to pursuing international trade economic liberalization. The first is the policy of reciprocity, in which a country has to lower its import trade barriers like tariffs in consonance with its obligations under a trade agreement, similar to what the United States of America did in joining the North American Free Trade Agreement (NAFTA). The second part has to do with domestic policy issues, since trade liberalization has unequal costs and benefits on certain industry sectors which are harmed by cheap imports, such as dumping of products.
Generally speaking, increasing the international or global trade of a country benefits it in what economists euphemistically termed “a rising tide lifts all boats” because everyone seems to benefit from it. This is the aim of most countries today, to be integrated into a global economy because doing so is beneficial in the aggregate (Baron 345). The president usually is left to decide on this issue based on what is called as entrepreneurial politics because only he can translate certain trade preferences into actual international trade policies. But on the other side, although imports can result in lower consumer prices overall, certain sectors are harmed by a flood of cheap imported products, resulting into lost sales and eventually, job losses. The president has to take a balance act in trying to reconcile these two competing interests in order to have a coherent policy with regards to international trade and still retain public support.
The interplay between these two components determines to a large extent on how the president will perform; whether he will cater to the interests of those who favor international trade (as long as it should be free and fair) or to the domestic industry sectors who clamor for some protectionism to spare them from the onslaught of cheap imports. In this regard, it is a vital part of American democracy that certain lobby groups have formed for this purpose. The special interest groups (lobbyists) can be found in Washington, D.C. representing all sorts of industries and politicians have to listen to them, resulting in some form of patronage politics, or what the author calls as client politics (ibid.) that can foster corruption and higher prices.
In the final analysis, international trade policy can be held hostage by which groups hold the greater bargaining power when it comes to the political economy. In an election year like this year, the president has to give more consideration to domestic economic issues than to foreign policy issues, as the American electorate is more concerned with jobs, health care and other domestic issues. The president has to win this year for a new mandate by catering to domestic interests, and then turn his attention again to foreign issues once he wins re-election.
Work Cited
Baron, David P. Business and its Environment. Upper Saddle River, NJ, USA: Prentice Hall Publishing, 2009. Print. Read More
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