指导assignment|自由贸易在现实世界中是现实的

指导assignment|自由贸易在现实世界中是现实的

Free Trade Is Realistic Desirable In Real World 

 

托马斯·弗里德曼在他那本关于全球化的令人兴奋和可读的书中说：“世界是平坦的，或者至少变得非常的平坦”。事实上，贸易自由化加速了国家间的一体化和全球化，创造了一个国家能够提高生产效率，促进创新，改善贸易平衡，促进全面增长的水平竞争领域。然而，“它仍然有坎坷”，使我们对全球经济增长和发展的前景感到悲观。

在过去的时间中，我们目睹了发展中国家和发达国家之间的强烈的融合。特别是，它的国际和区域组织如世界贸易组织的形成（关税及贸易总协定前1948），欧洲经济共同体（1957）、欧洲自由贸易协会（1959），北美自由贸易协定（1993），东盟自由贸易区（1992）分享利益加快增长。在世界贸易组织的谈判中，发展中国家一直推到积极参与贸易自由化过程中通过调整贷款条件的世界银行和国际货币基金组织。此外，国际货币基金组织、世界银行和联合国贸易和发展会议开始改变他们的重点从实施贸易自由化在发展中国家消除发达国家如加拿大、日本的关税和非关税壁垒，美国和欧盟。（Vlad Spanu，2003）。由于部分和逐步开放了对外贸易合作伙伴，国家即中国、印度、台湾、韩国、马来西亚…都取得了显著的增长，对自由贸易的现实演绎了一个典型的证据。

 

Thomas L. Friedman says in his exciting and readable book about globalization that "the world is flat or at least becoming flatter very quickly". Actually, trade liberalization accelerates integration and globalization among nations, creating a level playing field in which countries are able increase production efficiency, promote innovation, improve balance of trade, hence, foster overall growth. However, "it still has bumps", causing us to become pessimistic about the prospects for global growth and development.

 

For the past time, we have witnessed strong integration among developing countries and developed ones. Particularly, it's the formation of international and regional organizations such as the World Trade Organizations (former General Agreement on Tariff and Trade -1948), European Economic Community (1957), the European Free Trade Association (1959), North American Free Trade Agreement (1993), Asean Free Trade Area (1992)to share benefits and step up growth. Within World Trade Organization negotiations, developing nations have been pushed to actively participate in trade liberalization process through adjustment loans conditionalities of the World Bank and International Monetary Fund. In addition, International Monetary Fund, the World Bank and United Nations Conference on Trade and Development started to change their focus from imposing liberalization of trade in developing countries to eliminating tariff and non-tariff barriers in developed countries such as Canada, Japan, the United States and the European Union. (Vlad Spanu, 2003). Thanks to partial and gradual opening - up with foreign trade partners, countries namely China, India, Taiwan, Korea, Malaysia...have achieved significant growth, demonstrating a typical evidence for the reality of free trade.

 

Obviously, under both internal and external forces, almost all nations are participating actively in international playing field where is assumed to create desirable benefits to members.

 

Adam Smith (1776) and David Ricardo (1871) analyze that free trade helps countries to increase production efficiency. That is, countries specializing in producing commodities of their comparative advantages will raise the production, instead of focusing on industries in which other countries have the factor endowments. Through specialization, countries allocate their resources better, thus increase production efficiency.

 

It's undeniable that free trade creates stronger competition among nations, thus they are forced to promote innovation in products, technology and marketing and distribution channels. Consequently, no one else but customers enjoy products and services with higher quality at lower prices.

 

When a country exports goods or services to international market, it will get foreign currency inflow. By this way, the country can improve balance of trade. For example, China exports steel to the United States, getting U.S dollar. Later, China uses that U.S dollar to purchase machines from the United States, which help it to reduce the pressure of U.S dollar shortage in import.

 

As such, free trade brings about higher production efficiency, better innovation and more stable balance of trade, accelerating overall economic development and growth in participating countries. The people in those countries also enjoy increased living standard and real incomes.

 

However, there have been arising both internal issues in developed and developing countries and global ones that make people tend to be more pessimistic about the future of the world.

 

Developed countries are currently facing with massive serious problems such as low-paced growth, increasing inflation, high unemployment rate and high public debt rate.

 

The economy in Western Europe continues to run at a slow pace. Although industry sector has increased, it still remains below its pre-crisis peak reached in February 2008. Construction sector has declined without any sign of recovery (World Economic Situation and Prospects: Monthly Briefing No.28). Additionally, increasing inflation is also a big concern. For example, Hungary, so as to meet the fiscal targets, has imposed higher tax on large corporations; as a result, it has to incur higher inflation rate (4.7% inflation in December 2010). (World Economic Situation and Prospects: Monthly Briefing No.28). Unemployment rate in this area is becoming alarming. During the last decade unemployment rate averaged 10% of the labor force. Worse still, almost half of jobless were unemployed for over a year. Although conditions have improved somewhat since the beginning of the present decade, the problem persists. (Dominick Salvatore, International Economics). The unemployment rate in the United Stated seems not be more optimistic in comparison with that in Western Europe. In December 2010 this rate was indentified at 9.4 %, dropped to 9.0% in January 2011. (World Economic Situation and Prospects: Monthly Briefing No.28). In addition, the United States is confronting the widespread fear of large job losses due to rapid technological change and increased competition from the manufactured exports of emerging markets especially China. (Dominick Salvatore, International Economics). The year 2010 fiscal crisis in the five high-income EU countries (Greece, Ireland, Italy, Portugal and Spain) is explained owing to high government deficit and debt level (115% of GDP in Greece in 2009), causing great volatility in global financial and commodity markets. A restructuring plan among the five EU countries imposes more pressures on the world financial system and significantly reduces cash-flows to Europe, Central Asia, Latin America and the Caribbean. In a nutshell, the status in Europe in particular and in developed world in general makes the global growth prospects much more uncertain (World Bank, 2010 c, d)

 

Sharing concern of high inflation with developed countries, developing countries are also put under rising inflationary pressure. In Vietnam, for instance, consumer price inflation accelerated to 12.2 percent in January 2011 owing to currency devaluation, a surge in bank lending and higher food prices. In Indonesia, food prices rose by 15.6 percent in December 2010, lifting consumer price inflation to 7.0 percent. Soaring food prices, coupled with higher housing costs, have also pushed up the inflation rate in China, which reached 5.1 percent in November 2010. South Asia's economies also face strong inflationary pressures as prices of many food items especially fruits and vegetables have increased rapidly in recent months. Although the food price hikes are mainly attributed to supply disruption, policy makers fear these will push up other prices. In Pakistan, consumer price inflation reached 15.5 percent in December 2010. In India, wholesale prices increased by 7.5 percent in November 2010 and escalated to 8.4 percent in December 2010. (World Economic Situation and Prospects: Monthly Briefing No.28)

 

More severely, the occurrence of a series of financial crises in emerging market economies threatened the stability of the entire international monetary system. In 1994-1995, Mexico confronted financial and economic collapse; in 1997, a deep financial and economic crisis explored in Southeast Asian countries including Thailand, Korea, Malaysia, Indonesia and the Philippines; in the summer of 1998 Russia experienced the entire collapse of finance, economy and politics and in January 1999 "Brazil plunged into a crisis". Since early 21st century, Turkey and Argentina have gotten into trouble and it was assumed that Brazil might join them. Although each crisis was somewhat different, most were caused by a "massive and sudden withdrawal of short term capital pouring into these markets as a result of the liberalization of capital market during the past decade". (Dominick Salvatore, International Economics).

 

Despite international institutions' efforts in establishing international codes and standards to help developing countries integrate into global financial market safe, the reform process in developing world still proves to be inefficient and costly. Actually, a question arisen is whether reforms in terms of fiscal transparency, monetary and financial policy, banking supervision, data dissemination, and corporate governance and accounting standards proposed by an agency like Financial Stability Forum with no developing country member are sound enough? In addition, to be able to implement just three requirements of the WTO agreements (customs valuation, sanitary and phytosanitary measures (SPS) and intellectual property rights (TRIPs), a typical developing country cost $150 million which is "a sum equal to a year's development budget for many of the least-developed countries". (Dani Rodrik, 2001). So far, there hasn't any proof that this cost could bring the developing countries equivalent benefits. And the reality has shown that the countries namely China, Vietnam, India and Uganda have benefited the most from globalization are those that did not follow conventional rules. "By contrast, Latin America, which tried harder than any other part of the world" to comply with orthodox rules, experienced a dismal performance since the early 1990s. (Dani Rodrik, 2007). Although there appears sunshine in several countries called "star-globalizers" the perspective for developing world's future, in general, is still gloomy.#p#分页标题#e#

 

Not only sluggish growth, inflation, high unemployment rate, high debt level in developed countries or financial crashes, underachievement of trade liberalization in developing countries, the whole world are facing severe challenges of growing disparity between the richest and the poorest, rising protectionism, ethnic conflicts and political instability, climate change and alternative energy. Those global issues trap us in the pessimistic thinking about the world growth and development.

 

Globalization has played an important role in creating growing disparity between the richest and the poorest and growing inequalities within most countries around the world. "The number of people in poverty in Africa has doubled in the last two decades". Moreover, Africa was left, by its colonial legacy, with no resources and education to take advantages for growth. Worse, the Uruguay Round, signed in Marrakesh in 1994 was so unfair that the poorest countries of the world not excepting sub-Saharan Africa were actually made poorer. (Joseph Stiglitz, 2007). Additionally, the World Bank's report on "Gross national income per capita 2009" shows high inequalities between countries' income per capita. Luxembourg was at the peak with $57,640 per capita while income per capita in Liberia was only $290, challenging the globe in poverty reduction and bridging the gap between the rich and the poor.

 

Another issue is rising protectionism in developed countries whilst they call for developing ones to actively open the market and reduce subsidy. According to Joseph E.Stiglitz(2007), international trade agreements themselves contain "legal" forms of protectionism. He argues that procedures applied to determine dumping duties are not based on sound economic principles and put developing countries in particularly disadvantageous position. And the fact that advanced industrial countries appear to be abusing the use of dumping duties is actually protectionism. However, "many of the developed countries view the practice as totally legitimate while at the same time criticizing developing countries for making use of the leeway they have between current and bound tariff rates". Also, Stiglitz states that "it is better to be a cow in Europe than to be an average person in the developing world" since the average cow in Europe receive a subsidy of $2 a day while some 40 percent of the people in the developing world live on less than $2 a day.

 

Political and ethnic issues have become increasingly sophisticated, leading the world to the danger of regional and international war. Recently, the world has seen political crises in Thailand, severe conflicts and violence in Africa, terrorist's attacks in Afghanistan (Hasbrouck, 2010). In spite of United Nations' effort in resuming peace, the political issues have been going on and getting more complicated, contradictions in benefits, objectives and religious benefits among parties have not been resolved.

 

Furthermore, climate change, unforeseen disasters along with alternative energy have created severe constrains on the whole world. Tsunami in the South East Asia, earthquake in China, Chile, Haiti, New Zealand and most recently in Japan, serious flooding in China, Pakistan and Vietnam... caused huge amount of fatalities and economic losses for this decade. Simultaneously, unsustainable exploitation and use of natural resources, rising population and speeding up industrialization certainly accelerate natural resources exhaustion. Especially, as global industries and consumption depend on heavily on oil, the solutions of alternative energy are costing nations a great deal of time and money.

 

As I analyzed above, internal issues in both developing and developed countries along with global issues are posing severe constrains on the growth and development of the whole world. The prospects for a bright future seem to be non-exist in the coming years. In the context of massive finance crises, natural disasters, the developed nations find hard to recover and restore economic growth while the developing countries are still in a vicious circle of finding themselves a growth path.