Globalization: A Free Trade Phenomenon Essay

1063 words - 4 pages

Globalization is “the integration of states through increasing contact, communication and trade to create a holistic, single global system in which the process of change increasingly binds people together in a common fate” (Carey 2002). Some economists recognize globalization as being in the best interest of all states. While others believe that increasingly liberated trade and global economic interaction is necessary in many ways. While globalization marks a move toward a more open world-trading regime, it can also be linked to strains on sovereignty, worker’s rights, and the environment.
“Issues of globalization and free trade are surrounded by heated debate and controversy. Problems with contemporary free trade are rooted mainly in the General Agreement on Tariffs and Trade” (Brady 2002), which was established in 1947. The General Agreement on Tariffs and Trade, commonly known as the GATT, instituted guidelines for international trade. These rules and regulations included establishing normal trade relations with all states, restricting non-tariff barriers to trade, restricting unreasonable technical limitations on imports, lower tariffs, and eliminating subsidies and dumping. Over time, the nations affiliated with the GATT began resembling a regime; however, “there were still various issues that the agreement did not address” (Brady 2002). For example, guidelines for the trade of agriculture, textiles, intellectual and cultural property, and services were not included in the GATT. This lack of regulation created problems in international trade.
After almost forty years, members of the GATT met to resolve the resulting problems. Finally, in 1994, the states came to an agreement in every area except textiles. “If there were to be free trade in textiles, many manufacturers in the United States would go bankrupt” (Smith 2002). Many states can produce textiles at lower costs then the US, and for this reason, American policy makers refused to come to an agreement on the trade of textiles. They realized that if they were to allow the free trade of textiles, it would be detrimental to a large portion of the American economy. What our politicians failed to realize is that these losses are only short-term. Over time, workers would be retrained and new jobs would arise. Nevertheless, strong opposition still existed, and no agreement was made.
Without resolution, the member states developed a new organization that was a manifest extension of the GATT. At the Uruguay Round in 1994, the member states of the GATT established the World Trade Organization. The WTO is governed by the rules of the GATT, however, the decisions it makes are binding, and member states are required to abide by its resolutions. Since its beginnings, the WTO has overseen international trade and has stimulated freer international trade across the globe. In addition, the establishment of the WTO has led to the formation of various other free trade areas across the globe. However,...

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