Pros And Cons Of Trade Liberalization

I wholeheartedly support the liberalization of trade among states, and the WTO has brought more good than harm. The world is too deep into Globalization and it has been developing at a very rapid rate as a result. A policy regime based on Protectionism at this point in time will only bring conflict and stagnation. While protecting jobs may sound like a very appealing goal on trade policy, this could induce a trade war whose harm will outweigh the good that protectionism promises to bring (Werner et al.). WTO has members from almost every country in the world, and its progress towards trade liberalization is unlike anything the world has seen before. The classical and most basic explanation to why free trade is being pursued for the greater

As the world economy changes, comparative advantage also fluctuates, and those workers who are left without jobs are increasingly more visible. Yet, according to Scheve and Slaughter, the workers who are most skilled (workers with a college degree or higher) are the ones who have been experiencing growth in their incomes, while those less skilled workers (those with at least a high school degree) are experiencing a decline in their earnings (4-5). In addition, corporate profits are those who have brought most of the money to these highly skilled workers (Scheve and Slaughter 5). What this argument is trying to say, is that the average citizen is suffering more income inequality as a result of free trade, and that is not accurate. Inequality has increased in some countries who have pursued globalization, but it is because of “domestic education, taxes, and social policies” (Dollar and Kraay 1). Another factor can be an outside force who has unfair trade practices. A major player in international trade that has been growing at a tremendous rate is the People’s Republic of China. Trade liberalization has enabled them to pursue “predatory trade policies” through the manipulation of their yuan to maintain its value relative to the United States dollar, and even in industries where the United States is said to have a

Developing countries have seen the most change thanks to it, but in order to increment their gains, they must also attract foreign investment (Dollar and Kraay 4). It is imperative for a country who is still developing to globalize in order to bring growth and decrease poverty. There have been multiple examples of success from developing countries as a result from trade, and among them are also Mexico, Vietnam, and Uganda; which have achieved success from their comparative advantages (Dollar and Kraay 4). Thus, trade liberalization has enabled the problem of unfair trade, but the repercussions of protectionism are so high in this point in time, that an approach toward fair trade would be the most reasonable goal. The global economy is so interdependent that a trade war could hurt millions of workers. Protectionism is not the answer, but it is certainly a tempting approach to see fast results. Decades of work toward trade liberalization should not be ruined by a major member that follows this short-sighted