The Shortcomings Of The Current International Trade

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The Shortcomings Of The Current International Trade System Essay, Research Paper The issue of trade has been a factor in the interrelations between nations since their conception. Throughout history there have been many different structures that encompass these trade relations. In essence, the state of trade between counties coincided with, and depended upon, their economies, social structure, willingness to trade, and their available resources (tradable products and services). Today’s trade system is still formulated by these factors. However, there are many more concerns and actors which must be weighed. The current international trade system is, to say the least, much more complex. In its complexity, the trade system has also inherited a very controversial nature. This

controversy is focused on the true benefits of the current structure itself, which is labeled as trade liberalization. Within this paper I would like to address this controversy, and pose the argument that, The international trade system, as currently structured, does not serve to advance the interests of the North or South. Concentration will be directed toward the negative effects to the South, and secondarily on the long-term detrimental effects on the North. In order to understand the current structure fully, one must know the history. With the close of the Second World War, the world’s leaders resolved to build a global economy that would be far more institutionalized and constitutionalized than the prewar model. In their initial design, the United Nations would provide

the international political stability. Furthermore, economic growth among nations would be characterized by “free multilateralism,” driven by such organizations as the General Agreement on Tariffs and Trade (GATT), the World Bank, and the International Monetary Fund (IMF). In terms of trade in the postwar, the United States and Great Britain tried to setup the International Trade Organization (ITO) to work along with the World Bank and IMF in an effort to promote free trade. However, because of confusion about the implications of free trade, the ITO never came to be. Most notably, the United States and Europe (mainly Britain) clashed in their concepts of free trade. The United States saw free trade as a great means of helping world prosperity and encouraging peace. Europe was

however skeptical of this structural change while power was so unevenly shifted in favor of the United States. With the threat of the US slipping into another depression, which would also hurt Europe’s economy, and presence of the Soviet Union’s ideals lurking in the background, a determination on trade became essential. Finally, the GATT was established with the sole concern of reducing trade barriers. After several years of operation, the first of the South’s voice would be heard as they began to complain of unfair tariffs that industrialized countries still had in place that were detrimental to the developing counties. It was reported by an investigative committee that, “barriers of all kinds in developed counties contributed significantly to the trade problems of

developing countries.” A major subject of the 1961 United Nations General Assembly was the large trade gap between developed and undeveloped worlds. The Group of 77 (G-77), made up of developing countries, pointed out the shortcomings of GATT and helped form the United Nations Conference on Trade and Development (UNCTAD) as a response. This new organization improved exposure to the “special and differential” needs of the South and supported the push for greater liberalization of the North’s markets and tariff reductions. This brings the history to the opening of the Uruguay Round of trade negotiation in 1986. This round was one in a series under the GATT’s umbrella. The negotiations took place over eight years and involved 125 countries. Unfortunately, developing