GLOBAL FREE TRADE

Global free trade

Global free trade

Introduction

Trade liberalization is often seen as an important, if not vital, element to eradicating poverty levels. There is evidence that trade liberalization increases growth and production levels while improving the overall economy. This is a widely held belief that can be traced back to classical economists such as Adam Smith (1776) and David Ricardo (1815) and has been rigorously put into an international practice for over twenty years (Winters, 2000). However, even in spite of the studies that 'prove' trade liberalization's benefits, there is still a mounting hostility with the process itself, especially by the millions who have been thrown into poverty from market liberalizations. Indeed, the growing enmity culminated into the Seattle protests against the World Trade Organization (WTO) in 1999, and, historically, there have been outspoken opponents against free trade that can fill volumes.

The effort to diminish poverty levels cannot be overstated in its importance, which is exactly what free trade proposes to achieve. However, the methods employed and the ways in which free trade policies have been implemented not only cause a great deal of controversy, but also produces inequitable results that often exacerbate the economic woes of developing nations. Although the long-run goal of globalization and free trade is to eradicate poverty levels, they have fallen woefully short in the current and historical state.

This discussion will be primarily focused on trade liberalization and its connection to poverty, but it will also provide an overview of the key players involved in free trade, and the exhausting debate around it. An overall understanding of this very complex issue will help provide a clear overview, as well as elucidate the link between free trade and poverty, which is so often ignored. Indeed, a substantial bulk of the research on the so-called benefits of trade liberalization focus on the aggregate level of economic improvement and growth, yet conveniently ignore the inequalities free trade policies incur, especially on the microeconomic level. This discussion therefore offers an alternative view on the effects of free trade, as it will provide evidence that free trade practices do not assist in closing economic gaps, but rather, they assist in making these gaps wider. Moreover, trade liberalization is generally accompanied by market liberalization, which effectively destroys the social and political fabric of the country. The bottom line is that economic development implies a transformation of society, and the West has pursued free trade in a very ideological way, using it as a vehicle for globalization policies, displacing the poor, creating massive inequalities, and leaving social and political chaos behind.

Discussion

Since the collapse of the erstwhile Soviet Union, the already huge sphere of influence of Liberal Free market ideology has expanded further to include several countries, mostly those from the third world or developing countries. Since Deng Xiaopeng's market reforms were brought in the late 1970s in Communist China, several developing states like India, Brazil, and various African nations have slowly but surely moved away from a regulated economy towards a ...