8.2.7. Concerns Related to International Trade

Undertaking international trade is mutually beneficial to nations if it leads to regional specialisation, higher level of production, better standard of living, worldwide availability of goods and services, equalisation of prices and wages and diffusion of knowledge and culture.

International trade allows countries to specialise in producing goods and services they excel at, increasing efficiency and overall production. This specialisation can lead to an increase in the standard of living for the citizens of those countries, as they can access a variety of goods and services from around the world. Furthermore, trade can help equalise prices and wages globally, meaning that consumers in different countries can have access to similar products at comparable prices. It also facilitates the spread of knowledge and cultural exchange, enriching societies.

Imagine you are a farmer who grows apples exceptionally well, but your neighbor raises cattle better than anyone else in the region. By trading apples for beef, both farmers benefit. The farmer has delicious meat to eat, and the neighbor can make great cider from the apples. This collaboration leads to a better diet and improved living standards for both families.

The WTO has however been criticised and opposed by those who are worried about the effects of free trade and economic globalisation. It is argued that free trade does not make ordinary people’s lives more prosperous. It is actually widening the gulf between rich and poor by making rich countries more rich.

Despite the potential benefits, international trade is often criticized for exacerbating inequalities. Critics argue that free trade may lead to the wealthier nations becoming richer while poorer nations struggle to compete. This can create a larger gap between socioeconomic classes both within and between countries. People feel that policies made by powerful nations in trade agreements prioritize their own interests over the welfare of less developed countries, leading to exploitation and dependency.

Think about a small bakery in your town that competes against a giant multinational company selling baked goods at lower prices because of its scale. The little bakery may struggle to attract customers due to the pricing power of the larger company, leading to its potential closure and loss of jobs in the local community. This scenario illustrates how global trade can sometimes hurt smaller players in the market.

Global trade affects many aspects of life; it can impact everything from the environment to health and well-being of the people around the world. As countries compete to trade more, production and the use of natural resources spiral up; resources get used up faster than they can be replenished.

The pressures of international trade can lead to overexploitation of natural resources as nations strive to meet the demands of global markets. This can result in environmental degradation, such as deforestation, pollution, and depletion of fisheries, which in turn affects people's health and quality of life. When focus shifts to maximizing production and profit, essential social issues, including labor rights and community welfare, may be overlooked.

Consider a river that is used for fishing by local communities. If a big company starts to fish there to export fish globally, it could reduce the local fish population significantly, impacting the local fishermen’s livelihoods. Over time, this can lead to a decline in biodiversity and ultimately harm the surrounding ecosystem, affecting everyone who depends on the river for food and clean water.

It is also argued that developed countries have not fully opened their markets to products from developing countries. Issues such as health, worker’s rights, child labour and environment are ignored.

There is a concern that many developed nations place trade barriers on goods from developing countries, limiting their market access. This creates a dependency, where developing nations are reliant on exporting raw materials but unable to grow their economies due to restricted access to larger markets. Additionally, social issues such as labor standards and environmental protections often take a backseat in trade negotiations, leading to exploitation.

Imagine a country rich in natural resources like cocoa. While they grow cocoa beans for chocolate production, large companies in developed countries might buy them at low prices, squeezing profits in the producing country and not supporting local industry development. This situation reflects how significant power imbalances in trade can maintain inequalities between countries.

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