The International Trading system

The International Trading system has been revolutionized in the last sixty years with the setting up of Multilateral trading organizations, liberalization of trading systems world wide and the growth of International trade at an unprecedented level.

The formation of the W. T. O (World Trade Organization) in particular has made International trade an engine for international economic growth and cooperation. In the past fifty years, while world G. D. P has increased six fold, international trade in merchandise has increased nineteen fold. The International trading system has an impact on trade, investment, labor, environment industry and agriculture. It is basically concerned with promotion of free trade, establishment of Institutions to manage world trade (W. T. O. ), assist poor countries in negotiating in trade agreements, dispute settlement, address trade and environment related issues and deal with Intellectual Property Rights and Multilateral Investment agreements.

1) International trading system and Labor issues: Since 1948, The WTO has evolved from The General agreement on Trade and Tariffs (GATT) as an international law making body covering national policies affecting international competitiveness such as tariffs and quotas. Although the legal rights of workers in any or several country affects the competiveness of workers and industries in other countries, the WTO has not touched issues of workers rights including the right to Unionize.

In parallel certain International Human rights laws have come into place with the setting up of The International Labor Organization (ILO) and the Universal declaration of Human Rights. It covers rights of workers in the following areas-prohibition of exploitation like child labor, forced labor and discrimination in employment and freedom of association and collective bargaining. These core rights have been discussed in detail by 8 ILO conventions but many influential nations like U. S. , China, and India have not ratified them. The condition of workers in the globalised world can be seen by the following example.

Oxfam International’ recent report, “Trading away Our Rights” reveals new research that shows how Big brand retail companies from the Developed countries in the food and fashion sectors, are driving down employment conditions of millions of women workers all over the world. The companies are using their power at the top of global supply chains to squeeze their suppliers to deliver. This means longer working hours, horrible working conditions and absolutely no rights for collective bargaining for the women employees in the factories located in underdeveloped countries.

Today’s business ethos seems to be- “Make it quick, make it flexible, make it cheap. ” – whatever is the human cost. This reality is in deep contradiction to the pro-globalization argument that globalization has improved employment and working conditions all round the world. Supporters of the International trading system believe that it has created employment, more job opportunities, higher wages and better opportunities for labor in countries worldwide.

But critics point out the opposite- giant multinationals are exploiting labor, paying them pittance, engaging them in poor working conditions, preventing them to organize politically and practicing poor labor policies like child labor, gender discrimination, and lack of freedom of association. In developed countries, the free trade system has reduced standards of living by creating unemployment due to outsourcing of jobs to cheaper countries. 2) The challenges before the International trading system- A W. T.

O report identifies ten benefits of the new International trading system that it has ushered in-1) The system helps promote peace 2) It helps in dispute settlement 3) Rules drawn by the W. T. O make it easy for all nations to co-exist 4) Freer trade cuts the cost of living 5) It makes more choice of products and qualities 6) trade raises incomes 7) Trade stimulates economic growth 8)The basic principles of the trading system makes life easier, 9) Governments are shielded from lobbying and 10) The system encourages good governance.

The era of international trading system has seen the spurt of international trade far ahead of growth of even global G. D. P. It has resulted in considerable reduction of tariffs. Tariffs on industrial goods in developed countries dropped from 40 % to even 5% The Millennium Development Goals envisioned free trade as engine for global prosperity and reduction of poverty. Whether trade can help in development ca is belied by the facts. Most relevant to developing countries, agricultural trade is heavily distorted by artificially cheap world prices.

Developing countries have few tools to protect themselves. The Uruguay round of the GATT addressed the tremendous wave of agricultural protectionism around the world. WTO is expected to work further towards trade liberalization in agriculture and target protectionism-domestic supports and export subsidies in agriculture practiced in some countries. Trade facilitation measures such as cutting of red tape, risk assessment and audit based controls and electronic data submissions are all expected to be implemented in the near future.

Adoption of International standards will become a bigger determinant of international investment flows. The WTO is also increasingly dealing with domestic policies of nations that affect international issues. These included labor standards, Intellectual Property Rights, investment, competition policy, environment protection, and commodity related problems. In sum, by 2020, the framework for multi lateral trade will become more intrusive and contain disciplines on more areas of domestic policies (Vision 2020).

These are the new realities facing us at the dawn of the new millennium- a community of nations more closely knit than ever in human history.

BIBLIOGRAPHY 1. McGaughy. W. (n. d. ), ‘Labor and environmentally oriented trading system’, Minnesota Fair Trade Campaign. 2. Marici. P. , 2001,‘Worker’s Rights in Global trade”, The International Economy. 4. Strickner. A. And Murphy S. (n. d. ), ‘ Future of International Trading system. ’ Institute of Agriculture and Trade policy, Geneva. 5. ’ WTO trade talks- fiddling while world trading system burns’, ICFTU Online, 2004 6. The International Trading system-VISION 2020-(n. d. ).