Term Paper on "International Trade and WTO"

Term Paper 10 pages (3321 words) Sources: 7

[EXCERPT] . . . .

International Trade Walmart

International Trade, the WTO and Wal-Mart

The concept of a global community has become one of the defining features of our shared economy. With the internationalization and liberalization of trade throughout the world, there is a thrust toward the removal of barriers for nations and corporations desiring to conduct business across national borders. This has stimulated the creation of such international economic alliances as the World Trade Organization, which is charged with providing oversight for said nations and corporations. But evidence provided in this discussion will suggest that the current conditions promote a deep inequality where those nations and corporations with the greatest resource availability are in a position to exploit labor and consumer markets to a destructive economic end. The case example used for this discussion in the Wal-Mart retail chain, which uses the deregulatory conditions of free trade and the laxity of the WTO in order to profit at expense of both local and global economies.

It is appropriate to initiate this discussion with an explanation of trade liberalization. The process of globalization, spurred by the inception of 'free trade' and a strategy of closer economic inter-dependency between nations, has produced a framework for global re-organization. In no small way accelerated by the dissemination of communication technologies such as the internet and mobile cellular devices, globalization primarily concerns the breakdown of barriers to free trade between sovereign states and the elimination of restrictions to the multinationalization of corporations. Its advocates argue that this is contributory to a system which is collectively beneficial to all parties involved. However, the set of talks which have persisted to shape the process of free trade proliferation reveal in their goals, their accomplishments and their shortcomings the inherent complexity and the prevailing obstacles in the realization of globalization's goals. From the Uruguay Round which perpetuated from 1986 to 1994, to the followup Doha Round which began in 2001 and which remains in a stagnant session, there is clear evidence that the process of free trade remains in conceptual and practical flux as its participants and those who have yet to benefit from its claimed merits work to shape its parameters. As a result of this state of flux, globalization has the effect of not simply failing to serve developing or westernized economies but even worse, of reinforcing negative trends of economic obscurity for developing nations. The early gains of globalization to all parties involved are ultimately undermined by the costs to economy and constitutionality in such contexts.. At the heart of this condition is the World Trade Organization (WTO), a group which came into being in 1995, is comprised of more than one hundred nation state members, who assembled in 1986 in Uruguay with the objectives of improving conditions of trade betwixt unequal economies.

Perhaps nowhere is this clearer than in the effects which trade internationalization has had on the U.S. And global retail markets. This points us in the direction of the organization at the center of this case discussion on globalization. Wal-Mart is an American firm which has long maintained a distinct competitive advantage by operating, producing and distributing at a minimum of cost, passing on bargain standards to the consumer. As the largest corporation in the world, its most powerful retailer and the single largest employer in the world, Wal-Mart would enjoy the resource capacity to seize cost-potential advantages as they have emerged, enabling it to stay at the forefront of the global retail market. However, Wal-Mart's approach to the opportunities of globalization reveals it to be guilty of extensive human rights violations. Under the thumb of its impetus for low-pricing, Wal-Mart is notorious for squeezing retail items out of its producers at absolute bargain-basement prices. The consequence of this is quite often felt by the production laborers themselves, who are severely affected in terms of equitable living wages. This speaks to the two issues of primary focus on this discussion, which denotes that Wal-Mart is a company which imposes deeply negative conditions upon Americans. Namely, the issues of outsourcing American jobs to cheaper markets overseas and of underselling local competition in American consumer markets are collectively enriching the company by sapping the American economy of both production and labor.

This is an argument which forms the basis for the critical examination of the firm by Frontline, which is a feature of the Public Broadcasting Station (PBS). Here, a prying investigation into Wal-Mart's practices and behavior indicates that as much as any force, Wal-Mart is responsible for the degraded quality of the American economy in the face of globalization. Its exploitation of an evolving system of trade has opened it to opportunities for expansive growth and simultaneous disruption of the patterns of American consumer practice. As reported in the introduction to the PBS investigation, "Wal-Mart's power and influence are awesome,' [PBS correspondent Hedrick] Smith says. 'By figuring out how to exploit two powerful forces that converged in the 1990s -- the rise of information technology and the explosion of the global economy -- Wal-Mart has dramatically changed the balance of power in the world of business. Retailers are now more powerful than manufacturers, and they are forcing the decision to move production offshore.'" (Frontline, 2004)

Here, the discussion proceeds with the argument that Wal-Mart has not simply adopted the types of practices that are forcing American jobs overseas while also devaluing these jobs at the expense of foreign laborers, but additionally, its zealous price-cutting has forced countless competitors to engage the same destructive economic practices simply to remain in business. This renders Wal-Mart not just a negative corporate citizen but more problematically, a largely negative force on a fully permeating economic and social scale. As Smith (2004) contends, "Wal-Mart is one of the key forces that propelled global outsourcing -- off-shoring of U.S. jobs -- precisely because it controls so much of the purchasing power of the U.S. economy,' says Gary Gereffi, a Duke University professor who studies global supply chains." (Smith, 2004)

In no small regard, Wal-Mart's monumental profitability is a direct outcome of the global business environment fostered by the WTO. Charged with the brokering of financial aid to developing nations, it has become notorious for the inequality of its policy representation and for its impractical demands of repayment from impoverished nations for aid debts. By and large, the WTO has come to be identified with the collateral damage of free trade in the widespread exploitation of third world labor and the ever growing chasm between rich and poor.

In consideration of the global trade agreements and their implications to the global community, it is important to evaluate the relevance of World Trade Organization (WTO). As this discussion will yield, the agreement is the product of a history of international conventions as well as an actuality produced by the trade liberalization sparked after the end of the Cold War. To the latter occurrence, one may attribute the opening of countless new international trade relationships, the deconstruction of politically motivated blockades and the vast flooding of the international community with nations in genuine need of development strategy. To the former, the existence of prior international agreements such as the Paris Convention for the Protection of Industrial Property (1883), the Berne Convention (1886), the General Agreement on Tariffs and Trade (GATT, 1947) and the Patent Cooperation Treaty (1970) would all contribute to the intent and legal precedents of global legislation concerning trade and proprietary behaviors.

Though all of these conventions would promote the idea and the parameters of an international standard on the subjects of trade, it would not be until the establishment of the WTO that any real global mandate could exist for contending with the subject. The WTO would be the result of the Uruguay Round of talks. Though its participants entered with the intent of resolving certain conflicts implicit to the GATT, they exited nearly a decade later under the agreed conception that there was a need for an entirely new form of economic alliance. When the Uruguay Round of trade talks commenced, the intent was to arrive at a set of conditions within which the deregulation of trade could nonetheless provide the protections that were necessary to ensure its success in raising collective economic prospects. Particularly, Uruguay would pay recognition to the demand for more effective prevention of farming subsidies. But even as it attempted to do so, it would be faced with the imposing challenging removing the inherent inequality of nations engaged in the process, and would thus come up somewhat short on many of its goals. Accordingly, one article denotes that "although the 1994 Uruguay Round of trade talks succeeded in bringing agriculture into the rules-based trading system, it did little to actually reduce agricultural trade protection." (Beirele, 2002) This is because, according to many of its critics, the Uruguay round would be dominated by the interests of the more powerful and industrialized nations and corporations engaged in the proceedings. In many instances, even beyond agriculture, the intentions which emerged during… READ MORE

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