The future of world trade

There are changes afoot in world trade – the resources, the products of industry and agriculture, the services – as more and more players are realizing what the present system is about: The total domination by the western world in all matters.

The globalization debate is also in there as well as economic theory and practice. The old masters of the world are being overtaken by new entrants. The western world led by the US is not going to push more things through as other nations like the BRICS and more are starting to find their voice.

The case of the the rare earths is illustrative. China has much of the world’s resources of these 17 specialties – Rare Earth Elements – and we have had to buy them there. China now needs more and more of the stuff for themselves and have put restrictions on exports. So there is a case being mounted with the WTO – give us the stuff or we will force you. The outcome is clear – China has it and has no obligation to hand it out to others. So the solution to this little matter is to find more of the stuff elsewhere.

Many other issues are surfacing – industrial production, agriculture and jobs suffer in many Western countries. They have been trying to borrow their way out of it, and the US and EU are now trying to use quantitative easing to find their way back to health. Currency wars are looming as the rates of exchange are pegged too high or too low. There are always two sides to a currency, the reserve currencies are important references, and here there are changes coming. These processes are slow, almost imperceptible, glacierlike.

The Chinese are building an international presence not only in the South China Sea, but in Africa where they now are the biggest lender, they are upping their military presence, seeking new transport routes in northern waters – including building new icebreakers, making deals about resources all over. Very busy they are fostering the welfare of their own people.

The question of globalization may be up for a new debate as well. This is based on the mantra of free trade, comparative advantage running its course, the big players with their big finances having free access to all markets. A grand system of deals has been made over the years, domination have been allowed to become the norm, the old capitalist ideas of equal players competing under equal conditions have been allowed to lapse and become a monster. Tariffs, quotas, subsidies are part of the picture. It is all very complex, some would say incoherent.

The intended effect of making the cake bigger has been achieved in many areas, but sadly only to the benefit of some – there are still too many that are not sharing.

The old saying of being master in your own house is coming back. Too much outside influence, even downright outside economic and/or political government, is not desirable and should be avoided.

Producing everything on a large scale in faraway places make a jumble of many local economies – the jobs disappear, socially rich societies crumble, diversity disappears, cultures wither, the reason for being is lost.

The ethics is coming up too – see the problems of Nike, Apple and all the others – using factories with a substandard wages and working conditions. Large scale agriculture that is not sustainable is also part of the picture.

The economic theory must be revised – it is just a pretty picture missing out on several counts – especially on the sustainability bit, the culture, the cost to society, the management of your own destiny.

The fight over resources is increasing too, new thinking is needed, the concept of balanced trade have come up.

The beneficiaries of the present system is clearly many producers and many consumers, but the effects on the rest of the roles we have in society is not acceptable – out of jobs, being ruled by outside forces is not what people want or should have. The plethora of cheap goods is a bonus, but nothing worthwhile in the long run. The bad taste of coercion, colonialism or imperialism lingers.

The emergence of new nations is good. We must not, however, let there be new masters in place of the old – the aim must be a more broadly participative, balanced, reasonable world.

So the new thinking has to start about the practice of the new ethics of fairness, balance, sustainability, about local governance and responsibility for your own destiny.

This is heavy stuff – there are many forces against – but fairness will be the norm one day. Surely.

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2 Responses to “The future of world trade”

  1. Patrick says:

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