Free Trade Essay

[1337haxxor]

hey i just finished writing this essay and i wanted a bit of input before i submit it.

What is free trade? What would Canada be like without it? How would the world be a different place if Canada did not join the WTO? These are all questions with a thousand and one answers. To reach a conclusion with any of them you need to have a wide base of knowledge; the mission of this essay is to give you the information and the tools you need to form a well informed opinion your self.

So what exactly is free trade? Free trade can be defined as:
w
free trade
n.
Trade between nations without protective customs tariffs#

But wait, what?s a tariff? A tariff is a tax imposed, by a government, on an imported good. The purpose of this is to produce extra revenue for the nation.

So, that means that free trade is trade that takes place without taxation of goods and, to be more precise, without any government intervention at all. This allows trade to take place more fluidly with less disruption in a shorter period of time. Another thing free trade does is takes away the advantage of a domestic market over a foreign one.

It works like this: You take a product, electronics how about, and you have your domestic producer here in Canada, Electron-o Makers, and then you have a foreign producer from Japan called Glowbo-Chem. These two producers ship their products to a distributor here in Halifax to be sold. Electron-o Makers enjoy free reign as to where they can sell their Canadian products in Canada, they do not have to pay any extra taxes and actually they are government funding to keep Canadian jobs in Canada so they have it easy. Glowbo-Chem has higher expenses because they have to pay the tariff. Although their goods are of the same quality of their Canadian adversary they a forced into a bad situation. To remain competitive they either have to drop their prices to the same rate as the domestic product and take less profit or they just have to find a better market.

What free trade does is it banishes these taxes so that Japanese and Canadian alike can maintain competitive enterprise world wide without having to compete with a local bias. But how did this come to be anyways? Why did people agree to this style of trade and when did this take place? To understand this there is only really two places to look, first the GATT (General Agreement of Tariffs and Trade) and then the WTO (World Trade Organization).

After the end of second world in 1945 a dream was born of a free thinking democratic world where groups from any country of the globe could trade with any other country with out intervention. It was to be an age of prosperity that would change the world into a global village#, thus the GATT was born. Twenty-three nations around the world singed on as members and collectively knocked down thousands of tariff laws on many products that are traded hundreds of times a day. The way this was done was through the most-favoured-nation clause. What this said is that when two countries made an agreement with each other to cut a tariff it had to be applied to all GATT members#. But in 1995 they took it a step further.

In 1995 during the discussions that took place in Uruguay the members of the GATT decided to dissolve and form a newer, larger and stronger trading system, the WTO. For starters when the WTO was born it had 128 member nations rather than the GATT?s 23. The WTO was based off of the same principals but was much more powerful, mostly, for one simple reason. It was self governing. No intervention at any time, unrestricted trade, always.


It worked like this, when you became a member you had to do a rather hefty load of paper work - 228 documents and agreements need to be signed.# These were all agreements on how you were to conduct yourself in the WTO and the trade agreements you would align by. What would happen if you broke one of these rules?

What would happen is that you could be appealed by another member state and then within 30 days a report had to be put forth of your conduct. Within 30 days of the report being put forth a board of representatives would review it and then pass judgement. If the accused nation is found guilty they have within 60 days to comply with the judgement or appeal it. If an appeal is made it has to be completed within 30 days after submission for reassessment. After this, judgement is ruled again and the decision is final and all guilty parties have 30 days to right their wrong doings. At any time during this process the accusing nation can withdraw their complaint.

Although this may seem slow its actually a revolutionary process. What it does is guaranties that there is a resolution within 180 days as opposed to never. In The 47 years of existence the GATT handled only over 300 such cases and in the WTO?s 7 years it has dealt with over 250. This has sped up world baking intensely and has created a much more efficient way of doing business.

The numbers certainly show that the WTO has been successful but there in lies the problem. They work only in numbers. Many important things get over looked in the WTO negotiations such as human rights and social welfare. Remember those 228 documents that need to be signed to join the WTO? Not a single one of them says a thing about the environment or human rights. These issues aren?t even part of the talks and discussions that designate their policies and this is a huge problem amplified though the fact that the WTO is self governing. So what happens when you have a group of people controlling the worlds economy, as part of an organization that is solely responsible for itself and have only one goal, making money?

There?s a few very negative things that are done that are also very popular. One Of these things is called Neo-colonialism. Neo-colonialism is when a large corporation screws over an entire country for money.# More in depth Neo-colonialists are people who use their huge economic pressure to allow a country for them to set up shop. They purchase large amounts of land in a small 3rd world country and inflate its small economy by producing a lot of product in the country. Then they say, ?Hey government, if you don?t make these environmental laws that are holding back our production go away, or we will pull out.?. Of course is a company that?s moving billions of dollars through the economy leaves, it would easily throw a developing nation in to crisis so they have but any choose to let them abuse their land. It works the same way for work place safety laws and other human rights codes.

But what if the abused says, ?Were not gunna? take it!?#? Well that doesn?t really do a lot of good either. For example: Assume a small 3rd world country, lets name this country Rhodunia.# And then we have our 2nd country named Agracana which is very economically powerful and produces the most and best tractors in the world. Agracana depends on Rhodunia?s tractor exports to work its agricultural industry to feed its people. Rhodunia understands the situation and decides to raise the prices of their tractors when selling to Agracana. Of course this is unfair and very exploitative so Agracana demands this double standard be banished, to which Rhodunia responds, ?No.?
This injustice makes Agracana very angry and the submit a complaint to the WTO about this breach of the most-favoured-nation clause.# Knowing that a complaint can be dropped at anytime Rhodunia government warns, ?If you don?t drop this we?ll stop trading with you altogether.? but Agracana decides to go ahead with it anyways. So it reaches a board of appeal where the complaint is to be reviewed but because these reviews a closed to the public and the press# corruption of this process is easy and definite.

So then if the board actually does decide that this is a breach in agreements (which it is) they pass a ruling, for this example lets say they ruled that indeed Rhodunia needs to comply with their original agreements. But guess what? Rhodunia doesn?t want to drop its prices, its happy making more money but because of their power no one really wants to stop trading with them because there?s so much money to be made and their countries have adapted to working with Rhodunia so they can?t just suddenly pull out. So even though everyone wants to help no one is willing to risk their hides so s poor little country can have a cheaper tractor.

The further action from this point is forcing the offender to comply, war style. But there is certainly no one willing to throw their lives away for tractor prices in the 3rd world and even if they were guess what Rhodunia has been spending its surplus on? Building a military to protect its global investments. So no one can do a thing about it even if they were willing too. And this is what happens when you give a self governing body to right to do what it wants no strings attached and the only people who have the power to change it directly are making billions of dollars off of it. So guess what Agracana?

boned
adj.

To be screwed
To be without hope
To be in grave danger or peril

?We?ve run out of oxygen, were boned.?

But all this doesn?t mean that free trade is helpless and rudimentarily evil. There is hope for it. For example free trade has the ability to greatly improve every ones quality of life. For example the kind of foods avaible to us has greatly increased. Without it I would not be able to type up this essay, computers would not exist and our scientific knowledge would be greatly less and very regional.

So how is Canada effected by free trade? At the moment free trade mostly has a positive effect on Canada as far as wealth goes, we have been on the better end of the raw deal so far. It has made Canadians more wealthy at the expense of others. What Would Canada be like without free trade? A lot less wealthy and a lot less guilty. Since the signing of NAFTA (North American Free Trade Agreement), which creates free trade between Canada, U.S.A. and Mexico, Mexico has dropped off into economic rescission and the quality of life has dropped intensely (i.e. Montezuma?s revenge) because all of the wealth has been traveling across the boarders into American banks.

Free trade has endless possibilities but these will only be squandered until we make sure it benefits all rather than just the elite and that it is not self governed so that people can be accountable for their actions.


all coments accepted

unfortunitly i had to cut details out of this thing actully, it was saposed to be 1500 words but if your checking its acully floating around 1800. if you would like a copy of my research notes i can do that.