Looking to the future: Government Influence on Trade
Looking to the future: Government Influence on Trade
Problems of reducing trade restrictions globally will most likely continue in the foreseeable future. Governmental reactions will likely be to focus on bilateral and regional agreements, rather than the global ones envisioned by GATT. The United States, for example, typifies the non-global approach with its already existing bilateral agreements on textile quotas with 41 different countries and its current implementation of a North American free-trade area.
Some additional arguments for protectionism may likely gain importance in the foreseeable future and also give rise to more bilateral agreements. One of these involves nations' equal access to one another's markets on a product-by-product basis. This argument has erupted within the United States within recent years and is sometimes referred to as a strategic-trade policy.39 Briefly, the argument is that in industries where increased production will greatly decrease cost, either from scale economies or learning effects, producers who lack equal access to a competitor's market will have a disadvantage in gaining enough sales to be cost competitive. This has been argued, for example, in the semiconductor, aircraft, and telecommunications industries, especially in relation to governmental procurement policies, production and export subsidies, and import restrictions. One may envision the use of bilateral agreements and retaliation to bring about a so-called level playing field.
Although the above trends seem to indicate a growing difficulty in bringing about the freer movement of trade, there are other indications for optimism on trade growth. Even with fewer globally negotiated concessions, the global trading system is not apt to fall apart. Trade has been growing rapidly and should continue to do so. One factor is the movement in many countries to privatize formerly government-owned companies and to open up import markets so that domestic companies must operate more efficiently by having to compete. These movements have been especially important in Eastern Europe and in the newly industrialized countries of Asia. Even such highly protected countries as Mexico, Brazil, and Argentina have begun liberalizing imports.
Problems of reducing trade restrictions globally will most likely continue in the foreseeable future. Governmental reactions will likely be to focus on bilateral and regional agreements, rather than the global ones envisioned by GATT. The United States, for example, typifies the non-global approach with its already existing bilateral agreements on textile quotas with 41 different countries and its current implementation of a North American free-trade area.
Some additional arguments for protectionism may likely gain importance in the foreseeable future and also give rise to more bilateral agreements. One of these involves nations' equal access to one another's markets on a product-by-product basis. This argument has erupted within the United States within recent years and is sometimes referred to as a strategic-trade policy.39 Briefly, the argument is that in industries where increased production will greatly decrease cost, either from scale economies or learning effects, producers who lack equal access to a competitor's market will have a disadvantage in gaining enough sales to be cost competitive. This has been argued, for example, in the semiconductor, aircraft, and telecommunications industries, especially in relation to governmental procurement policies, production and export subsidies, and import restrictions. One may envision the use of bilateral agreements and retaliation to bring about a so-called level playing field.
Although the above trends seem to indicate a growing difficulty in bringing about the freer movement of trade, there are other indications for optimism on trade growth. Even with fewer globally negotiated concessions, the global trading system is not apt to fall apart. Trade has been growing rapidly and should continue to do so. One factor is the movement in many countries to privatize formerly government-owned companies and to open up import markets so that domestic companies must operate more efficiently by having to compete. These movements have been especially important in Eastern Europe and in the newly industrialized countries of Asia. Even such highly protected countries as Mexico, Brazil, and Argentina have begun liberalizing imports.
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