Trade has entered a new era in its economic

Trade has bring
the world closer and improved human lives. Especially with the globalization
trade has become more frequent. Globalization includes interaction and
integration of people, companies, and different countries, it is motivated by
international trade and international investment and supported by information
technology. This process brought changes and effect on environment, culture,
political systems, and economic development around the world. There are many
different trade agreements no matter they are international agreement or
regional agreement setup in recent years, however not all of them are perfect
and we will analysis the shortcoming of them and see if better trade
regulations can further improve the world and international development.

 

International and regional trade regimes

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Policy and technology developments in the
past few decades have increased rapidly in several sectors, such as cross-border
trade, migration and investmentare in high numbers and made manypeople believe that
worldwide has entered a new era in its economic development. The volume of
world trade has increased by 20 times since 1950s and according to WTO
tradestatistics, international trade
flows have increased dramatically over the last three decades. The value of
world merchandise exports rose from US$ 2.03 trillion in 1980 to US$ 18.26
trillion in 2011, which is equivalent to 7.3 per cent growth per year on
average in current dollar terms. Commercial services trade recorded even faster
growth over the same period, advancing from US$ 367 billion in 1980 to US$ 4.17
trillion in 2011, or 8.2 per cent per year. When considered in volume terms,
world merchandise trade recorded a more than four-fold increase between 1980
and 2011.(Wto.org, 2017)

 

The globalization now is pushed by policies
which have opened economies domestically and internationally. In these years after
the World War 2, especially during the last20 years, many countriesadopted free
market economic system, this increased their productive potential and created
new opportunities for international trade and investment. Governments of these
countries also have reducedbarriers to commerce and have signed international
agreements to promote trade in goods, services, and investment with worldwide.

 

With the new opportunities in foreign
markets, many corporations built foreign factories and created marketing
arrangements with foreign partners. A defining factor of globalization is the international
industrial and financial business structure. 
However, globalization is controversial sometimes. Supporters of
globalization believe that globalization allows poor countries to develop economy
and improve their citizen’s living standard. And opponents of globalization argue
that the creation of unfettered international free market only benefited
multinational corporations in the developed countries at the expense of local
enterprises, local cultures. So there are resistance to globalization at both
popular and governmental level as people and governments try to manage the flow
of capital, labor, goods, and ideas that formed the current globalization.In
order to find the balance between benefits and costs relatedto globalization, people
of all nations need to understand how globalization works, the policies and the
choices facing them or their societies.

 

 

3 the rise of Regional trade agreements and its
shortcoming

One of the
biggest development in the global trade system since 1990s is the huge raise in
Regional Trade Agreements. From about fifty Regional Trade Agreements in 1990
that notified to the World Trade Organization, the number has raised to 279 in
2017. Regional trade agreements increased both in
number and reach over the years, includied significant increase in plurilateral
agreements under negotiation. After the RTA signed between Mongolia and Japan
in June 2016, all World Trade Organization members have a RTA in force now.

Trade became
more regionalized especially among the developing world but this trend is most seen
in Asia area. Comparing to Asia area, industrialized region’s intra-regional
trade shares in Europe have bog down and declined in North America area in
recent years. These developments could be related to the rise of China in the world
trade market, since its growing share in world trade would also boost regional
trade in Asia and with other regions. Nowadays trade is mainly motivated by a
few big trading corporate across countries, and the dominant performance of
global companies. At first WTO supported the growth of Regional Trade Agreements
because WTO believed that regional integration could complement multilateral
trade regime. But the sudden rise in RTA numbers in global trade and increased
diversion of trade through RTA became a concern for the multilateral trade
system under WTO.  Regional trade
agreement is an important exception to the World Trade Organization’s principle
of non-discrimination. According to WTO rules, countries signed RTA can trade
among themselves and enjoy preferential tariffs, easier market access conditions
than other WTO member countries. So as a result those WTO members who are not a
part of the specific RTA will lose out in these markets. Furthermore, trading
within the regional trade agreement doesn’t come under the scope of WTO. While
there are increasing amount of global trades are diverted through this route,
there are more and more concerns about the role of Regional Trade Agreements in
WTO.

 

The WTO Annual
Report 2003 showed concern about this latest development and comments:

RTAs can complement the multilateral trading system, help to
build and strengthen it. But by their very nature RTAs are discriminatory; they
are a departure from the MFN principle, a cornerstone of the multilateral
trading system. Their effects on global trade liberalization and economic
growth are not clear given that the regional economic impact of RTAs is ex ante
inherently ambiguous”. (Networkideas.org, 2017)

 

Non-discrimination between
trading partners is one of the main principles in the World Trade Organization.
But RTA built one of the exemptions and being authorized by WTO subjected to a
set of rules. Under these rules, it recognizes the need to improve transparency
and understand the impact of RTA on the interests of WTO members. On 2006 WTO members implemented a provisional
mechanism to enhance the transparency of such agreements and better understand
their effects on multilateral trade system. Under the process, members notified
the WTO about their existing RTAs and are discussed by the wider WTO membership.

 

 

 

 

4. Can better
trade regulation promote international development

 

Under the modern
rapid changing international trade environment, policy makers should reconsider
the current models of trade cooperation. This relates to both the form and its
content. The reality of current practices has overtaken the way trade
negotiation agendas traditionally been set. In today’s world, it is getting
harder and harder to separate goods from services. Barriers to merchandise
trade, no matter tariffs or non-tariff ways, disturb the delivery of a
“package” from manufacturing side and vice versa. Barriers to investment, and
difference or weakness of regulatory regimes also affect making decision on
selecting production facilities location. So far governments addressed these problems
through the discussion of preferential trade agreements. This is the start of developments
concerning multilateral disciplines which will prevent duplication and
divergence and ensure fairness, balance and to create a level playing field
among countries. But the current WTO agenda-setting and negotiations have
proven that it is too slow for business and those countries which heavily
involved in complex trade. And other models of trade cooperation such as
sectoral agreements may gain support temporally, but they have uncertain
outcomes. WTO trade negotiations are becoming heavy burden for many countries.
What should be done to improve the current situation? Firstly, governments need
to move forward on the current agenda and address market access conditions for
both goods and services and ensure they are under equal determination.
Secondly, other sources of unfair competition and restrictions in the open flow
of trade need to be addressed at the worldwide stage rather than just regional
level. Analyze the information provided by the WTO’s preferential trade
agreements transparency mechanism and also strengthen the WTO’s other monitoring
functions can help to identify problems that are already addressed in one way
or another at the WTO, in example, various types of NTMs. Furthermore, new
issues can be emerged, such as investment and competition policy which
multilateral action may be beneficial. International development is inevitable
under the trend of globalization. So I believe strive to address the issues
within global trade and setup better trade regulation is necessary and eventually
all population will benefit from it.