One of the strongest trends in the modern world is globalization. the process of globalization has led to creation of united and single world, where national and other barriers do not play significant role anymore. It is more reasonable to talk about one world, rather then about the different countries. We are living in the age of cultural and political mix, global communication and collective responsibility for the future of our planet.
Among the factors that have led to a high degree of globalization the following ones may be pointed out. First of all, development of transport infrastructure has decreased distances between the different places in the world. It was almost impossible for people from Europe to visit America in the 18th century. Nowadays, it is a simple thing. Second of all, technological development should be mentioned. For instance, development of Internet has eased communication for people from the whole world. It is not a problem to find a friend on the other mainland nowadays. Finally, the mentioned factors and economic interests has helped international companies to overcome national borders and establish a single global business environment. The words that business interests are among the reasons for globalization can be proved by the following quote.
“In order to remain competitive, companies move as quickly as possible to secure a strong position in some of the key world or emerging markets with products customized for the need of the people in such areas in which they plan to establish. Most of these world markets are attracting companies with new capital investments with very good incentives” (Okolo).
Therefore, we may talk about global market and global business environment nowadays. Separate markets play more significant role nowadays. They are affected by the global situation. The most vivid example is the global financial crisis, when problems in one country (the United States of America) have affected the whole world.
Development of international trade is among the features of the modern global business world. Firs of all, the term “international trade” should be defined. One of the most appropriate definitions is the following.
“International trade is the exchange of goods or services along international borders. This type of trade allows for a greater competition and more competitive pricing in the market. The competition results in more affordable products for the consumer. The exchange of goods also affects the economy of the world as dictated by supply and demand, making goods and services obtainable which may not otherwise be available to consumers globally” (International Trade Definition).
Simply speaking, international trade is trade between companies from the different countries and, also, between countries themselves. There may be a lot of objects of international trade. The most common are goods, services and factors of production. Information and knowledge have become a very valuable product in recent decades.
Conceptually, two types of international trade may be defined. First of all, the exchange of goods, services and factors of productions on some international markets may be pointed out. Second of all, this trade may be performed in a particular country. We are talking about exports and imports in such case.
The following step will be to determine motives for international trade. Among these motives the following ones may be pointed out:
Companies look for less saturated market with a lower degree of competition. They are able to get higher profits on such markets, because of higher demand;
Companies look for places with cheaper labor force. They may decrease production costs in such way and, once again, increase profits. It is not surprising that a lot of large multinational companies have opened their branches in the emerging and developing countries;
Generally, international trade is the way to increase national well-being. Trade inside a country is able to increase well-being of separate individuals, but not the whole nation;
When a country has a surplus of some product or factor of production, it desires to sell them, since it is economically justified;
Sometime countries are forced to import deficit products, services and factors of production, since they cannot produce them, because of the range of reasons;
International trade reduces risks for one economy. Every separate economy does not have to produce everything. It should produce those goods that may be produced in the best way. The other goods and services may be purchased from the other countries;
Finally, international trade increases wealth of the whole world. When countries produce and sell gods, which respond to their competitive advantages, the overall efficiency of the world’s production grows.
Therefore, realization of economic interests prevails among the motives for international trade. Countries enter international market, since they look for growing efficiency and profitability. It means that effective and solvent market is a key factor in international trade. One of the most solvent markets in the world is European market. That is why it sounds reasonable to focus on international trade on this market.
First of all, European market is one of the largest in the world. There are more than 500 million potential customers. Second of all, it is a very solvent market. The average GDP per capita is almost $35.000. Finally, this market is characterized with developed transport, information and technologic infrastructure. Simply speaking, the market has the whole range of competitive advantages that make it very attractive for the companies from the whole world. However, European economy is experiencing not the best times nowadays. On the other hand, the crisis will finish, in end, and a lot of benefits can be got from business in Europe. Some additional information about European market and its perspectives can be got from the following quote.
“Europe's economy is still reeling and unemployment could remain high for years despite the progress made in solving the debt crisis, the European Union warned Wednesday, as it downgraded next year's forecasts for the 27-country bloc. The European Commission, the executive arm of the EU, on Wednesday revised down its forecast for the region's gross domestic product, which it now expects to grow by just 0.4 percent in 2013, compared to its expectations this spring of 1.3 percent growth” (DiLorenzo).
Some sorts of international trade have always existed. However, its beginning can be forwarded to the Age of Discovery, when national borders began to fall. Of course, international trade is not a spontaneous process. It is a well-organized and coordinated process. It is performed according to some formal rules and informal principles. There are even special organizations that control and monitor international trade. Probably, the most influential is WTO, which main goal is to boost international trade and, respectively, global economic growth and development.
The overall goal of international trade is really notable – to boost economic and social prosperity of the whole world. However, this goal has been not always followed. Some countries used international trade as an instrument to promote their national economies, despite the fact that other economies were harmed. A lot of trade empires may be mentioned in the different periods. Among them the following ones may be pointed out: Great Britain, Spanish empire, Ottoman Empire, etc. We can talk about trade expansion of the United States of America and China nowadays.
Generally, a lot of experts claim that the modern world is not dependent on some particular country and its trade potential. All the countries have similar opportunities. However, there are also a lot of claims that the modern international trade is unfair. Ours task is to provide and explain such claims.
First of all, it is important to understand that usually such claims come from developing countries. Probably, it is better to say that they come not from the leaders of international trade. For example, Ireland, generally, cannot be called a leader on European market. Such countries believe that terms of international trade are favorable for the large countries, while the smaller ones are not able to realize their competitive advantages.
For example, they believe that terms of international trade boost economy of the large countries that define these terms. As it has been already mentioned, international trade is managed by specific international organizations. WTO is the most important. This organization is located in the United States of America. Its Board consists of representatives of the countries that are the members of this organization. The number of representatives depends on economic weight of a country. Respectively, the larger countries have broader representation in the organization. Ireland cannot be proud of such representation.
It is a natural fact that the rules, which are written by the organization, are more favorable for the countries, which have more representatives in the Board. The reason for it is that these rules are written by these countries. They cannot limit their own possibilities and competitive advantages.
The following factor is that international trade is mainly performed by the multinational companies. These companies may be larger than some particular countries of Europe. For instance, the GDP of Ireland was $187 billion in 2011, while turnover of a lot of multinational companies is larger. It means that a lot of international companies have greater influence than single countries. Since, the largest multinational companies are located in the largest countries, they may represent their interests. This is the second reason why the smaller countries claim that international trade may be unfair.
International trade is based on competitive advantages of the countries that participate in it. Sometimes these competitive advantages may be stimulated by unfair methods. For example, subsidies for exporters and dumping can be mentioned. A lot of countries use such methods in the modern area of open borders and trade. This opinion can be proved by the following words.
“In some countries outside the EU, distortions of competition such as monopolies, state subsidies, dumping practices etc. prevail. Under such conditions, European businesses competing with exporters based in these countries can be put at a competitive disadvantage” (International Affairs. Combating Unfair Trade).
Finally, international trade is especially unfair at some specific stages of development of economic potential of countries. As we have already said, claims about unfair character of international trade come from emerging, developing and small countries. Usually, these countries are behind the developed ones in the terms of economic development. Free trade cannot be beneficial for a country that only opens its economic borders. However, the large countries demand from the smaller countries to open their national borders immediately. Of course, such situation is not beneficial for smaller countries, since their industry is not developed and cannot be competitive on international market.
To conclude we would like to say the following. Globalization is probably the most significant trend in development of the modern society. The reasons for it can be divided into economic, technological, infrastructure, etc. These have led to creation of a single social and economic environment. Common market is the most vivid feature of economic globalization. On the other hand, international trade is a specific characteristic of common market.
International trade can be defined as exchange of goods, services and factors of production between countries and companies from the different countries for the purpose of getting economic, politic and social benefits. There may be a lot of motives for international trade. Among them the following ones may be pointed out: need to import deficit products, services and factors of production; export of goods and services that are in surplus; a need to increase overall global efficiency of production via synergetic effect, etc.
Generally, international trade is beneficial not only for the companies that participate in this process, but for the whole global society. Countries are able to specialize on production of goods and services, which respond to their competitive advantages. Every country sells goods, which respond to its competitive advantages. Respectively, the overall well-being of the global society is growing. That is why the role of international trade just cannot be overestimated. However, a lot of countries, usually the smaller ones, claim that international trade is not fair. Generally, smaller countries say that they are treated unfairly in such controversial situations.
The main task of this research paper was to define the reasons for such claims. Among these reasons the following ones may be pointed out. First of all, international trade is ruled by special norms and principles. These norms and principles are developed by international organizations, for example, WTO. This organization mainly consists of representatives of large countries. As a result, these rules are favorable for these countries.
Second of all, international trade is performed by multinational companies, which are mainly located in the large countries. As a result, they may be intermediates in pursuing the interests of home countries.
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Third of all, despite the degree of development of international trade, a lot of companies still use unfair methods of boosting of competitive advantages of their companies. Some of these cases are strictly punished, while the other ones are not. Little countries claim that usually they are treated unfairly in such situations. Once again, such cases are analyzed by international organizations that are mainly represented by the large countries.
Finally, the developed countries demand to open all the borders at every stage of development of a national economy. However, such situation is not beneficial for the developing countries, which industry is not competitive. That is why it is not surprising that the smaller countries claim that international trade is a bit unfair.
“Trade barriers not only hurt our economy, they act as a drag on the global economy as well. This is why, after examining the arguments against free trade, Friedman argues we should “move unilaterally to free trade, not instantaneously but over a period of, say, five years, at a pace announced in advance.” This would give domestic industries the time they need to adjust to the new market conditions” (Kline).
Therefore, claims of smaller countries about unfair character of international trade can be called unfair. In our opinion, such situation is inevitable in the modern world. The only solution for such countries will be to strengthen their industry and realize their competitive advantages. This is the only way to overcome this unfair character of international trade.