The Role of Justice in International Trade and Economy


Mehmood-Ul-Hassan Khan

ABSTRACT

We are living in a complicated arena of free market and complex prophecies of globalization. Integration of economic markets and financial centers around the world has made our planet a virtual village. Furthermore, emergence of global socio-economic-politico sensitivities and trans-boundary influxes of geo-politics have already polluted the concept of true and simple justice in the international trade and economy. Notwithstanding, interdependencies levels of regional and international trade and economy demands element of justice to be practiced in its real meanings.

In this connection, direct or indirect institutionalized denial of justice in existing international trade and economy is making survival very tough for many countries around the globe. Due to which highly projected concept of fair and free international trade and economy is being compromised at many important regional and international economic forums and regulatory organs.

International trade and economy is the exchange of goods and services across the world. Export-oriented countries have greater sway in the existing international trade and economy systems. Silk Road and Amber Road share with us about the evolutionary and revolutionary phases of the international trade and economy. Its economic, social, and political significance have increased in recent centuries, because of rapid industrialization, advanced communication infrastructure, globalization, rise to multinational corporations, and outsourcing and the last not the least execution of justice has had been playing very crucial role in this regard.

Justice in international trade and economy is a concept of having durable and trustworthy trading partnership, based on dialogue, development, transparency, accountability and respect that seek greater equity and participation in international trade. It attributes to sustainable development, coexistence, by offering better trading conditions to all the participating countries, and securing the rights of, marginalized nations, producers and workers especially living in the poor countries.

International trade and economy rules directly affect the fates of billions of people around the world but developing countries have been at receiving and sharp end. Absence of justice in the international trade and economy has made lives miserable to farmers (Africa, Asia, and Latin America), workers or ordinary families of developing countries.

Justice in international trade plays a major role in the promotion of economic development, the alleviation of poverty and securing universal peace. The crux of many research studies suggest that justice is must for an increased integration of the world economy in order to achieve sustainable, economic growth and poverty reduction in developing countries. The complexity of the multilateral trading system may confront developing countries with an expanding array of policies and legal challenges to which they need to respond. Therefore, significance of justice is obvious and crystal-clear in the international trade and economy system.

Justice is against any move, policy, mechanism or drive of economic nationalism or protectionism. Every country big or small, and rich or poor must abide by the rules and regulations of the World Trade Organization which implicitly and explicitly highly speaks about the upholding of free and fair trading and economic system. Justice stands toll against prevalent doctrines of market embargo, trade barriers and limited or no market access in the world. The rising levels of global poverty, sacristy of resources, food and water security issues, widening gaps of GDPs, and parity of incomes between the West and East or between the developed and under-developing countries all entail that element of justice is missing or not working properly.

True spirits of justice advises that a poorer or weaker country should bear less and richer and stronger country should do suffer or sacrifice more to achieve working/functional balance in the existing international trade and economy. International trading system and economy based on richer countries’ expansionary desire to fulfill the objectives of their foreign policies and geo-political and geo-strategic goals may not be sustainable anymore in the emerging world of uncertainties and conflicts.

Impositions of socio-economic sanctions are supposed to be another type of denial of justice in the international trade and economy. For example, the USA has had an embargo against Cuba, North Korea, Iraq and Iran for many years. Millions of helpless and hopeless people died out of the socio-economic sanctions in Iraq and many other countries.

It is true that despite the WTO and other regulatory bodies we are still living in governmental quotas and restrictions age and often taxed by tariffs. Since 1995, the WTO has been dominated by the interests of powerful, strong and rich nations. Corporate lobbyists, NGOs and foreign policy gurus use their connectivity levels, skills and expertise for seeking to secure advantages for their clients (countries) at the expense of everyone else. The result has been a series of agreements that have made daily life worse for people in many developing countries: decreasing jobs opportunities and driving down working conditions, lowering prices for agricultural products so that farmers fall ever deeper into circular debts, wiping out tax revenues meant for social development like education, health and housing, and leading to the privatization of public services/entities in many countries. Consequently, many public sector development programs have been curtailed in many poor countries which have multiplier effects on their socio-economic fabrics and systems.

The current WTO round of negotiations is supposed to be the ‘development-oriented in all respects. It was decided that the interests of poor and weaker countries would come first, in an attempt to turn the imbalanced international trade and economic system around. Surprisingly developed and rich countries have not been ready of letting go of their selfish interests. Now the cries of resistance from poor countries, already growing during the last round of talks, have become a roar. It seems that the ongoing development round talks is on the brink of collapse as poor countries refuse to be bullied any more. The whole system of international trade and economic rules is tottering.

In this research paper concrete recommendations and suggestion will be given in order to achieve strong and sustainable international trade and economic system especially after the ongoing global economic recession and financial crunch. This paper may be useful to students and teachers of foreign policy, economics, international relations and political sciences.

INTRODUCTION

The pursuit of justice across national boundaries through regional, global, and other supranational bodies arises from increased flows of global commerce and social and cultural interconnectedness. From philosophical point of view, justice stands for equality, accommodation, fairness and the system/facility to have level playing field for the individuals, groups, commercial organizations and countries with out any prejudice. But in general, it follows the ancient Greek philosophy “justice is done among the equals not un-equals”. Moreover, it seems that the effective role of justice in international trade and economy is gradually on the decline.

Imposition of socio-economic sanction, trade embargo, trade barriers, rise to economic nationalism or protectionism and the last not the least denial of easy access to international markets to most of the developing countries/companies are the prime examples in to-day international trade and economic system. For example, the United States has had an embargo against Cuba for about 40 years which caused financial damage of more than $100 billion. Iran has also been facing this unjustified act for many years. Pakistan does not have easy access so as the many African countries to the EU and even USA which is again supposed to be discriminatory act and against the true spirits of international trade and economy system.

There are many schools of taught on this important issue. Some believe that trade justice is better than free trade. Others stress that free trade is must for overall socio-economic development around the globe. Now, the international trade system stands at a crossroads due to denial of free trade doctrine by the USA, EU and other powerful member countries of the WTO. There are complex geo-political and geo-strategic domestic compulsions along with international economic might, expansionary designs based on greed, selfishness, economic dominance, military superiority and uni-polarity which are making flows of international goods and services difficult. The elements of inequality and un-sustainability are the hallmark of world trade order and economic system. The ongoing economic recession and financial crunch is the resultant of unjust international trade and economic system.

Many research studies reveal that workable and simple spirits of justice may be achieved in international trade and economy by implementing international trade rules and regulations, fair play of all the international regulatory institutions and monetary agencies like, World Bank, IMF where decisions are made other than merit and justice.

Due to denial of justice in the international trade and economy the gap of inequality between the developed and developing countries is getting wider and impassable by each passing day. The level of poverty, inflation, unemployment, and health is always on the rise in most of the developing countries. Moreover, life is ugly, miserable, dependent and unsecured in most of the developing countries. Where as life is beautiful, full of hopes, comforts and luxuries in all the developed countries due to their doctrine of comparative advantage.

The above diagram shows that levels of poverty are on the rise and gap between haves and have-nots are dangerously widening and denial of justice in international trade and economy is supposed to be one of the main reasons for it.

The benefits of the international trade system have gone to those who already have the most, while many of the poorest have failed to benefit fully and some have even been made poorer. The environment has also suffered badly due to high levels of carbon emissions in the developed countries. So, they are making human existence difficult and polluting our economies, societies and even politics. The essence of justice demands that developed countries must promptly to control the high level of climate change around the globe.

Many prominent economists argue that the selected socio-economic integrations between the two countries or region and rigorous isolation to some specific countries are against the junction of free market economy and modern international trade and economy.

For its own commercial benefit the US grants duty-free access to many exports from countries in Sub-Saharan Africa under the African Growth and Opportunity Act (AGOA). The EU too has adopted the so-called “Everything but Arms” (EBA) Initiative, which aims to grant duty-free access to all imports from LDCs except for arms and munitions. If Africa, East Asia South Asia, and Latin America were each to increase their share of world exports by one percent due to fair and free and having justice in the international trade and economy the resulting gains in income could lift 128 million people out of poverty. In Africa alone, this would generate $70 billion several times more than the foreign assistance. But interestingly, these developments have not been matched in the one organization around which the rules of the entire international trade system are based the WTO.

In his book, “The Law of Peoples”, John Rawls argues in favor of international justice between states, even among those that do not fully accept or subscribe to political liberalism. Adam Smith also wrote in “The Wealth of Nations” about the importance of justice in a society, economic system and international trade mechanism. The burning issues of cotton subsidies and agricultural economy reflects the fact that the global trading regime is rigged and distorted, particularly to the extent that for over fifty years the comparative advantage that developing countries enjoy in agriculture has been undermined by policies that permit developed countries to restrict their markets to agricultural imports from developing countries or by subsidies to farmers in rich, industrialized countries who are not the lowest cost producers.

Outcome of many important decision taken by the WTO reveal that important decisions of international trade and economy are made purely on politics. It is allegation against the WTO which most of the crucial times act highly secretive due to dominance of by its richest members: the United States, the European Union, Canada, and Japan just as in the old GATT.

The history of recent trade meetings from Seattle to Doha to Cancun to Hong Kong shows that something is wrong with the global trading system. According to many research studies suggest that current economic arrangements disadvantage the poor countries. Tariff levels by the developed countries against the developing countries are four times higher than against the developed countries. While the developing countries were forced to open up their markets and eliminate subsidies, the advanced developed countries continued to subsidize agriculture and kept trade barriers against those products which are central to the economies of the developing world. It is not acceptable to Brazil, Argentina, India, Mexico, South Korea and most of the African countries.

The Food and Agriculture Organisation (FAO) said the Doha Round of international trade negotiations has collapsed mainly because of a fight for advantage in agricultural markets by large and powerful countries, corporations and lobbies. The negotiations were expected to address trade issues related to the needs of poor countries and small farmers. “But they never quite got round to these issues and as a result the Doha Round collapsed because of a fundamental lack of fairness in its vision, its process and its projected outcomes.

The real losers are cotton farmers in West Africa, textile workers in low-income Asian and Muslim states, and low-income shoppers in the poorest quarters of America and Europe. The Doha Round was supposed to help the world’s poor, by lowering subsidies that keep Mali’s cotton out of textile mills, tariffs that limit the flow of Cambodian T-shirts and other clothes to shelves.

Every time, trade talks and meetings, have been tilted towards the protections of agricultural sectors of the developed countries. Some 25,000 rich American cotton farmers, reliant on government subsidies for cotton, divide among themselves some $3 billion to $4 billion a year, leading to higher production and lower prices. The damage that these subsidies wreak on some 10 million cotton farmers eking out a subsistence living in sub-Saharan Africa is enormous. Yet the U.S. seems willing to put the interests of 25,000 American cotton farmers above that of the global trading system and the well-being of millions in the developing world.

Protectionism’ a Threat to Recovery

Despite the dawn of WTO from January 1, 2005 major economic super powers of the world are taking anti-free trade policies. The imposition of GSP by the EU on Pakistan’s textile exports, and anti-dumping duties imposed by different countries on the products of developing countries showed the other side of picture of free trade. The European Union imposes Seafood ban on imports from Pakistan or French farmers ask for the subsidiary from the government all speak but the rise of protectionism in international trade and economy.

One of the enduring lessons of the Great Depression is that global protectionism is a path to global economic ruin. We need “free markets, free trade which can ultimately produce and free people”. Moreover, one of the main lessons of the ongoing economic crisis and financial crunch is that financial systems are closely and globally interconnected, and that more than ever we are dependent on each other for stability and success. For that reason, it is essential to maintain the free flow of capital between countries, and ensure that cross-border investing is not stifled by restrictive measures that may be popular within individual markets in the short term but ultimately leave us all worse off. The world economy is still in a fragile state, and we must not jeopardise its recovery and future economic growth by building barriers to investment and shared success. Imposing anti-dumping duties on Chinese leather shoe exports, seafood ban of the EU from Pakistan, rejection of Chinese bid for Unocal’s take-over, and the Europeans misbehaving in the case of Mittal’s attempt to buy Arcelor all fall in the category of protectionism.

Socio-economic sanctions

USA has been imposing socio-economic sanctions on many companies and countries on its political presumptions, so called accurate information sharing of secretive agencies and gaining short and long term geo-political and geo-strategic goals. Iraq, Iran, Libya and even Pakistan has been suffering from sever socio-economic sanctions. According to UN report (2005) more than half million innocent children were died due to socio-economic sanction imposed by the US and the EU on Iraq. The levels of poverty, unemployment and inflation increased in these countries which have been debarred from having justice in the international trade and economy system.

On the other hand, free global trade has the potential to be a powerful resource to alleviate global poverty and support economic growth. Yet, unfair market competition has forced many impoverished countries out of the international trading arena. Following steps may be initiated to achieve justice in international trade and economy.

(a) Improved access to markets
: Many rich countries continue to limit the types and quantities of products that developing countries can export to them through tariffs and quotas. It must be removed to increase the flows of services and goods.Current US agriculture policies encourage overproduction of commodity crops like rice, cotton and soybeans, and this surplus is dumped on international markets at prices well below the cost of production. The dumping undermines local production, threatens the livelihood of millions of farmers, and deprives developing countries of earnings and market share. So, rationale approach should be adopted to achieve integrated world equilibrium in the international trade and economy system as said by economist Paul Samuelson.

(b) Reform trade-distorting agricultural subsidies:

(c) Right to direct trade and development strategies: Poor countries must also retain as much control over their own development policies as possible so that they are not forced to make trade concessions that negatively impact poverty alleviation strategies. In this regards, the friendly and cooperative gestures of international monetary agencies could play supportive role.

(d) Immediate Steps to Fair Trade:
Currently more than the 50 poorest countries control less than 1% of the global export market. It is estimated that if Africa, East Asia, South Asia, and Latin America were each to increase their share of world exports by one percent, the resulting gains in income could lift 128 million people out of poverty.

Concluding Remarks

Justice is a holistic approach to achieve social equilibrium in a country and maintain integrated world balance in the international trade and economy. Our collective co-existence relies on the true execution of justice in affairs of international trade and economy. World peace is heavily dependent on the elimination of poverty which could be reduced drastically while practicing justice in international trade and economy. Concept of free market must be followed and adopted in letters and spirits. Efforts are initiated to have level playing field for every country. Trade embargo, trade barriers, denial of market accessibility, economic nationalism/protectionism, and the last not the least, imposing of political oriented socio-economic sanctions ought to be discouraged. Regulatory bodies like WTO and monetary agencies do promote justified actions because justice is not done but seems to be done. Having justice in international trade and economy is the one way to come out from the ongoing global economic recession and financial crunch.

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