The Broader Picture
Trade has been a substantial part of human society since time immemorial.
We have moved from the most basic level, at which each clan produced
rudimentary goods for personal consumption, to a developed society
dependent on an ever-increasing sphere of trade.
Nowadays, the world market works according to the principle of free
trade, a concept that is hailed both as the non plus ultra of civilization
most base institution of imperialism. According to the economist’s argument
free trade is beneficial because it promotes the division of labor and allows
everybody to specialize in production according to their comparative advantages.
This process guarantees maximum efficiency resulting in the highest rate
Free trade allows us to enjoy a far more varied and abundant supply
of goods and services. Globalization with its new economic possibilities,
such as outsourcing
and off-shoring in all sectors, has given transnational corporations (TNCs)
the opportunity to produce their goods abroad at lower labor costs. The diminished
cost of labor in turn results in a less expensive final product. This process
provides a clear advantage to the global North, but the benefits to the off-shored
South are arguable. Many TNCs do not comply with the International
(ILO) labor standards and do not operate under environmentally-sound conditions.
Crucial questions are: How fair is free trade?
How much does foreign
direct investment (FDI) really contribute to a country’s long-term
Are the TNCs merely opportunistic, or do they
offer serious global solutions?
How much do the workers of a maquiladora in Mexico really benefit?
that depends on the exploitation of the marginalized is not beneficial
to all parties
and, therefore, it is not sustainable.
The promotion of sustainable development is an imperative in today’s
world. As human and natural resources are being exploited in the name
of profit maximization, it becomes increasingly difficult to meet the
demands of present and future generations. Poor terms of employment,
unhealthy and hazardous working conditions, environmental pollution
and the scarcity of natural resources are problems that have been acknowledged
by the international community. Yet, many international companies only
exacerbate these existing problems. At present the majority of businesses
do not internalize the costs of their social as well as environmental
Globalization and liberalization of markets have an increasing impact
on peoples’ lives all over the world. The inter-connectivity
of societies has advanced at an incredible speed over the last several
decades due to the rapid development of technology. More and more people
internet, airline travel becomes cheaper and therefore more accessible,
and the cost of international communication has plummeted. Today technical
and financial barriers to trade are being overcome. Through outsourcing
and/or off-shoring, companies can save, not only
on labor costs, but also gain time working across different time zones.
Additionally, financial markets in New York and Tokyo are able to simultaneously
respond to new economic developments.
Yet despite our global advancements, progress is not equally distributed.
There are many people in the South with no access to the technology
that has revolutionized the global economy. To those who have not
benefited from the fruits of free trade, poverty, inequality, and isolation
are still a way of life.
The ongoing debate in the United States about the winners (consumers
enjoying lower prices, stockholders who see profits rising) and losers
(workers whose jobs are displaced, owners of firms whose contracts
get transferred abroad) of the new trade possibilities can be easily
stretched to encompass the North-South conflict.
The world has seen a growing polarization between the rich and poor
countries in the global economy that is still continuing. The share
of international trade involving developing countries barely changed
in the last decade. Of the least 48 developed
countries, 29 are members of the WTO.
Since 1960 their share of global trade has fallen by 80%; Africa’s
share is 1.8%, tendency falling. Moreover, Africa and South West Asia
are regions that
flows of foreign direct investment (Data
Trade: Winners and Losers).
About 80% of FDI and 70% of
world trade is controlled by the approximately 500 top TNCs. This fact
highlights the importance of TNCs, and the extent of their power
Sub-human working conditions in TNCs and the sweat shops they subcontract,
the fast movement of capital, and the tax exemptions contrast with
the TNCs potential to provide an engine of growth, employment, and
generally speaking little technology and knowledge is transferred to
the community and the innovative jobs remain in the North. Of course
TNCs are not evil as such and there are many examples of ethical business
codes and respect of workers' conditions. To contribute
to sustainable development, it is imperative for TNC’s
to act responsibly towards all members who have a stake in their activities.
The need to challenge conventional thinking and address the multifaceted
nature of inequality is widely acknowledged. Alternative trade movements
campaigning for global trade reform, such as Trade Justice or Fair
Trade, gain momentum and consumer support as more and more consumers
become aware of their power. Fair Trade products give consumers the
chance to act responsible and put pressure on companies that do not
comply to Fair Trade standards.
Everybody who would like to find out more about an alternative approach
to trade focusing on fairness, acknowledging the dignity of all links
in the supply chain, and encouraging ethical consumption, is encouraged
to find out more about Fair Trade.
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|Sustainable development is development that meets the needs of
the current generation without compromising the ability of future
generations to meet their own needs.
Photographed by Piper O'Sullivan, North India 2006