Rethinking The Trading System

Abstract

Rethinking the trading system is the need of the hour. Realizing this, the World Trade Organization revamps trade policies from time to time.

Of late, economic globalization has intensified owing to the introduction of structural adjustment as well as liberalization of trade. This trend has been happening since the year 1980. The foreign corporations have made their presence felt in almost all sectors of the economy. Manufacturing sector, energy, telecommunication, financial and other sectors have witnessed their(foreign corporations) presence. Changes have also set in the industrial organization in the last couple of years.

Studies reveal that the developing nations have experimented with various "neo-liberal trade liberalization" models, which eventually proved to be a failure. Although revenues from exports have generated growth in nations with low income, nevertheless, there are few nations where poverty has not reduced despite the growth. Those countries, which were successful in registering growth, had adopted trade policies, which were not in accordance to the norms of the World Trade Organization or WTO.

Reasons for the failure of neo liberalization policies:

The main reason why policies pertaining to neo liberalization failed may be attributed to the fact these policies did not take into account the "power imbalances" existing in the value chains.

All of the above factors necessitated rethinking the trading system:

It was felt that resources need to be reinvigorated, reclaimed and re localized (at national level). By doing so, the poor producers belonging to the low income nations will be in a better position ti avail of the benefits of the rethought trade policies.

It was also realized that domestic production strategies would improve if regionalism could be adopted as a strategy.

A multilateral trading system may prove to be solution for the problems existing in the developing nations. The following multilateral trading system would perform the following responsibilities.

To stop anti dumping activities by disciplining them.

Facilitate sharing of knowledge, research pooling and perform regulatory functions in the countries.

Implement multilateral competition

Regulation of corporate behavior

Execute agreements pertaining supply management

Execute ICAs or International Commodity Agreements.

In a nutshell, it may be mentioned here that rethinking the trading system is an essential part and parcel of the reforms in the trading activities of countries. To this effect, the WTO or the World Trade Organization needs to continuously revamp its trade policies.