ECONOMICS, WORLD TRADE ORGANISATION and GLOBALIZATION

Emergence of GATT

After 2^nd world war industrialized countries shift towards protectionism.With the emergence of concerns and In order to decrease trade barriers and liberalize trade, a conference was held in Geneva in 1947. 23 participants Nations agreed to extend trade concessions; First step taken was the signing of General Agreement on Tariff and Trade or (GATT). This is an agreement to reduce tariffs and other barriers, not an organization. Member increased up to 132 till 1994

Since its inceptions, several rounds of negotiations held among member nations to reduce tariffs and non-tariffs barriers.

Kennedy Round of Trade Negotiation 1964-67

Tokyo Round of 1973-79

Uruguay Round from 1986-94

GATT was transformed into World Trade Organization on Jan 1^st 1995

WTO is a watch dog of international trade, GATT was merely a legal arrangement among member nations to liberalize and deregulate trade, WTO, on the other hand, is an international organization having headquarter in Geneva (Switzerland).Currently WTO has 150 member countries and WTO examine the trade regime of members, administrate the new global trade rules, helps the member nations in solving the trading disputes through its Dispute Settlement Court. 28 agreements are administrated through various councils and committees.Its management consultant for world trade helps in promoting environment friendly trade.

Pakistan is a member of WTO since 1995.World Bank has estimated that the liberalization of trade will add 275 billion dollars annually to world income, obviously Pakistan will also get its share from the trade gain, The partial phasing out of MFA(multi fiber agreement) by 2006 has greatly helped in increasing the exports of textile and clothing and other items which has gone up to 18 billion dollars in 2006-07.Pakistan has gaining from exports of agricultural products like rice, fruits and vegetables.For increasing exports Pakistan is also following the standards set by WTO for exports like quality control, trademarks etc.

A number of international institutions established in the wake of World War II—including the World Bank, International Monetary Fund (IMF), and General Agreement on Tariffs and Trade (GATT), succeeded in 1995 by the World Trade Organization (WTO)—have played an important role in promoting free trade in place of protectionism. Liberalization started before World War II but has accelerated considerably since the mid-1980s, driven by two main factors. One involves technological advances that have lowered the costs of transportation, communication, and computation to the extent that it is often economically feasible for a firm to locate different phases of production in different countries, The other factor has to do with the increasing liberalization of trade and capital markets: more and more governments are refusing to protect their economies from foreign competition or influence through import tariffs and non tariff barriers such as import quotas, export restraints, and legal prohibitions. For participating countries the main benefits of unrestricted foreign trade Globalization and International Trade stem from the increased access of their producers to larger, international markets. For a national economy that access means an opportunity to benefit from the international division of labor, on the one hand, and the need to face stronger competition in world markets, on the other. Domestic producers produce more efficiently due to their international specialization and the pressure that comes from foreign competition, and consumers enjoy a wider variety of domestic and imported goods at lower prices. In addition, an actively trading country benefits from the new technologies that “spill over” to it from its trading partners, such as through the knowledge embedded in imported production equipment. These technological spillovers are particularly important for developing countries because they give them a chance to catch up more quickly with the developed countries in terms of productivity. Former centrally planned economies, which missed out on many of the benefits of global trade because of their politically imposed isolation from market economies, today aspire to tap into these benefits by reintegrating with the global trading system.

       It is widely asserted that we live in an era in which the greater part of the social life is determined by global processes, in which national cultures, national economies and national boarders are dissolving. Central to the perception is the notion of a rapid and recent process of economic globalization. Since the collapse of the communism, the triumph of the capitalism and the revolution in neo-liberal ideas and technology the economic globalization has entered into new sphere of life.Globalization connected the global economy together.  Since the markets are all globally connected together when one market falls, the world’s economy collapses. Economic globalization gives governments of developing nations an access to foreign lending. When these funds are used on Infrastructure including roads, health care, education, and social services, the standard of living in the country increased. If this money does not allocated in developmental projects then also becomes the cause of the disparity.After global economy rose, corporations started to produce more and more, because people started to ask for more. However, in order to produce the most in the shorted amount of time, the factories would have to break the environmental regulations and, of course, care less for the workers. Globalization brought up the global economy and made the corporations have to do things that are immoral and unethical. Most importantly, it is hard to find someone to be responsible for the consequences, because the globe is connected together and “everyone” should be blamed for the consequences. The influx of foreign companies into developing countries increases employment for the competitive workers especially for skilled workers. But the arrival of the foreign companies are also big cause of unemployment for the indigenous due to their hard criteria of recruitment and the people from the developing countries usually do not very well skilled.Global companies, Intergovernmental Organization such as UN and International Economic Organization such as WTO are the main forces which drive developing countries according to their interests. So, in this way the role of state can be challenged. Some scholars predict the “end” of national state power. Some argue that the state may only adjust to globalization, without having an active role in it. Some believe that the state will disappear like Michael Sandel; Charles Maynes and Zygmunt Bauman

The facts of practice show that the role of the state is increasing in all aspects of social life, including economics. Economic globalization does not remove the necessity for functioning of the state. Radicals (supporter of great social or political change) point of view say all effects of globalization are positive only: there are no negative effects. The so-called negative effects are the consequences of loss of employment in inefficient, noncompetitive industries, loss of monopoly power of local industries/ businessmen and traders to exploit consumers by charging them the prices higher than imported goods and by supplying low quality products as compared to internationally available quality. The most positive effects of globalization are elimination of local monopolies, elimination of inefficiency, and access to opportunities available all over the globe for every citizen of different countries and awareness of citizens that they are not destined to be oppressed by the local political parties and rulers. But these are also the negative effects, not on the society of the common citizens, but on local monopolists, inefficient local producers, idiotic and corrupt politicians and lazy, shirker section of the workers.

Although there are some negative impacts; however, the positive impacts could overcome those negative impacts and make the world a better place. Globalization is sometimes opportunity and sometime it is a challenge. So, we need to think and act smartly to cope with challenges and to gain maximum out of globalization.