Describe the way in which trade agreements have affected state sovereignty, especially for developing countries
Over the last 20 years, there has been an increase in the number of trade agreements. These trade agreements have positively impacted on investments and have helped foster relationships among countries across the world. Cannard (2019) defines trade agreement as a notable signing of an accord between two or more countries to facilitate transaction among them. In view of this, trade contracts comprehensively eliminate barriers and lowers cost of imports and enhance economic growth thus provides nations with opportunities for growth and developments, which has made trade agreements a widespread phenomenon. However, trade agreements poses challenges regarding how developed countries exercise control over developing nations. In addition, there is public distrust on the hidden intentions of major companies as who may exercise uncontrolled power over small scale businesses (Sabel et al., 2017). In 2015, two major trade agreements were proposed. These were; Pacific Partnership and the Transatlantic Trade and Investment Partnership that were expected to allow integration. This report evaluates why trade agreements negatively impact on sovereignty of nations.
Supreme power of nations is often affected, especially when major economies sign agreements with developing countries. Companies from developed countries demand more security and safeguards before signing binding agreements of trade with nations and their local businesses. During this process, treaties that potentially erode primacy are signed. For example, Alvarez (2015) opines that the United States is notorious for advocating for investor safeguards when signing treaties with Peru, Colombia, and Panama. Most of the investor protection is invariably meant to minimize the risks involved in doing business. In a way, developed states use investor-state conflict resolution mechanisms.
The use of investor-state conflict allows companies from industrialized countries to sue developing countries in an intercontinental jury with the intention of forcing a less developed state to offer compensation. Forcing a less developed state to pay compensation has happened as depicted by Alvarez (2015). In this case, a dispute involving Karpa Company and Mexico ensued, where the former accused the latter of adamantly denying export tax rebate. Ultimately, as revealed by (Alvarez, 2015), Mexico lost the case and was forced to pay 1.5 million dollars in compensation. In a way of coercing developing countries into submission, international companies may also fail to trade with developing companies with histories of corruption, mismanagement of funds, and gratuitous violence. This is case of discrimination and may deny a developing country the opportunity to advocate for its rights and privileges.
Developed countries exercise control over developing economies using threats of withdrawing aid and other local support initiatives. For instance, United States threatened African countries with sanctions and withdrawal of foreign aid if they continued trading with China (Young, 2016). Therefore, developed nations unanimously decide on trade policies that fit their interests and not those of the citizens of these republics. According Young, trade envoys of developing nations are expected to protect their people (2016). However, sometimes, they end up pursuing the interest of these influential companies subjecting host countries to submission. As a result, the sovereignty of a developing country is threatened because of a few local workers being employed, lack of environmentalists and consumer safety protectors.
When deciding what is best for a country in relation to business activities, the people at the negotiation table are usually corporate representatives. Developing countries are frequently left with few options and witness how corporations advocate for removal of trade barriers to increase profits. According to Young, A. (2016), trade agreements should be carefully negotiated in the glare of the public, especially in front of those likely to be affected by them. Unfortunately, this has not been the case because certain provisions are often negotiated in closed doors. Cannard (2019) present the example of Nigeria, which has failed to sign African Continental Free Trade Agreement citing the secrecy around the negotiations and lack of input from non-governmental organizations. This represents a clear case of excessive control capable of negatively affecting a country’s sovereignty. For that matter, citizens of developing nations are usually unable to review decisions and hear concerned parties argue, an aspect that can be considered as an indirect colonization of developing kingdoms because they have no say over matters that affect the country. According to Sánchez-Flores (2010), the supreme power is adversely affected because deals are brokered behind closed doors and benefit international companies at the expense of local economies. Fundamentally, international companies attempt to establish dictatorships in developing countries. for example, these enterprises use trade agreements to control wages and influence working conditions. To them, laws mean nothing and the will of the people is not respected in such extreme cases.
Trade agreement remains a crucial component of a state’s economic and foreign agenda. Accordingly, the public interest should be prioritized when it comes to determining the types of trade to engage in while preserving as much supreme power as possible. Regrettably, the agreements have been used to impoverish and control developing countries by forcing them to enter into treaties over which they have little to no control. Additionally, in cases of dispute, international panels negotiate and resolve conflict and developing countries emerge as losers. It is expected that trade agreements can create democratic systems and space to allow citizens maintain sovereignty but not been the case for developing countries.
Alvarez, F. (2015). Free trade agreements and sovereignty. The Permaculture Research Institute.
Retrieved from https://permaculturenews.org/2015/07/06/free-trade-agreements-and-sovereignty/.
Cannard, J. (2019). The African Continental Free Trade Agreement: Loss of sovereignty, lack of
transparency. CADTM. Retrieved from http://www.cadtm.org/The-African-Continental-Free-Trade-Agreement-Loss-of-Sovereignty-Lack-of.
Sabel, C., Herrigel, G. and Kristensen, P. (2017). Regulation under uncertainty: The coevolution
of industry and regulation. Regulation & Governance, doi:10.1111/rego.12146.
Sánchez-Flores, M. (2010). Introduction in Cosmopolitan liberalism; expanding the boundaries
of the individual. New York: Palgrave. pp. 1-18.
Young, A. (2016). Not your parents’ trade politics: the Transatlantic Trade and Investment
Partnership negotiations. Review of International Political Economy, 23(3): 345-78.
Review the evidence on global inequality and attempt to provide an explanation for this pattern. Has globalization deepened the gap between the rich and the poor?
Inequality remains a global concern and is on the rise in almost every nation across the world. There is perhaps an increase in inequality going by the state of global economy and impacts of recession that have affected the operations of multinational companies like Google. These multinational companies are finding it difficult to sustain operations in some countries due to competition. When these firms ultimately close down, a massive number of people lose their jobs subjecting them to poverty. Poverty and low standards of living creates an inequality gap between the rich and poor. Unfortunately, it is challenging to comprehend the possible reason for the pattern because of inadequate credible data. There is need for more empirical studies to explain why there is a huge gap between the poor. This is the global inequality this report explores.
Global inequality is a concern for countries aspiring to grow their economies. This is depicted in Europe which exhibit least inequality. Conversely, Savoia (2017) mentions the Sub-Saharan Africa, Brazil and Middle East have shown serous inequality. Furthermore, there exist vastly unequal economies, contemporary conditions, and income between diverse states across the world. The inequalities influence the heath, wealth, and education of a country and are a result of direct consequences of unequal progress that has been witnessed in the last two centuries. Some nations have registered significant progress, while others have failed in their missions to improve the general state of their economies, wealth, and education.
The inequality pattern is driven by unequal ownership of national wealth. For example, for example, in Western Europe, despite most people being permanently employed, the wage gap is significant (Roser, 2019). The major economic players continue controlling the wealth leaving the majority of the citizens poor. The about 10 percent top earners in Europe control more than 37 percent of total revenue (Roser, 2019). It is inherently unfair that few people across the world enjoy healthy and wealthy lives while the majority continues languishing in poverty. To promote the economic growth of a country, the gap between the rich and the poor need to be reduced. This has not been achieved due to the selfish nature of some wealthy individuals to amass wealth and subject the poor to extreme poverty.
Scramble for economic resources has been a recipe for chaos in most countries across the world. For example, Africa is endowed with minerals and oil yet is composed of some of the world’s poor countries. This and has been the subject of violence and tension. The chaos witnessed in Libya and the ultimate death of president Gaddhafi is a perfect example. In addition, most of these countries are prone to dictatorships so as to control massive wealth and subject citizens to abject poverty. Poverty makes it difficult for these citizens to advocate for their rights and improve their standards of living. This creates an inequality gap. Moreover, some countries having massive reserves of minerals like the Democratic Republic of Congo lack the sophisticated infrastructure to harness and use its proceeds to improve the economy and quality of life of its people. In ability to economically use resources promotes inequality as that particular country remains poor while other countries like those in the Arab gulf continue to flourish. Countries such as Saudi Arabia have used their oil reserves to improve its economy Overall, skewed distribution of economic resources and inability to harness such resources has been responsible for the huge inequality gaps between developed countries and developing nations.
Globalization has widened the gap between the rich and poor. For example, the phenomenon has reduced the ability of skilled manpower to bargain thus pushed the inequality pattern in many countries across the world. According to Clinch (2017), outsourcing of human resources from one country to another has increased the rate of unemployment. As result, majority of the people in these countries remain poor. Moreover, globalization has opened countries for trade and in the process enhanced competition for profits (Knight & Keating, 2010). As such, workers initially employed have lost their jobs due to stiff competition forcing their employers to close business and abandon operations. Moreover, offshoring is another aspect of globalization that continues to widen the gap between the rich and poor. Rodrik (2011) defines offshoring as the tendency of companies to relocate production and operation to cheaper and friendly countries. This means that such countries will lay-off in previously host countries as they will find cheap labor in regions they have shifted operations to.
In summary, inequality is a global concern and continues to affect economic growth of countries. Inequality patterns has increased due skewed distribution of income, skewed availability of natural resources across countries, inadequate infrastructure to harness resources, and offshoring. To remedy the situation, governments need to initiate policies on income distribution and management of resources. Notably, globalization has augmented inequalities. The opening of borders for trade has increased competition, allowed industries to outsource labor, and move their production units elsewhere. As a result, there have been massive jobs losses. Hence, the primary focus should be on protecting people and not jobs.
Clinch, M. (2017). Globalization hasn’t fixed the gap between rich and poor, top CEOs say.
Published online at CNBC. Retrieved from https://www.cnbc.com/2017/01/17/globalization-hasnt-fixed-the-gap-between-rich-and-poor-top-ceos-say.html.
Knight, W. and Keating, T. (2010). Global politics; emerging networks, trends, and challenges.
Toronto: Oxford University Press.
Rodrik, D. (2011). The globalization paradox: democracy and the future of the world economy.
New York: Norton.
Roser, M. (2019). Global economic inequality. Published online at OurWorldInData.org.
Retrieved from: https://ourworldindata.org/global-economic-inequality.
Savoia, A. (2017). Global inequality is on the rise – but at vastly different rates across the world.
The Conversation. Retrieved from https://theconversation.com/global-inequality-is-on-the-rise-but-at-vastly-different-rates-across-the-world-88976.