Does It Benefit The United States Economy?

In an effort to rebuild economies after Word War II, international agreements were formed encouraging trade between the free nations. One such agreement, the General Agreement on Tariffs and Trade (GATT), was formed in 1947. It was subsequently replaced by the WTO, which was formed on January 1, 1995. Current globalization has fostered a trading system that has become unbalanced. The WTO has favored investor rights and has supported aggressive countries in pursuit of their own markets, the U.S. included. The WTO must do more for environmental protection, consumer protection, and labor standards.

Does It Benefit The United States Economy?

Major decisions involving the World Trade Organization (WTO) are discussed and voted on at Ministerial Conferences (the WTO’s top level-decision making body) which meets at least once every two years. Protesting by environmental groups, labor advocacy groups, farmers, and many other interest groups marred a conference held in Seattle, Washington, November 30 to December

Take for example the situation of the U.S. steel workers. In 1999, "more than 10,000 workers lost their jobs as factories laid off individuals in response to a surge of imports from Japan, Russia, and Brazil (A Citizen’s Guide, 1999).” The United Steel Workers of America (USWA) in conjunction with steel industry leaders asked President Clinton for emergency relief. The President said he could not help because WTO rules forbid such action. However, Congress passed the Continued Dumping and Subsidy Offset Act of 2000, also known as the Byrd Agreement. Under this act, the U.S. Customs Service collects duties on products that its finds to be unfairly subsidized or dumped by the U.S. International Trade Commission and the U.S. Department of Commerce. In essence, the Byrd Amendment simply provides monies to the victims of foreign competitors who were found guilty of trade violations. These funds collected from the foreign corporations guilty of illegal trading practices under U.S. anti-dumping laws are rightfully made available to employers and workers for reinvesting in plant and equipment, pensions, lost health care benefits and job retraining.

A third way that globalization affects wages is through foreign investments. In an alarming rate, U.S. firms are moving plants to low wage countries. This has a definite effect on the U.S. labor market. Even the mere threat of closing a plant can convince workers to accept a pay cut. Again, this writer must stress that globalization is not solely responsible for unemployment, but it is certainly a contributing factor.

The real costs of the WTO for workers, communities, and businesses are greatly underestimated. The promised benefits have failed to materialize. The answer is not to stop globalization. In the long run, a system of both freer trade and fair trade that ensures all participants play by a well-defined set of market-based rules can maximize incomes for most, if not all, countries around the world. Existing trade agreements should be repaired and rebuilt before moving ahead with another round of broad, new trade deals.

One can plainly see that there are advantages and disadvantages of U.S. participation in the WTO. Free trade centers on production gains from the increased availability of goods and services, as well as lower prices for consumers. U.S. firms are experiencing a growth in foreign markets as plants are moved to other countries—all this resulting from more competition in the marketplace. Protectionists, on the other hand, argue for trade restrictions to protect domestic output and employment, to diversify (not putting all our eggs in one basket or relying too heavily on other countries) in case of economic disruption, and to protect national security.

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