Advantages of Technology in Internation Trade
Technology plays a major role in international trade. Databases,
overnight delivery and faxes have opened the world market to not only larger
companies but small ones too. To add to this globalization, companies and even
competitors are combining and forming alliances to cut cost and increase the
profit margin. Chrysler, General Motors and Ford have formed an alliance in
research and development to avoid duplication. These alliances are not only
with domestic companies but they also go over national lines. Companies are
pushing for integration of the world economy in hope for increased profits and
governments are beginning to listen.
Since 1986 (GATT) General Agreement on Tariffs and Trade have taken the
incitive to move towards the liberalization of international trade. GATT
members agreed to reduce tariff and non-tariff trade barriers. From 1986 to the
present due to GATT’s lead many markets have been open to the United States
increasing exports and increasing efficiency through competition.
One of the most aggressive liberalization groups to follow GATT’s lead
is APEC (Asian Pacific Economic Community). APEC consist of 18 countries that
account for 1/2 of the worlds output. The three largest economies Japan, China
and the United States are members. APEC leaders are committed to achieving free
and open trade for the region by 2010. APEC is moving towards this goal through
many means including accelerating initial Japanese tariff cuts by 50%. China
will also cut a number of tariffs by 30%. Indonesia and other APEC members are
also reducing tariffs sharply. What sets APEX at the head of the pack leading
liberalization is it wiliness to extend benefits of membership to everyone.
APEX is willing to extend the benefits of cuts in tariff and non-tariff barriers
to all countries willing to make comparable cuts. This is a major incentive for
all countries because the Pacific Rim is the fastest growing market in the world
and large profits are to be made there.
To put these cut in trade barriers in perspective lets look at the
company Chrysler. Chrysler is introducing a right handed drive version of the
neon subcompact to the Japanese consumer. Chrysler plans to sell 4,000 units at
their 200 show rooms. They are hoping for even more success with the right
handed versions of the Voyager and Wrangler which they plan to introduce next
year. With Japanese subsidizes on exports which lead to a high price on
Japanese domestic goods, Chrysler should be very competitive.
Liberalism in trade, though progressive vary a lot with area. The
European Union consisting of the countries of western Europe have established a
free trade zone between themselves but those areas outside the union deal with
the same old trade barriers. Tariffs on sensitive goods still remain.
Sensitive goods range from agriculture and raw materials to footwear and
furniture. These practices may seem unfair but the union is beginning to open
up trade with Eastern Europe, the Mediterranean and hopefully they will take the
APEX incentive to open thier market. If not we have policies that we can follow
to force free trade.
The United States is in a unique position in the world economy being the
largest consumer nation and also a major exporter. The U.S. can use the threat
of trade sanctions to open up closed markets and even change countries policies.
An example of this is the U.S. threat to use trade sanctions towards China.
China has a booming industry pirating U.S. films and music. This industry cost
the U.S. billions. The threat of trade sanctions forced China to crack down on
these pirating industries.
The world is moving towards the liberalization of international trade.
Large economic communities are being formed to make trade more profitable for
everyone involved. The APEC initiative takes this even farther with plans to
incorporate the whole world into a free trade area, thus making the entire world
more efficient and goods less costly.