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ECONOMICS & NATIONAL INTEREST.
Term Paper ID:20680
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Essay Subject:
Need for U.S. govt. to create policy to deal with threats of free trade, regional trading blocs, changing global marketplace.... More...
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5 Pages / 1125 Words
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Paper Abstract:
Need for U.S. govt. to create policy to deal with threats of free trade, regional trading blocs, changing global marketplace.
Paper Introduction:
Throughout its history, the United States has supported the free trade system. Ideally, this system is designed to keep international trade open and to prevent governments from imposing restrictive tariffs or quotas on the importing or exporting of goods. Recently, however, there have been increased complaints among American politicians that some of our major trading partners are engaging in unfair practices. For example, some foreign firms have engaged in the practice of "dumping," in which goods are exported at a loss "in order to drive other products out of the marketplace" (Bonker, 1988, p. 32). Furthermore, some foreign governments have adopted policies which give an unfair advantage to the companies of their own nations. These governments often provide subsidies to companies that utilize aggressive exporting techniques. In addition, these governments
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138). Japan's domination of foreign markets has causedit to hold a powerful position within the rising East Asian trading bloc.Many people in America today feel that Japan's economic strength, as wellas its utilization of unfair trading practices, are a threat to the currentinternational order (Jackson, 1993, p. Ideally, this system is designed to keep international tradeopen and to prevent governments from imposing restrictive tariffs or quotason the importing or exporting of goods. (1993, Summer). Following the example of both Japan andGermany, U.S. 223-229. The second of these blocs is found in Western Europe,with the recently united nations of the European Community. Clearly, economic issues play an important role in terms ofinternational security in today's world. Clinton's emerging trade policy.Foreign Affairs 72, pp. New York: William Morrow and Company.----------------------- 1 economic interests, becausethey encourage not only protectionism but also mercantilism (Garten, 1991,p. Some political analysts feel that these trading blocs will damagethe world trading system by closing off international trade. It is possiblethat other international blocs might develop in upcoming years, as well.For example, there are indications that Latin America and Eastern Europemight soon form their own economic alliances (Garten, 1993, p. 186). Trade: Opposing view-points. Trading blocs will harm the world tradingsystem. Such practices create a threat to U.S. W. 34-35). The success of Japan's economy also indicatesthat ongoing investments in research and development will help Americancompanies to "stay on the cutting edge of technology," which will in turnhelp the nation to maintain a high level of competitiveness in the worldmarket (Bonker, 1988, p. These meetings provide an opportunity for theworld's leaders to work out strategies for economic cooperation. The UnitedStates can handle both of these problems without resorting to protectionismor other practices which shut off free international trade. In addition, the U.S.needs to place greater emphasis on the importance of education and trainingas well as on the ongoing development of advanced technology. E. 26 ). Head to head: The coming economic battle amongJapan, Europe, and America. 131). In this regard,the United States can play an important role in summit meetings betweeninternational leaders. exports to Europe aresuffering as a result of increased trading among the European nationsthemselves; furthermore, there are signs that the United States is losing"political leverage in trade negotiations as a result of Europe's reducedneed for American military protection" (Garten, 1993, p. (1988). Such trading blocs are a threat to U.S. Boston: Houghton Mifflin. Garten, J. (1991). The politicalanalyst Lester Thurow (1992) has suggested that American companiescultivate the practice of "international benchmarking." This practiceinvolves first studying the competition, and then developing strategies foroutperforming the competition (Thurow, 1992, p. 189). These governments often provide subsidies to companiesthat utilize aggressive exporting techniques. Thurow, L. 188). This type ofpractice results in severe trade deficits between nations, which in turnresults in international tensions. 26). At this time,three major trading blocs appear to be emerging in the world marketplace.The first of these trading blocs consists of the countries of the NorthAmerican continent, including the United States, Canada, Mexico, and theCaribbean Islands. firms to get into foreign markets" (p.172). However, these policies should not be based onprotectionism, which is antithetical to free trade, but rather on the ideaof increasing the nation's "export competitiveness" (Garten, 1993, p. For example, the firms of Japan have shownthe importance of such things as investing in technology and training, aswell as the importance of constantly upgrading manufacturing techniques(Garten, 1993, p. 13). 187). San Diego:Greenhaven, pp. For example, someforeign firms have engaged in the practice of "dumping," in which goods areexported at a loss "in order to drive other products out of themarketplace" (Bonker, 1988, p. America's trade crisis: The making of the U.S.trade deficit. Because of Japan's aggressive export policies and strictlimitations on imports, the nation developed a trade surplus with theUnited States which soon became "a source of international trade friction"(Jackson, 1993, p. Dudley, ed. companies can also improve their performance in global tradeby developing the use of teams. The next battleground: Japan, America, and thenew European market. Because of the upcoming changes, it is important that the U.S.government develop new policies for helping American businesses compete inthe global marketplace. In theseways, the United States can boost its own position in the world economicorder while at the same time maintaining its traditional role of "pushingthe world trading system toward greater openness" (Garten, 1993, p. There are manylessons that can be learned by studying the successes of othermultinational organizations. 229). In the words of Bonker (1988), the government needs a comprehensive tradepolicy that encourages "more U.S. Even the traditional alliance between the United States andEurope may be threatened as a result of future changes in trade practices.In fact, it has already been noted that U.S. Throughout its history, the United States has supported the freetrade system. Also following the example of Japan, there is nowwidespread agreement among political thinkers that improvements inAmerica's education system will result in improved work skills and thus amore productive work force. 182-189. In addition to creating a new approach to foreign policy, the U.S.government also needs to encourage American firms to adopt "a way ofthinking, a way of structuring our institutions so that they reflect theglobal nature of today's economy and are able to respond to itsunprecedented rate of change" (Bonker, 1988, p. E. Boston: Houghton Mifflin. (1993). In this regard, it has been claimed thatregional trading blocs will create strains in international alliances andthus result in a lack of cooperation in efforts on important issues such asdrugs, terrorism, the environment, and economic development (Garten, 1991,p. In order toaccomplish this goal, the United States needs to strengthen its position inthe global marketplace by developing policies which encourage increasedexporting and competitiveness among American firms. businesses which are bound bythe ideals of international trade without government interference. If the United States canincrease its competitiveness in the world market, many of the nation'scurrent domestic economic problems, such as unemployment and the budgetdeficit, will be alleviated at the same time. The success of those two nations has shownthat teamwork results in increased cooperation between workers, managers,suppliers and customers; and that this increased cooperation in turnresults in increased productivity, quality, and sales (Thurow, 1992, p.298). Asnoted by Congressman Bonker (1988), such practices are unfair because ourprivate firms simply cannot compete with a foreign firm that has theunlimited resources or its government behind it" (p. In a mercantilist system, government policies are created toincrease exports while at the same time decreasing imports. Furthermore, some foreign governmentshave adopted policies which give an unfair advantage to the companies oftheir own nations. 185). The United States also needs to develop effective policies fordealing with the rising problem of regional trading blocs. Inaddition, they provide an opportunity for U.S. (1992). representatives to promotethe development of "outward-looking blocs in a framework of cooperativeallied relations" (Garten, 1991, p. 227). 228). Current threats to this securityinclude the unfair trading practices of some nations and the fact that theworld is becoming divided into large regional trading blocs. Recently, however, there have beenincreased complaints among American politicians that some of our majortrading partners are engaging in unfair practices. national security, because economicposition is a vital factor in the current balance of global power.However, the threat of unfair trading practices has resulted in a greatdeal of talk among American policy-makers regarding protectionism, apractice which is contrary to the ideals of free international trade. Jackson, T. Another threat to America's economic position is being posed by thefact that the world is apparently being divided into regional tradingblocs. It should be noted thattrading blocs threaten not only economic interests, but also other areas ofinternational security as well. Garten, J. References Bonker, D. In addition, thesegovernments often assist companies in a practice known as "targeting." Inthis practice, new and promising markets are identified in the world, andthen "whatever action is necessary" is taken in order to seize them (pp. The thirdmajor trading bloc is that of East Asia, a huge sector which encompassesJapan, Korea, China, Thailand, Indonesia, and Australia. For example, during the 198 's, theUnited States began experiencing problems in terms of its trade imbalancewith Japan. 35). 32). The concept offree trade is important to U.S.
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