Competition and Globalization

Competition and Globalization

In an effort to rebuild the economies after World 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 with The World Trade Organization (WTO) in 1995 which 2002 had 144 countries who were members. These agreements were designed to help trade flow smoothly, freely, fairly, and predictably. However, there have been several advantages and disadvantages of these agreements for the United States.

The advantages the United States has seen since these agreements have been set are enormous. Good paying American jobs, higher living standards, and the continued growth of the U.S. economy depend on its ability to sell the goods and services it produces to consumers everywhere.(Supporting American Workers) Supporters argue that the WTO has helped the U.S. achieve this goal. The WTO allows American businesses to find new opportunities, create jobs, and raise family living standards. By lowering trade barriers, the WTO has helped the U.S. export more of its goods and services to other countries. In return, this has offered the U.S. consumer a variety of products and services through the various imports from other countries. Free trade enables U.S. industries to be more responsive to the needs of their customer. Therefore, U.S. participation and leadership in the WTO are of critical importance. The WTO has become the platform for U.S. efforts to lower foreign trade barriers and establish international rules for fair trade. (Welch and Welch 2002)

Although there appears to be several advantages one can not look past the disadvantages the U.S. has seen since the WTO was enacted. Perhaps the most damaging effect of the WTO and free trade to the U.S. is the loss of American jobs. Globalization aggravates the problem of unemployment. Driven by the laws of competitiveness, firms are forced to achieve the highest possible output with a minimum of workers. In the past the U.S. was the world leader in exports, however since the 1970's the U.S. trade surplus has been declining, as Europe and Japan have been able to compete effectively with the U.S. Trade. (Leenders 2002) This decline in exports has destroyed millions of high-wage,