"Visions of World Benefit & Global Responsibility: Perspectives of McGill Students

Saturday, July 28, 2007

Free Trade Agreements

On July 15 2007, Stephen Harper arrived in Bogota, the capital of Colombia, to meet with Fernando Araujio to discuss the possibility of a trading agreement between the two countries, which did not come without criticism from human rights activists. Five days later, the Prime Minister of Canada was received in Barbados, to continue his quest for more trade agreements.

The history of trading agreements is not a simple one. At its beginning, a strong advocator of free trade was Adam Smith, going all the way back to the 18th century, on the European continent. He defended the idea of an open economy and capitalism and criticised the mercantilist economic system of Europe. David Ricardo, on the other hand, a political economist, brought to the table his theory of competitive advantage and his belief in free competition. Both of these individuals contributed to the movement who led to the expansion of free trade all around the world and in all industries.

Today, three centuries later, the role of trading agreements is no longer simply the exchange of goods and services with no barriers and tariffs between two parties, but a road to a partnership between two important influential bodies. It is a vehicle from more developed countries to promote human rights, democracy and increase the living standards of individuals along with building political relationships with less developed countries. In the age of globalization, many countries around the world are now involved in the process of trade agreements and discussions and this trend is likely to continue.

The concept of free trade has become so important that organisms such as the World Trade Organization and the United Nations now play a significant role in the management of trading agreements. The WTO has an objective to reduce the trade barriers while also facing much criticism from labour rights activists, among others. Also, the UN tries to promote its values of international cooperation in areas such as economics, politics, security and peace, trough trading agreements. When all of this is going on, it is hard to think that this movement will eventually stop. It is more likely to grow, and further integration between existing blocks of countries is a possibility for the future, just like what happened with the evolution of the European Union.

The EU first started as the European Coal and Steel Community (ECSC), where trade cooperation was necessary to help rebuild Europe after WWII and install a certain stability and peace on the continent. Over the years, more countries joined the original six members for a total of 27 members and more are waiting to join. As further process, economic integration came to be within certain member countries. Although integration such as this one can help the movement of capital from one country to another, there are still a lot of debate and discussion revolving about the success and future of the EU. Issues of control, identity and governance are often centers of debates.

On a positive side, in any trading agreements, countries can benefit from their exposure to new markets and can help leverage knowledge from one country to another. It can help nurture new ideas and product innovations. On the other hand, the political instability of certain countries and the management of various cultures can sometimes create problems. Leaders and managers need to be aware of what trading agreements involve when making the step of venturing abroad and taking advantage of no barriers and tariffs.

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