Globalisation & Pesky Non-Tariff Trade Barriers
Saturday, August 20th, 2011
Globalisation of trade has been around in its current sense for centuries. However, in its current phase from the 1970s onward, globalisation has become exponentially more efficient and effective – fueled by corporations crossing international boundaries and the golden chalice of trade-enabling technological progress.
Globalisation is enabled by Technology
The enabling technologies of this latest phase of globalisation include rapid development in computer and related technologies (including the Internet), logistical technologies like the humble shipping container, a shift toward internationalised legal/political structures and the almost costless communication that sees more business transactions occuring in 1 day of 2011 than occurred in a year (or years) of the 1960s. Never before have individuals (of elite economies) and business transactions been able to travel so far and fast or purchase goods so broadly at such low cost.
GATT, the WTO & Trade Barriers
Unfortunately all of that internationalisation comes at a price. If you look at the new globalised world – driven by corporations expanding across borders – the ideals of a new world order have aligned squarely on the maximisation of shareholder wealth at the expense of those less fortunate. The World Trade Organisation (WTO – 1995 onwards), which replaced and furthered the aims of General Agreement on Tariffs and Trade (GATT – ran from 1947 to 1993), has progressed past the lowering of tariff trade barriers and is focused squarely on the issue of non-tariff trade barriers.
The effect of globalisation on affluent societies can’t be denied – those GATT agreements for tariff reductions led to a huge rise in international trade and profits since the end of World War 2. Particularly important, underpinning those Free Trade objectives are those enabling technologies that have resulted in an exponential increase in business transactions and the ability to send goods to their global destinations. Obviously, there are winners and losers in the globalisation paradigm… that cheap shirt you’re wearing may likely be made in almost slave labour conditions by a 7 year old child deprived of an education.
Non-tariff Trade Barriers
Which brings me to those pesky non-tariff trade barriers – that is, any number of trade barriers other than a tariff that stand in the way of free trade on a level international business playing field. As tariff trade barriers receded around the world there has been a tendency to impose non-tariff barriers in their place. These include quotas, import licensing, requirements for documentation, red tape, the use of national standards (often with the excuse of health and safety), buy national policies, an over-valued currency, government policies and subsidies (consider Tony Abbott’s proposed $50 billion subsidy for big polluters), domestic assistance programs, border taxes, administration fees and that pesky old excuse of quarantine.
