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The Future of International Trade

Reducing border restrictions to trade has been the main concern of international economic integration for more than half a century. This is mainly done by reducing tariffs. Although the task is not yet complete and there is still substantial barriers associated with agriculture exists and the domestic opposition is powerful as well.

The question is that what is the role of multinational corporations so as to ensure that international trade flourishes in the coming years? Many answers have been provided and the essence is that companies should draft policies which provide sustainability instead of running after immediate gains. In this respect, it should be kept in mind that sustainable trading cannot be reaped by short term profits but through optimal medium as well as long term supply chain solutions which will be beneficial for all the participants.

The result is that a new type of international integration takes place with special reference to East Asia. This idea of integration emerged from the concept of the second unbundling of global trade. The first part consisted of the geographic separation of production and consumption which referred to the production of bread in one country which was swapped by clothes by another country in which every country in the trade benefited by producing items in alliance with its comparative advantage.

The process of the second unbundling comprises of the division of the production as a whole. The benefit of this will be that every segment of production will be conducted in a location which is considered to be the most efficient. In order to reap benefits from this process on unbundling, the requirement of dismantling the border restriction element but, also incorporating consistency within standards, rules as well as methods of physical infrastructure and operations so as to get the production chain completed smoothly and with less complexes. This method will turn out to be more subtle as compared to the straightforward job of reducing tariffs.

There will arise a lot of disagreement pertaining these rules. Differentiation within standards has taken place as a comparative advantage which may include different safety, environmental as well as labor standards which in fact might be appropriate. In addition to this, intellectual property rights will also be exercised so that there exists a balance between the rights of all those who came up with the idea and those who used or copied that idea in place of handling out monopolies to patent holding businesses which never made any economic sense. Moreover, the technical standards should be the same all over and those standards should prevail.

The major concern will be that the set of rules surrounding the second unbundling is quite difficult to establish as well as enforce similar to the way in which free trade is enforced in the WTO (World Trade Organization). Furthermore the platinum standards are also considered to be less appropriate as the US is highly pushing in for the Trans Pacific Partnership which has a strong demand of having intellectual property rights, regulated discipline of all the state-owned enterprises, stronger labor as well as stronger labor.

Posted by: Joel on Feb 12 2014

Tags: Trade International Trade Future Of Trade Global Trade

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