Globalization and Free Trade
There has been a lot of talk (and protesting) lately about globalization and free trade. Free trade meaning lowering and eventually elimination of import tariffs, elimination of export subsidies and of governments financial support of their industries. This is in turn expected to increase global trade and allow developing countries to build local industries, create jobs and increase the standards of livings.
Some of the instruments of free trade are the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). These two examples have increased trade for the countries involved. But when barriers are lowered or removed, local industries must now compete in worldwide markets. This sounds all well and good until you realize that the cost of production (and living standards) are not equal. The cost of production is not only raw materials, but the manpower to produce products. When it comes to manpower costs, industrialized nations -like the US- are at a distinct disadvantage. It is much cheaper to produce a dress shirt in China than in the US' southern linen mills. Under these circumstances, US industries are at a cost disadvantage and are faced with closing manufacturing facilities or moving them to third world countries such as China. As manufacturing continues to move to developing countries, the US will lose their 'blue collar' manufacturing base. And lately it's not just the manufacturing base that's being lost. High tech jobs are now being moved to India. This is one reason the high tech sector is unlikely to rebound from the loses of two years ago. Any rebound in high tech activity is likely to be outsourced.
Until such times as developing countries' costs of living approach those of the developed countries and manufacturing costs (including environmental protection) become more on a par, jobs will continue to be lost to low cost developing countries. To counteract this trend, developed countries like the US need to take a more practical approach to imports by enacting sliding import tariffs on goods imported from developing countries, tied to exporters' country of origin's yearly cost of living, for goods that directly compete with that of US manufacturers. This will allow developed countries including the US to better compete while the developing countries economies and living standards rise to that of the west. As for the outsourcing of high tech jobs, this is not a result on uncompetitive imports, but as a result of bottom-line decisions. American companies need to realize - and realize soon, that outsourcing high tech jobs will backfire since the unemployed will definitely not be in a position to spend and add to their hoped-for higherbottom line!
01/17/04 ( [an error occurred while processing this directive] )
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