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Student Boiko A. I.
Donetsk national university of economics and
trade named after Mykhailo Tugan-Baranovsky, Ukraine
Trade wars in the 21st century
Barely
five years into the 21st century, with a globalized neo-liberal trade regime firmly in
place in a world where market economy has become the norm, trade protectionism
appears to be fast re-emerging and developing into a new global trade war of
complex dimensions [1].
A trade war refers to two or more
nations raising or creating tariffs or other trade barriers on each other in
retaliation for other trade barriers. Increased protection causes both nations'
output compositions to move towards their autarky position. Poor countries are
more vulnerable than rich countries in trade wars; in raising protections
against dumping of cheap products, it risks making the product too expensive
for its people to afford [2].
Since the
1960s, world trade politics has become multilateral rather than bilateral. This
has not eliminated trade wars, but has made them multilateral also. If the EU
declares war on US hormone-fortified beef and export subsidies, then the USA
may declare war on EU luxury goods and Caribbean bananas [3].
The world is at war again - over trade.
Governments and producers squabble over beef, bananas, steel and other goods.
Once again some countries try to 'protect' their faltering industries behind
trade barriers.
Let’s take a look at the dangers facing the world economy.
Free trade in peril
Trade
disputes have a habit of turning into bitter conflicts. Most times, both sides
lose out.
To prevent
such frictions, 134 countries have agreed on trading rules and joined the World
Trade Organisation (WTO) to mediate disputes. But the WTO's authority is under
threat.
The beef war
Is beef
from cattle reared using growth hormones safe for human consumption? The EU
says no, blocking all imports. The United States says this amounts to
protectionism. The WTO has now allowed the US to impose sanctions worth $116m -
far less than the original US demands of up to $900m. The next trade war is
about to break out.
The leadership battle
For three
months the WTO was without a leader, as member countries squabbled over who
should be the organisation's next director general. After a contest sullied by
accusations of mudslinging, the two candidates, New Zealand's Mike Moore or
Thailand's Supachai Panitchpakdi, agreed to share the job, but the WTO's
reputation suffered from the dispute.
The banana war
The US
government scored an important victory over the European Union when the WTO
agreed that Caribbean banana producers were getting preferential treatment from
the EU. The US retaliated swiftly with half a billion dollars worth of tariffs.
The steel war
The devaluation of the Asian currencies
last year led to a flood of cheap steel in world markets. Japanese steel
exports to the US surged a massive 400% last year - causing an outcry among
hard-pressed American steel manufacturers. Washington wants WTO action [4].
Within US
policy circles, the rapid rise of China as a major force in the global economy
is provoking a reconsideration of whether free trade is still in the US
national interest.
The
prospect that China can be a major economic power is feeding widespread
paranoia in the United States. The fear is that developing nations, led by
China and India, may out-compete the advanced nations for high-tech jobs while
keeping the low-skill, labor-intensive manufacturing jobs they already own.
China already is the world's biggest producer and exporter of consumer
electronics and it is a matter of time before it becomes a major player in auto
exports [5].
In
conclusion, it is necessary to outline the basic points of the paper. In modern
international economic relations such problem as trade wars exists. Poor
countries are more vulnerable than rich countries in trade wars. Trade wars
exist in such forms as free trade in peril, the beef war, the leadership
battle, the banana war and the steel war. The largest-scale trade war is
between China and the USA.
References:
1. Henry
C K Liu The coming trade war and
global depression
// The Asia Times online. –
2005. – Jun 16
http://www.atimes.com/atimes/Global_Economy/GF16Dj01.html
3. Business Dictionary: Trade
War// Answers.com The leading Q&A site http://www.answers.com/topic/trade-war
4. World
trade wars // BBC News. – 1999. – 27 July
http://news.bbc.co.uk/2/hi/business/342821.stm
5. Henry C K
Liu Trade wars can lead to shooting
wars
// The Asia Times online. – 2005. – Aug 20