Sunday, May 11, 2014

Globalization, International Trade and Upland Resources Use


GLOBALIZATION, INTERNATIONAL TRADE AND UPLAND RESOURCE USE
by Antonio C. Antonio
March 2, 2014

For over thousands of years, humans have interacted over long distances.  Adventurism, expansionism and trade have brought man across land and ocean for new socio-economic and cultural discoveries.  Roads to foster easy access to trade routes were built earlier by the Romans, Greeks and the more advanced countries in Europe.  In the “Old World” of the 15th and 16th Centuries, the Silk Road provided a route that connected Asia, Africa and Europe in an exchange of products, goods and services.  Europeans, with the invention of maritime vessels particularly the iconic galleon of the “Galleon Trade”, started crossing the Altantic Ocean with the same trading enthusiasm.  This eventually expanded to the “New World” or the Americas in the 19th Century.  The “Old” and “New Worlds” fused in a worldwide trading commerce.  The invention of the steam engine, railroad and new forms of transport such as the airplane brought man even closer in spite of their distance to one another.

The 20th Century saw the dawning of the “Space Age” where man started conquering outer space.  Parallel advancement in telecommunications brought about development of modern means of communications such as the mobile phone, computers and the internet.  From the inefficient telegraph, the telephone provided easy and efficient communications throughout the world.  This access to modern technologies connected billions of people all over the world in a frenzy of exchanges… cultural and socio-economic.  e-Commerce was born.

e-Commerce provided man with the luxury of staying in his place and effectively trade with a business associate on the other side of the world.  Governments, in an effort to cope with the changing trading and commerce landscape, started to bond together in mutually beneficial agreements which gave birth to “globalization.” 

Globalization refers to a process by which different countries fuse together in a synergistic exchange of worldviews, ideas, culture and products (good and services).  This process generated interdependence among member-nations in the fields of economic and cultural activities.  The term “globalization” has been increasingly used since the 1980s.  By 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization:

1.     Trade and transactions;
2.     Capital and investments movements;
3.     Migration and cross-boundary movement of people; and,
4.     Technology, information and knowledge sharing.

The General Agreement on Tariffs and Trade (GATT), which started in 1948, provided the framework by which the World Trade Organization (WTO) proposed to regulate trade among its member-nations.  The WTO officially commenced in January 1, 1995 under the Marrakesh Agreement with the following mandate:

·         Regulate trade between member-countries;
·         Provide a framework for negotiating and formalizing trade agreements between member-nations; and,
·         Provide a dispute resolution mechanism aimed at enforcing the participating countries’ adherence to WTO agreements.

The basic purpose and aim of the GATT is to reduce the tariffs and duties of individual member nations to stimulate more international trade.

Several rounds of discussions on concerns from WTO-member countries have already been made.  Starting with the Uruguay Round of 1986 to the Doha Development Round of 2001.  Prior to the Uruguay Round, several other conferences were called to fine-tune existing WTO policies beginning with the Annecy (France) Round in 1949 to the Tokyo (Japan) Round in 1979.  The calling for regular international conferences (Rounds) by the WTO became necessary to assess the current economic landscape among member countries.  With each Round, focus is made on the protection under-developed and developing economies.

On the Philippine neighbourhood front is another multi-lateral trade association called ASEAN or Association of South East Asian Nations.  The ASEAN Free Trade Agreement (AFTA) is an agreement among ASEAN-member nations signed in January 28, 1992 which supports the region’s manufacturing sector.  The following were original countries who signed up in the AFTA; Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand.  Vietnam joined in 1995, Myanmar and Laos joined in 1997 while Cambodia joined in 1999. At present, all ten ASEAN-member countries have signed the AFTA.

The primary objectives of AFTA focus on:

·         Increasing ASEAN’s competitive advantage and edge as a production area in the world market by eliminating or minimizing tariffs and non-tariff barriers; and,
·         Attracting more foreign direct investments to ASEAN.

To increase the competitive advantage of ASEAN, a Common Effective Preferential Tariff scheme was adopted by its members.  This scheme gives ASEAN nations free and affordable access to products and services offered in the region.

The ASEAN Economic Community (AEC) will be upon us soon (2015) and it seems inevitable that ASEAN integration will come to pass.  And there really is reason for us to be apprehensive about this.  It should be noted that most, if not all, regional grouping of countries are more often dominated by the stronger economies.  The weaker states are normally benefitted only by the crumbs from the table of the more economically advanced countries.

ASEAN is made up of 10 countries.  If we ranked them, the first five should be (1) Singapore, (2) Brunei, (3) Thailand, (4) Malaysia and (5) Indonesia while the bottom half should be (6) Vietnam, (7) Cambodia, (8) Philippines, (9) Laos and (10) Myanmar.  From this rough positioning, it is easy to determine that Singapore, Brunei and Thailand will be the dominant members with Malaysia, Indonesia, Vietnam and Cambodia still exercising some degree of influence while the bottom three --- Philippines, Laos and Myanmar --- are the bit players… in Tagalog: “Susunod-sunod lang sa agos.”

It’s always nice and ideal to be part of a regional group… but it would be a lot better if we come in from a position of strength and dominance?  Of course, the official line will always be that such grouping is necessary for the stronger members to help the weaker members.  But that is, unfortunately, a myth.  Take Singapore for example… it is the smallest member state to ASEAN, lacking in natural resources compared to other member states, just a trading post in Southeast Asia, but the most progressive and financially stable in the region.  It is hard to believe that Singapore, together with the other “first five” members, will not exploit the organization to their advantage.

Aside from regional economic strength that is supposed to be the prime consideration for membership to AEC, there is also the aspect of regional security.  Unfortunately, again, the Philippines is at a disadvantage because of its weak and non-dominate position.  The West Philippine Sea dispute with China is a good example in this case.  ASEAN member countries are not too keen on taking our position in this controversy.  Why?  Simply because they are also afraid to cross swords with China who is also their major trading partner.  So… what is ASEAN or the AEC for if it cannot share the concerns of its members?  Would ASEAN also take the luke-warm position against China if it were Singapore, Brunei or Thailand that was in a territorial dispute with China?  Your answer is as good as mine.

So what do we have?  Is our membership to ASEAN and AEC a mistake?  Certainly not!  But we should look at our strengths and weaknesses first before we look into our opportunities and threats… a simple SWOT analysis perhaps.  It should be noted that Opportunities and Threats are part of our external environment while Strengths and Weaknesses are our internal environment… and between internal and external environment, our internal environment is something we have most control of.  With this in mind, I therefore say that we should first look into and focus on our internal affairs (the management of our economy, socio-cultural wellbeing, political and societal reforms, basic freedoms, education, etc.) before we extend our concerns to our neighbors.  With 2015 just around the corner, time is not enough… but we could always start now and (perhaps) be more active in ASEAN affairs in a position of strength and influence.

Another contemptuous issue is the balanced utilization of natural resources.  Environmental concerns in the international community of nations have risen to higher levels in the past three decades.  Global Warming and Climate Change are now the priority concerns of everyone.  And everyone would like to hold on to the natural resources available in their respective countries in reserve while importing natural resources from others.  The more dominant and economically advanced countries are feeding on the inability of weaker economies to compete in the world market.  On the other hand, underdeveloped and developing countries have nothing to offer but their natural resources in a bid to industrialize and improve their financial position.  The effects of this trading condition will only felt in the long term… when the poor economies find themselves poorer with the depletion of their natural resources.  The most often abused natural resources are forest and mineral resources.  Although forest resources are renewable, mineral resources, however, are not.

Globalization, international trade and utilization of natural resources should be balanced and treated with the same focus and concern.  Whether we are talking of the bigger (WTO) or the smaller (ASEAN) picture, policies, plans and programs should be balanced in such a way that weaker economies are given a fair chance of competing with the more advanced economies.  Predatory conditions and interests must be eradicated for globalization to succeed in the long term.  If not, individual economies would prefer to close their borders to international trade at some point.

Just my little thoughts…

REFERENCES:

·         Globalization (http://en.wikipedia.org/wiki/Globalization)
·         General Agreement on Tariffs and Trade (http://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Trade)
·         World Trade Organization (http://en.wikipedia.org/wiki/World_Trade_Organization)
·         Asean Economic Integration (http://www.rappler.com/world/regions/asia-pacific/39481-apb-survey-asean-economic-integration)



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