Mr. Abhishek Garg, MBA 2nd Year, IIT-Roorkee

"Except for religious conflicts and the petty wars of feudal lords, wars are primarily fought over resources and trade. President Woodrow Wilson recognized that this was the cause of World War I: 'Is there any man, is there any woman, let me say any child here that does not know that the seed of war in the modern world is industrial and commercial rivalry?'" -- J.W. Smith, Institute for Economic Democracy

Globalization, trade and the free markets are the talks of today. Many envision or talk about a future where people of different nationalities and cultures will be able to share and trade resources across boundaries in a manner that will benefit all of humanity.

But, I ask, how fair is trade when a nation's own global trading policies together with international corporations' desire to increase their profits result in manipulated international trade pacts and agreements, so that they are most favorable for themselves? How free is the free market? Why do the poor get poorer and the rich get richer?

A lot of overbearing regulations can give too much power to a few, and potentially corrupt ruling regime and prevent innovative ideas from flourishing. It can perhaps be an obstacle for a foreign nation to invest in a country due to those conditions and regulations which increase costs. The fact that some of these regulations are usually for the benefit for the people of that nation poses another problem.

However, too much deregulation can lead to corporations being able to undermine basic social and human rights as well as lead to environmental damage, often without accountability. IMF-imposed structural adjustment and their pushes for deregulation has also led to further poverty in some countries.

The correct balance is difficult to reach due to the inherent power conflicts between the various bodies involved. This leads to a lot of unfairness in trade and basic human rights for which the majority of people end up paying the price. For example, some believe that one of the main problems causing the 1998/99 financial crisis around the world is a lack of global regulations to help protect developing nations as they enter a global market. Even the World Bank has cautioned that globalization and localization (the increasing demand for local autonomy) can pose problems as well as offer benefits, if not handled properly.

There is already a growing fair trade movement around the world, where local producers are able to fairly trade their products. However, it isn't always easy to maintain that when globalization, in its current form, does not seem to favor those who want trade to be fair. I would also like to see environmental objectives- such as the 'polluter pays' principle - incorporated into international trade agreements and a minimum floor of global labour standards implemented. This would build sustainable development into globalisation and stop the 'rush to the bottom' where companies locate in low-wage countries which often have the worst conditions for workers.

People who are in favour of fair trade might be expected to show some concern that developing countries face tariffs on their manufactured exports that are nearly four times as high as those facing exports from industrial countries. Instead, those involved in the recent campaign for global fairness seem to view trade between high wage and low wage countries as intrinsically unfair. First, they argue that it is unfair to workers in the high wage countries because they are being undercut by sweatshop labour. Second, they argue that it is unfair to workers in low-wage countries because they are being exploited.

The Economist has suggested: "The best answer to both arguments is simply to point out that, 'fair' or not, trade raises incomes in both countries. Victims of injustice and exploitation should always be so lucky".

Should WTO rules permit members to use discriminatory trade barriers against countries that are obtaining an 'unfair' advantage in trade by following labour or environmental practices that some people in high-income countries regard as unacceptable? While this may appear to be a reasonable approach, there are at least three reasons why no one should rush to endorse such proposals:

• Unanimity about what specific labour and environmental practices are acceptable cannot be expected. What is acceptable depends on the alternatives available to poor countries. It also depends in many cases on moral judgments that are unlikely to be unanimous. The morality of using governmental coercion - e.g. through trade and investment bans - in such situations has to be questioned. People can make their own decisions as to what is acceptable or not in their roles as consumers and investors. '
• The concern of many developing countries that permitting the use of trade restrictions to influence production methods in other countries would open the door to protectionist abuse cannot be lightly dismissed. There are interest groups in many countries that would welcome another way to seek protection from import competition.
• Using trade barriers is not likely to be the most effective way to eliminate undesirable practices. Trade sanctions are only effective when a large number of countries agree to participate. Alternatives such as diplomacy, exposure to international media, education and conditionality clauses in development assistance are likely to be more effective in many cases.

What the WTO agreed recently was merely a framework for discussion. The real work is yet to be done, and we probably won't see the final deal until 2006. Even then there will be a timetable that only slowly reduces trade-distorting barriers and subsidies. Nonetheless, it is a start.