Global Trade Relations Research Articles

The role of corporate oil and energy debt in creating the neoliberal era

This article examines the relationship between the United States's rapid loss of energy sovereignty in the 1970s and the rise of speculative finance and neoliberal ideology that reshaped global trade relationships. Prevailing academic analysis of the neoliberal economy understates the tight relationship between the U.S. corporate state's influence over oil markets and persistent U.S. global hegemony since the 1973 energy crisis. During the Keynesian era, U.S. power was backed by actual geopolitical control over oil production, but after the 1970s, the influence of the so‐called Washington Consensus enforcing neoliberal policies derived in large part from leverage over international “energy debt” that propped up the U.S. dollar, allowing continued capital accumulation by banks and corporations via financial speculation, while disguising global energy risk. The article thus examines the roles of major U.S. oil companies in shaping neoliberal policies from which they benefited, the relationship of militarism to oil company profit, and the essential role of speculative debt financing in permitting otherwise uneconomic production of fossil fuels with low “energy return on investment” in the new era of climate change and resource limits.

Financial Integration in the Asia-Pacific: Fact and Fiction

Australia’s financial connectedness with the Asia-Pacific region lags behind its deepening economic, diplomatic and cultural ties with the region, according to this report by the Australian Centre for Financial Studies. The report finds that while the Asia-Pacific region represents roughly two-thirds of Australia’s global trading relationships, it still accounts for less than one-third of Australia’s financial relationships. Australia’s financial services exports and two-way investment profile remain oriented toward the ‘traditional’ trading partners of the United States, United Kingdom and New Zealand, even as four of Australia’s top five trading partners now lie in the Asia-Pacific. The report points out that financial services is the largest single industrial segment of the Australian economy, a major employer and the largest source of corporate tax revenue. The industry is also a major exporter – of a magnitude not often understood in the community. The value of Australia’s exports of financial services is in fact larger than the value of its tourism exports, and more than double the value of its education exports. High barriers to services trade and cross-border investment in Asia may be inhibiting Australian firms and investors from growing their connections with the region. This is likely to shift in 2015 with the gradual opening of China’s capital account; the realisation of a regionally-integrated ASEAN Economic Community; and the conclusion of three recent free trade agreements with China, Japan and South Korea. “All of these events will change the way in which the Australian financial system interacts with a rising Asia,” according to Amy Auster. A key finding of the report is that many aspects of financial integration are not well-researched or understood. The benefits and costs of financial integration have not been closely examined, and the data on trade in financial services is poor. Policymakers, regulators and practitioners lack a strong evidence base from which to make decisions of vital importance to the entire economy. Authors: Amy Auster, Deputy Director, and Martin Foo, Research Officer, of the Australian Centre for Financial Studies

International relations theory and Canadian foreign trade policy

This study evaluates the application of international relations theory in the Canadian foreign trade policy literature. It determines that studies can now be categorized into several groups, including: traditional power-based approaches; the content and negotiation of international trade agreements; the globalization of public policy; federalism and international trade; North American integration; and alternative approaches and new directions. For the most part, however, international relations theory is applied unevenly and implicitly in studies of Canadian foreign trade policy, if at all, with an emphasis on realist and neo-liberal approaches highlighting Canada as a principal, dependent, or middle power. It is argued that a greater emphasis on international relations theory, focusing on the level-of-analysis problem, non-state actors, and normative considerations, would improve the understanding and evaluation of Canada’s global trade relations for academics and practitioners.

Structure and agency in the Malaysian government’s policies for economic development

AbstractThis article examines the role of government in Malaysia’s history of economic development. In addressing two key challenges – inter-ethnic inequalities, conflicts and tensions, and exposure to global trade and economic relations – the Malaysian government has become directly involved in the economy. Strong government has played a role in Malaysia’s economic success in a range of ways, from 5-year plans to specific industry promotion and the creation of organisations for particular economic development purposes. Government has also been aware of environmental changes and in response has modified its strategies, established new organisations and invested in innovative ventures. Thus, while the drivers of economic development in Malaysia have been deeply embedded structural phenomena, the actual economic development path taken has been determined by the actions of the Malaysian government in concert with other stakeholders.

Book Reviews

Nicoli Nattrass of Centre for Social Science Research, University of Cape Town reviews, “Patenting of Pharmaceuticals and Development in Sub-Saharan Africa: Laws, Institutions, Practices, and Politics” by Poku Adusei. The Econlit abstract of this book begins: “xamines the need to reconstruct the globalized patent regime to address public health and development challenges that confront the citizens of countries in sub-Saharan Africa, focusing on the threats posed by HIV/AIDS, malaria, and tuberculosis epidemics. Discusses exploring the conceptual domains for patent discourse in global trade relations; evolutionary trajectories of patents and the politics of exclusion in sub-Saharan Africa; the ““myth” of patent justifications—triumph and failure dichotomy in the North and South; patent regulatory and institutional mechanisms in sub-Saharan Africa; pharmaceutical patents, the right to health, and constitutional supremacy in sub-Saharan Africa; and pharmaceutical patents and human development in sub-Saharan Africa. Adusei is Lecturer in Intellectual Property Law, Land Law, Company Law, and Private International Law at the University of Ghana, Legon.”

Policy Implications Of The War In Iraq And Its Influence On The Global Market: A Public Affairs Perspective

United States coalition force invaded Iraq after months of failed negotiation with the United Nation Security Council and the Iraqi government. Many of the nations that opposed the invasion were important trading partners with the U.S. As such, global trade relationships have been damaged in the short run. This paper examines the impact of Iraqi war on the global market economy. The global market performance was sluggish in the weeks preceding the war and including the cessation of the war in Iraq. This was due to uncertainty in the price of oil and the ultimate outcome of the war. However, markets rebounded as oil prices normalized due to the quick overthrow of Baghdad. Furthermore, the U.S. dollar had been steadily weakening against the Euro in the months preceding the war. Therefore, a successful completion of the Iraq war will help prevent further devaluation of the dollar.

The Role of Gold in the New Financial Architecture

Beyond its value as industrial input, including in jewelry, gold as a financial asset provides no cash flow or monetary dividend, nor a positive carry, and thus its value depends on non-directly measurable factors. However, its ancestral property as a store of value and a ‘safe haven’ especially in the face of heightened uncertainty and grave disruptions to the financial system would call for a role in the new financial architecture emerging after the global crisis. Absent a return to a fully fledged gold standard or to a gold exchange standard as prevailed pre-1971, gold could provide at least a partial anchor for monetary aggregates in a world that is increasingly multipolar, that is, where one economy would not be able to sustain the dominant international role of its currency without jeopardizing its internal stability as a result of an unsustainable external debt service (Triffin dilemma).The ongoing real decoupling trend of emerging markets from mature economies will lead to a secular re-centering of the world’s economic and financial geography. This implies that the size of the US economy will shrink relative to other economies and therefore the world will gradually revert to a situation similar to that prevailing before WWI when the first wave of globalization took place.During the XIX century and up to WWI, the gold standard provided the foundation for the expansion of international trade and the international financial relations. At that time none of the four or five large economies (including their colonial empires) was dominant. In that environment characterised by intense rivalries among major powers, the anchor for the world monetary and payments relationships was gold, i.e. an asset whose supply was independent from the discretionary decisions of national or supranational authorities.After World War I, and especially after WWII, an economic landscape took shape that was unusual from an historical standpoint (at least since the fall of the Roman Empire). With Europe undergoing reconstruction from the devastation and ravages of war while imposing restrictions on trade and payments, the US became the dominant economy in global trade and investment relations (especially considering that the Soviet Union and, after WWII, China decided to pursue a closed door policy in international economic relations, while India pursued a protectionist model of economic development). The US dollar became the international currency for payments and reserves, thanks to its peg to gold until 1971, the size, depth and liquidity of its financial markets, the dominance of the US as a capital exporter and thereafter thanks to its overwhelming size and military reach.The Triffin Dilemma, which figured prominently in the international monetary policy discussions right after WW II, posits that the country issuing the reserve currency is bound to run an ever increasing current account deficit as world trade and payments increase in order to allow reserve accumulation and until its foreign liabilities become unsustainable. Against that the US obtained an ‘exorbitant privilege, enabling it to pay for its imports with its own currency. This dilemma could be side stepped as long as the US economy grew at least as fast as the world global average and had no serious rival on the world stage. However, the global financial crisis which originated in the US severely shook confidence in US banks, financial institutions and markets, which along with the emergence of China and India (with a 10-15 year lag), has reignited these dormant worries. Moreover fiscal laxity in the US, aggravated by the uncertainty over the cost of the health care reform combined with the large unfunded liabilities related to social security and other entitlement programmes, raises the spectre of a scenario in which the international role of the dollar could suddenly come into question.The US cannot continue to run indefinitely a current account deficit without jeopardizing the stability of the world economy. In a multipolar world the size of a single country would not be large enough to sustain its role as supplier of the dominant reserve currency and international liquidity. The alternative would be to devise a financial system relying on several major currencies as was the case before WWI. But should such a multi-currency system be left to market forces to set exchange rates or could it benefit from being anchored to an asset such as gold which not issued by a national authority? Should we base an alternative global monetary system on national fiat currencies or should we move towards a gold exchange standard? The answer of this paper is that international liquidity should be supplied on a large scale by an international currency such as the SDR, whose value should be tied to a basket of major currencies and gold, with the weight of the latter set at 20-25%.

Dubai World Central and the Evolution of Dubai Logistic Cluster

The logistics sector has been one of the main forces pushing globalization. At the heart of the logistics revolution lays the integration of transport modes and the standardization of procedures which boosted synergies and economies of scale, to an unprecedent extent. Dubai has been riding high on the wave of this advancements fulfilling a vocation that had suited the Emirate since the late XIX century when its ruler at the time, Sheikh Rashid bin Maktoum, declared its port a free zone. Dubai has thrived in its role as a regional hub reaching a position of prominence in the global logistics network and today it is one of the critical nodes in the global supply chain. This evolution underlines also the growing importance of our region in the world and its gradual transformation from an energy commodity exporter into a diversified economy with a broader economic base and a flourishing, internationally connected, service sector. The opening of the Al Maktoum International Airport in June 2010 has strengthened and expanded this role. With global trade acquiring an even more strategic importance in the world economy, Dubai will reinforce its position at a time when Asia is supplanting the West as the main engine of growth. Research highlights that the relationships between transport costs, production locations, and trade patterns follow different stages. At the beginning of the process, when transport facilities slowly improve and costs drop, competitive advantages are the key driver of trade. Later, as the efficiency in transport grows, intra-industry trade starts to dominate, specialization increases and manufacturers exploit massive economies of scale. To achieve wider supply chain optimization it becomes imperative for companies at different levels of the production chain to coordinate their operations. At the macroeconomic level we observe, as a result, that trade elasticities to global GDP have increased over the last decade all over the world. Likewise, we observe that intra-industry trade among high income economies, but also between low- and high-income countries dominates global trade relationships. As much as 44% of all shipments pertain not to finished goods, but to inputs. Dubai’s logistics sector is poised to catch the tail wind of this new phase in global trade where the services and the organization of logistics will be the dominant success factors and firms will therefore increase scale and specialization while building sophisticated buyer supplier networks. To exploit fully the benefits of seamless integration between the major transport infrastructures in Dubai however a few hurdles must be cleared, such as the upgrade of regulation of intermodal links within the Emirate.

The Rough Road to Gender Equitable Growth: The case of Café de Mujer Guatemala

Women worldwide are contributing significantly to global economic growth but do not always receive the benefits needed to improve their own and their family's livelihoods. Women's contributions are often invisible, unrecognized and undervalued. This is especially apparent in global value chains, where harsh labour conditions in export-oriented sectors such as horticulture and the garment industry are well-documented in the literature. However, we still know very little about the agricultural sector, particularly smallholder agriculture and the contribution and position of women. Noortje Verhart and Rhiannon Pyburn use a value chain approach to look at opportunities to improve women's positions in global trade relations. Noortje Verhart and Rhiannon Pyburn illustrate that trade and trade relations are not gender neutral: they influence men's and women's opportunities to improve their position in a value chain quite differently. They demonstrate how a particular intervention in a global coffee chain is enabling the revaluation of women's contribution to coffee production.

The Obama Administration and United States Trade Policy

For all the focus on economic issues in the wake of the crisis of 2008 the Obama administration has remained ambiguous about a central component of economic policy. As both candidate and President, Obama has sent mixed messages about trade policy. This ambiguity reflects wider uncertainty within the Democratic Party about global trading relationships and this paper explores and assesses the reasons for this uncertainty. A large part of the answer lies in the disparate sources of support for the Democrats. That is, the party has courted support from interest groups and core groups of voters that have widely divergent views about the value of trade liberalisation.

How to join the World Trade Organization: Some aspects of the accession process

The World Trade Organization is the first international organization responsible for supervising global trade relations. It was established on January 1st 1995. The most important bodies of its organizational structure are the Ministerial Conference, the General Council and the Secretariat. It currently has 153 Members with many candidates involved in accession negotiations. Accession to the World Trade Organization is a highly organized process which can be divided into several steps or stages. The successful fulfillment of the conditions of one stage is the condition for movement to the next. Many challenges and opportunities are incorporated in that process and it is up to candidates for the Membership to find a way to face the challenges and use the opportunities.

Does Tariff Liberalization Promote Trade? Latin American Countries in the Long-Run (1900-2000)

This paper estimates the effect of trade liberalization on import performance of selected Latin American countries (which account for about 85 per cent of total Latin America imports). The novelty of this study is that it applies a long-term approach covering the whole XX century using times series and panel data analyses. The empirical exercise shows that the relationship between (lower) tariffs and import growth in Latin America cannot be taken for granted, as it often happens in the literature, and whenever it exists, it is not always quantitatively substantial. In particular, our analysis shows the existence of a long run relationship between tariffs and imports only from the second half of the XX century. It follows that trade liberalization appears effective in fostering Latin America's trade growth only when integrated within a wider process, implying a multilateral and negotiated approach to trade policy. In this sense, multilateral and regional agreements appear to have played a key role not only through tariff reduction but remarkably thanks to the creation of a rule-based system governing global trade relations, through which uncertainty was reduced and the spread of best practices promoted. This result would confirm the thesis of those who endorse the existence of a formalized trading system to guarantee tariff liberalization and foster trade growth.

Learning from the Tiv: Why a Sustainable Economy Would Have to Be "Multicentric"

Although careful not to romanticize the premodern cultures that have traditionally been the central object of their research, anthropologists might reconsider some classical ethnography in the light of ongoing deliberations on sustainability. Economic anthropology is in a unique position to achieve a distanced view of modern money and neoliberal market ideology by contrasting its notions of value and reciprocity with those of premodern, "multicentric" economies such as that documented over 50 years ago by Paul Bohannan among the Tiv of Nigeria. The assumptions of generalized interchangeability and abstract utility that are so fundamental to the theory and practice of neoclassical economics inexorably generate an accelerating destruction of natural resources and increasingly inequitable global trade relations. The fundamental principle of any "multicentric" economy is the acknowledgment of two or more distinct and incommensurable spheres of value. This principle deserves to be reexamined by economic policy makers seriously committed to improving local control of resources, sustainability, and equity. The challenge could be expressed in terms of "immunizing" local meanings and ecosystems against the conceptual and physical ravages of global capital. In this article, I discuss some aspects of the rationale of alternative markets and currencies, emphasizing the peculiarly dissolvent semiotics of "general purpose money" in a biosphere organized in terms of hierarchically nested levels of integration. I also sketch some fundamental considerations that such alternative economies would have to incorporate to stand a chance of curbing the dissipative logic of modern money.

Mainstreaming fair trade: adoption, assimilation, appropriation

Fair Trade is a global social movement that blends an alternative business model with explicit transformative objectives—a ‘business and campaign’. This paper explores the ways in which the movement challenges aspects of hegemony, including colonialism and free trade, to transform traditionally exploitative global production and trade relations. We present a case that the mainstreaming of Fair Trade into commercial distribution channels has not led to its principles being embedded in conventional trade. Instead, the dominant discourses of Fair Trade are currently assimilation, and appropriation or ‘clean‐wash’. Finally, we suggest ways in which elements of the movement have maintained their original counter‐hegemonic character, taking Fair Trade beyond the current discourse of individuals ‘shopping for a better world’ and into realms of collective decision making about consumption, and new producer/distributor relationships that challenge the distribution of value, through the ‘alternative high street’.

Service Quality: A Case Study of a Bank

Today's marketing environment is characterized by increased competition, uncertain economic conditions, and shifts in global trading relationships. The pressure to understand market conditions and customer requirements is growing to the point where organizations will be compelled to exceed, rather than simply meet, customer expectations. In adapting to this pressure, organizations are looking to service initiatives as a way to create or sustain competitive advantages. Measuring customer satisfaction is, therefore, critical to the process of serving the customer and responding faster and better than the competition.The objective of this article is to address the importance of improving service quality in the banking industry. A questionnaire was developed to identify underlying dimensions of bank quality and to assess consumers' perceptions of the importance of each of these dimensions. Two large banks were selected, with five branches among them. Service quality questionnaires were sent to 800 customers; the overall response rate was 59 percent. A nondifference score of SERVQUAL was used to assess the dimensions of service quality. The results of the service quality analysis show that reliability and responsiveness are the two most critical dimensions of service quality, and they are directly related to overall service quality.

Fair trade in tourism

Tourism as an industry is increasing rapidly in developing countries. Due to historical inequality in global trading relationships on the basis of ‘core‐periphery’ dependency, globalisation and liberalised free trade, mainstream mass tourism reinforces the social and economic disadvantages of southern destinations. The ‘Fair Trade Movement’ has sought to redress unequal trading by promoting fair trade in commodities with small producers in the South, enabling them to take control over the production and marketing process and challenging the power of transnational corporations. This paper examines the feasibility of fair trade in tourism. It explores the obstacles and opportunities that might lead to establishing a definition of fair trade in tourism, incorporating criteria that would be workable and practical for both partners in the South and North. Copyright # 2000 John Wiley & Sons, Ltd.

After the Storm

For those keen on closer ties between Canada and the countries of the Asia Pacific, the last couple of years have been difficult. In a case of almost unbelievably bad timing, the bloom faded from the Asian boom, and the Asia-Pacific Economic Co-operation (APEC) summit in Vancouver appeared to implode in a cloud of acrimony and pepper spray in 1998, Canada's Year of Asia Pacific. Regional currencies and stock markets sank, and the Bre-X fiasco added to the woes. Since then, the 'Asian contagion,' which the best national and multilateral analysts failed to predict, has been blamed for precipitating crises in Russia and Latin America. The legions of newly minted promoters ran for cover, and the entire Asia-Pacific region has assumed a much lower profile in Canadian foreign policy and media circles. Fashion changed, and the herd galloped off to greener pastures elsewhere.While many causes have been assigned to Asia's well-advertised demise -- overvalued currencies and equity markets perhaps foremost among them -- globalization has played the most significant role. Among globalization's many and often conflicting characteristics is a preference for global and multilateral trade, finance and investment relations at the expense of more traditional regional and bilateral ties. In some key countries in the Asia Pacific, the impact of globalization has been accelerated and accentuated by the preferred tonic of the International Monetary Fund (IMF) -- policy conditionalities and neoliberal reforms. Although this was greeted enthusiastically by supporters of an integrated, if asymmetrical, world political economy, the costs imposed upon civil society were very real.Trade liberalization, structural adjustment, and other IMF-favoured macroeconomic policies tend to concentrate wealth, both within and between states. As globalization continues, neither the gains nor the losses from the process are evenly distributed, especially in the short term. At the same time, the ability of many of the regions governments to cope effectively with the consequences of globalization and the requirements of the international financial institutions is extremely limited. Welfare reductions, programme cuts, interest rate hikes, currency devaluation, privatization, and marketization are politically tough to implement, especially at times of economic weakness.The imposition of these 'reforms' can contribute to the creation of desperate circumstances which, when combined with population pressure, resource scarcity, and a rush to the bottom in terms of labour standards and workers rights, can give rise to feelings of intense insecurity among those most affected. One has to look no further than contemporary Pakistan or Indonesia. Polarization of income and wealth is leaving an increasing number of citizens economically distressed and politically disenfranchised, while government priorities have moved further away from the welfare vocation of providing for the disadvantaged and more in the direction of providing a suitable 'enabling environment' for and competitive incentives to business. Even in political cultures steeped in the ethics of Buddhist acceptance or Confucian submission, this is a potentially explosive combination.Globalization, with its inherently deregulating and liberalizing dynamic, expedited both the inflow of foreign capital and the outflow of export products. This, in turn, fuelled Asia's decade of record-breaking expansion and the flight of investment that precipitated the crisis when perceptions suddenly changed. The dazzling transformation of mainstream Western thinking about Asian business practices and political culture is particularly instructive. What was seen as an outstanding example of co-operation among business, labour, and government one day became 'crony capitalism' the next day. Countries that had been regarded as economic miracles and Asian tigers by pundits and financial markets alike came almost overnight to be seen as 'basket cases' and 'alley cats. …

Breaking Trade Dependency: A Global Simulation of Third World Proposals for Alternative Trade Regimes

Calls for a New International Economic Order included proposals for revision of the Liberal trade system in ways which would facilitate Third World development. To assess possible costs and consequences of these proposals a simulation model of the international trade system is employed here to explore changes in trade patterns which could result from alternative trade orders. Specifically, two proposed alternatives are compared to the existing order: one relatively moderate strategy which calls for concessionary tariffs to be granted to developing countries by advanced nations, and a second, more radical strategy which counsels economic disengagement of the South from the North in favor of Collective Self-reliance for the developing nations. The simulation exercise reveals potential difficulties associated with these strategies, including highly unequal distribution of benefits and costs, and the internal incompatibility of the multiple development objectives which these proposals contain. Should global trade relations be governed by the classic liberal norms of openness, non-discrimination and reciprocity, or should the world trade system be structured to facilitate progress in developing areas? For four decades now, trade relations between the industrialized North and the developing South have been deeply politicized because antagonisms go well beyond the individual commercial policies of particular countries and revolve around the trade regime itself. The industrialized countries were largely successful in establishing a liberal world trade order shortly after World War II. Developing nations questioned the underlying norms of this order from the outset and developed proposed regime alternatives over the ensuing years. As scholars, our understanding of the postwar liberal order and proposed alternatives-and thus our understanding of the North-South debate-has been limited by the fact that our observations are quite naturally restricted to outcomes produced by that existing Author's note: The research reported in this paper was conducted while the author was a research scientist in the Global Modeling Group of the International Institute of Comparative Social Research, Science Center Berlin. The extensive support of that institution is gratefully acknowledged. The author would also like to thank the editors of ISQ and three anonymous reviewers for several constructive criticisms and suggestions, and wishes it were possible to have been more responsive to these. An earlier version of this paper was delivered at the 22nd Annual Convention of the International Studies Association, March 1981.