Trade Liberalisation Always Provides Benefits Essay

There seems to be no compelling reason to argue that the existing trade treaties have no objectives to realise world’s prosperity. For instance, The WTO expressly shows in its preamble ‘a view to raising standards of living, ensuring full employment’. Additionally, NAFTA has a clear-cut objective to create ‘new employment opportunities and improve working conditions and living standards in their respective territories’. However, inequality and poverty still take place in nearly half of the world population, calling for new strategies or approaches from the existing trade treaties that could solve these basic problems. There have been dissenters to the view that trade liberalisation always provides benefits. Muhammad Yunus, a Nobel Peace Prize winner, assumed that income inequality was a murky reality from trade liberalisation, pointing ‘ninety-four percent of the world income goes to 40 percent of the population while sixty percent of people live on only 6 percent of world income’. Stiglitz then warmed that the fast-moving trade liberalization without any ‘safety nets, with insufficient reciprocity and assistance on the part of developed countries, can contribute to an increase in poverty’. Likewise, Krugman and Obstfeld employed the theory of the second best, explaining that free trade can only work ‘if all other markets are working properly’. If they are not, it entails governmental intervention to pacify the effect of market failure. Some empirical studiesShow MoreRelatedPositive And Negative Outcomes Of Economic Globalization1635 Words   |  7 Pagesglobalization, and the impact on developed and developing nations. The findings indicate a strong trend in the belief that developed countries dominate in the world of international trade, as there resources ensure a competitive advantage over poorer undeveloped nations. 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