Reforming International Trade

This brief presents an analysis the free trade regime and it's negative impact on the least developed countries, and proposes more equitable alternatives for allocating essential goods and regulating international trade.


International trade is the increasingly powerful engine that drives global economic growth. Free-market advocates insist that effective poverty reduction can only occur if developing countries open their markets to global trade. However, the modern system of trade is extremely biased against low income countries. The share of world trade for the 50 least developed countries has declined to 0.6%, less than a third of what it was 40 years ago.

In their pursuit of growth, economically powerful governments have yielded to corporate interests by pursuing a neoliberal agenda. As a result, corporations are increasingly profiting through the private ownership of public resources, services and knowledge. Although there are sufficient resources to provide all basic human needs, 40% of the global public live on less than $2 a day and 50,000 people die each day as a result.

The trade regime must not be allowed to manipulate essential resources for teh sake of increasing corporate profit. Resources, services and knowledge that are essential for life need to be more cooperatively managed so that they are available to secure basic human needs. To achieve this, the WTO would need to be progressively decommissioned and the remaining trade activity should instead be overseen by United Nations agencies.

Table Of Contents:

Part 1: Understanding Free Trade

  • The Free Trade Regime
  • Developing Countries and Trade Barriers
  • Free Trade Agreements
  • Trade, the Environment and Agriculture

Part 2: Reforming Trade and Sharing the World’s Resources

  • The Problem With Trade
  • Rethinking Global Resource Allocation
  • A UN Based System Of Fair Trade
  • Sharing In Practice
  • Implications For International Trade
  • Decommissioning The WTO And IMF, And Regulating Trade
  • Reforming Corporate Activity And Commerce
  • Conclusion

Part 1: Understanding Free Trade

The Free Trade Regime

The concept of ‘free trade’ was first put forward by economists such as David Ricardo and Adam Smith in the 18th Century. These and other economists envisaged a global economy where goods, services and capital could move and be traded between countries without barriers such as tariffs. However, in its current incarnation, free trade resembles the mercantilist trade practices that were employed by the imperial powers of past centuries - practices that Smith and Ricardo were highly critical of.

Modern free trade advocates for the removal of government restrictions to international trading markets. Removing these barriers allows corporations to export their goods to new markets, which then brings in capital to the country producing the goods. Historically, the prosperity of many high-income countries was accrued by securing trade relations with countries that - willingly or unwillingly - bought their exports. In fact this mechanism was a major driving force behind colonialism. Both the military and large corporations were employed to maintain these trade ‘agreements’.

Global trade is very big business, currently accounting for around 55% of global economic growth, and as much as 75% of GDP in the EU. There is a widespread belief that economic growth, through international trade, is the only way to prosper a country and tackle poverty. This is a belief almost universally held amongst economists, politicians and businessmen, and one that is increasingly forced upon developing nations through the agency of the IMF, World Bank and World Trade Organisation.

Whilst there is little doubt that international trade has the potential for vast wealth creation, the evidence thateconomic growth is not an effective means of poverty reduction is also conclusive. Overall, the 40% of the global public who survive on less than $2 a day received little additional income from economic growth over the past 20 years. Improvements in poverty levels have been isolated to a few regions such as China and East Asia. Most other regions, particularly Sub-Saharan Africa have experienced an increase in poverty levels over the same period. In addition, the inequality of income distribution from growth continues to grow.

The evidence suggests that it is crucial to address inequality if poverty is to be reduced. The reason why trade is unable to deal with inequality is because a high concentration of trade is controlled by multinational corporations - seventy percent of world trade is controlled by just 500 of the largest industrial corporations. The privatization of the majority of goods and services traded has meant that senior management and major shareholders of these corporations are the main beneficiaries of international trade, not the poor or majority population. The benefits are also minimal for the employees of these corporations. In 2002, the top 200 corporations had combined sales equivalent to 28% of world GDP, whilst employing less than 1% of the global work force.

Developing Countries and Trade Barriers

The current free trade system is also extremely biased against developing countries. Protectionism allows a nation to strengthen its industries by levying taxes and quotas to imports, thus increasing their own industrial capacity, output and revenue. The US and EU in particular maintain strong protectionist policies that make it more difficult for developing countries to gain access to their markets. Such policies go against the practice of free trade. At the same time, rich countries push for greater access to foreign ‘emerging’ markets. This market liberalisation forces poorer countries to open their markets to foreign products, destroying local industries, and creating dependency on commodities from high income countries.Since all high income countries have evolved by protecting their infant industries from external markets, it is unreasonable that these same countries enforce liberalisation on emerging economies.

Government subsidies are another tool used to protect domestic markets. Subsidies keep the price of a country's products artificially low, and developing countries cannot compete with these prices. Rich nations currently subsidise their industries to the tune of $1billion dollars a day, the EU provides a daily subsidy of $2.7 per cow, and Japan provides three times more at US $8. In comparison, half of India's one billion people live on less than $2 a day. According to the Human Development Report 2003 in 2000 the average dairy cow in the EU received $913 in subsidies, compared with an average of $8 per person in Sub-Saharan Africa. The north’s agricultural subsidies alone cost developing countries’ economies nearly as much as they receive in ODA each year. With the addition of other trade barriers, the south pays twice as much to the north in unjust trade costs compared to what they receive in aid.

Whilst there remains a massive potential for increasing corporate profits and economic growth, high income countries will continue to pursue liberalisation and protectionism in the name of free trade. The economic successes of countries such as India, China, Taiwan and Korea are often used to sell the free trade model to developing counties, even though these countries all used - and many continue to use - strong protectionist measures.

The low import, large export directive of modern free trade that mimics mercantilism, whilst neglecting the principles of mutual benefit and cooperation. If international trade is to work fairly, it must be a zero sum game with all parties benefiting equally. As it stands the rules are rigged against developing countries instead of helping them to strengthen their industries from the ground up.

Free Trade Agreements

The strong financial position of economically dominant countries has meant that trade agreements are forged in terms of profitability and not aid, equity, redistribution or long-term global prosperity. With short-term self-interest driving international trade, high income countries have created a global trading regime with which they can determine the terms of exchange. This has effectively enabled the corporate agenda to dictate the economic policies of developing countries. Given the huge financial benefit any small increase in their share of international trade will give developing countries, they have little option but to agree to trade terms which are clearly biased in favour of high income countries.

The North American Free Trade Agreement (NAFTA) between the U.S., Canada, and Mexico is an example of free-market fundamentalism that gives corporations rights at the expense of democracy in all three countries. Since its implementation it has caused job loss, undermined labour rights, privatised essential services, increased inequality and caused environmental destruction.

More recently, representatives from 34 countries have been working to expand the NAFTA to Central America, South America and the Caribbean under a new agreement called The Free Trade Area of the Americas (FTAA). Until now, the US has not been able to push through the agreement due to resistance from many countries which would be adversely affected by it. Instead, the Bush administration is attempting to push through similarly aggressive trade agreements - the Andean Free Trade Agreement or AFTA and The Dominican Republic-Central American Free Trade Agreement or CAFTA. Both are neo-liberal in their approach, guaranteeing corporate globalisation at the expense of local economies, the environment, democracy and human rights.

A similarly detrimental trade agreement within the European Union is the highly inefficient Common Agricultural Policy (CAP) between EU member countries. Only five percent of EU citizens work in agriculture, generating just 1.6% of EU GDP compared to more than 50% of citizens in developing countries. However, the CAP provides subsidies to EU farmers to the tune of £30 billion, 80% of which goes to only 20% of farmers, guaranteeing their viability, however inefficiently. The resulting overproduction results in the dumping of products, depresses global prices and destroys the livelihoods of small scale farmers. Overall, by protecting Europe’s high-cost farmers, and preventing developing countries with agricultural potential from exploiting their comparative advantage, the CAP distorts global production and acts as a disincentive to agricultural development in poor countries.

WTO Trade Agreements

The World Trade Organization (WTO) was established in 1995 to provide an international framework for the regulation of rules that govern trade. However, due to the economic dominance of the US, EU, Canada and Japan, poorer nations find themselves precluded from core WTO decisions on trade agreements. Instead, low-income countries are repeatedly forced to comply with calls to open their markets to richer nations, whilst the richer nations continue to protect their own markets.

The WTO’s current mandate allows it to override national economic policies and existing multilateral agreements relating to the environment, human rights and labour issues. The General Agreement on Trade and Services (GATS) was agreed at the World Trade Organization (WTO) in 1995. Its aim is to remove any restrictions and internal government regulations in the area of service delivery that could be considered "barriers to trade". Such services include anything from fishing to provisions for health and education. The agreement affectively abolishes a government’s sovereign right to regulate, subsidise and provide essential national services on behalf of its citizens. Instead, these services are opened up to the international market, where wealthy multinationals can easily outbid local providers.

The Trade Related agreement on International Property Rights (TRIPS), forces developing countries to extend property rights to seeds and plant varieties. The agreement allows rights over individual plant genes. This removes farmer’s rights to their crops and seeds and impacts significantly on the agricultural practices that two thirds of the world relies upon. It undermines thousands of years of indigenous control over local knowledge and production of food and livestock. Control over these resources and services are instead granted to corporate interests through the GATS and TRIPS framework. For example, 70% of patents on staple food crops are held by 6 multinational corporations, who can set the market price for them and block competition for 20 years.

The fact that such measures primarily benefit corporations has been the conclusion of an UNCTAD report in 2000.  The European Commission doesn’t shy away from stating that these trade agreements are primarily instruments for the benefit of business. It is clear that market liberalisation and intellectual property right agendas do not contribute sufficiently to poverty reduction and primarily serve the economic interests of dominant countries.

The WTO with the assistance of the IMF and World Bank continues to negotiate access to developing markets and securing intellectual property rights, circumventing democratic national rights in favour of corporate interests and reinforcing inequalities. The unsuccessful Doha round of World Trade negotiations is a testament to the fact that the international trade regime currently serves the interests of the richer nations and multinational corporations. This approach to trade is unsustainable economically, environmentally and morally, and it continues to fuel intense opposition globally. Structural reform of the international trade regime is long overdue.

Corporations and Trade

In light of the inequities of free trade, one must consider why there is such resistance to adopting fairer rules for trade which allow developing countries to gain market access in the north and protect their own industries where necessary.

The rules and practices of the global economy are mainly ‘negotiated’ through the IMF, World Bank and WTO. This is largely an undemocratic process, with economically dominant governments and a number of corporate lobby groups retaining excessive influence. Together, these groups only represent a small portion of the global public, approximately the wealthiest 10%. As a result, the vast majority of the global public and their interests are disproportionately represented within the global economic framework.

The primary beneficiaries of international trade are large, multinational corporations who control the vast majority of international trade. 500 corporations control 70% of world trade. For example Cargill, one of the world’s largest global food trading corporations, reported profits of $2.1billion in 2005- almost five times those of 2000. Cargill and similar multinationals (based mainly in the US and EU) fiercely lobby to globalise free trade through WTO agreements, in particular to increase their access to profitable markets in emerging economies.

Unlike developing country representatives, corporate lobbyists enjoy privileged access to government policy makers who partake in these trade talks. Over 30,000 corporate lobbyists are based in Washington and Brussels, vastly outnumbering the US Congress and European Commission staff that they lobby. Together, they spend billions of dollars annually advocating their cause. Both WTO agreements and other free trade agreements such as CAFTA -the Central American Free Trade Agreement essentially prevent communities, states, and sovereign nations from nurturing local production and regulating businesses according to the needs of their citizens.

The secondary beneficiaries of international trade are the competitive governments of high income countries who experience economic growth through the trade activities of their domestic corporations. Once again, however, free trade and liberalisation of markets do not significantly benefit the majority of small and medium sized farmers and producers, the main beneficiaries are agri-business and multinationals. This phenomenon is one of the causes of the growing level of inequality experienced in these countries, particularly in the US – which also has the world’s largest economy.

In a competitive global economy, driven by profit and financial markets, survival depends upon economic strength. As a result, developing countries are at a disadvantage, having yet to develop their own industries. For international trade to be sustainable and fair, its benefits must be distributed more evenly. Given the high levels of inequality and poverty around the world, the economic needs of developing countries must be prioritized, and they must be provided with the necessary assistance to develop their domestic industrial capacity.

As a result of the corporate influence over governments, the IMF, World Bank and WTO, it is unlikely that the global trading regime will be rendered equitable until a regulatory system has been established that can curtail corporate influence over international trade policy. As they stand, corporate mandates are too broad, eclipsing social and economic rights and environmental concerns in favor of competitive growth and profit accumulation.

Trade, the Environment and Agriculture

In need of income to finance trade, debt servicing and welfare, developing countries are generally unable to opt-out of the export orientated market regime imposed on them by the WTO. In addition to the inequality of benefit from global trade and growth, environmental devastation from inefficient international trade and the disappearance of environmentally sound agricultural traditions threatens our biosphere. The resulting damage disproportionately affects developing nations, who bear the brunt of climate change.

Environment

International trade is dependant upon the oil used to transport goods all over the world. Oil is an increasingly volatile commodity - especially in light of tentative international relations, oil price fluctuations and finite natural supplies. The global trade regime is also extremely wasteful of oil and is a vast and unnecessary contributor to C02 emissions.

Most produce that we buy is not locally sourced, but travels hundreds if not thousands of miles before it reaches us. In this way trade fuels climate change which in turn adversely affects agriculture and farming. According to a report by the Institute for Food and Development Policy, if those living in the US state of Iowa bought just 10 percent more of their food from within the state, they could collectively save 7.9 million pounds of carbon dioxide emission a year. And if Japanese families consumed local food instead of imported food, the impact would be equivalent to reducing household energy use by 20 percent.

A recent report by the New Economics Foundation details how many countries are increasing exporting goods to a country from which they are simultaneously importing identical goods. The resulting inefficient network of import and exports releases large amounts of detrimental emissions from land, sea and air transportation. The bigger picture points to a severe waste of many resources - including labour - to sustain a fundamentally flawed system of resource allocation.

The same report also highlights the unsustainable impact (or ecological footprint) on the environment of consumption-based economies. The US is the leading consumer of all resources as well as the primary advocate of free trade. If US levels of national consumption are achieved globally, more than 5 planet earths would be required to meet our needs. This fact highlights another major flaw of the free trade, consumer-driven economy that the WTO is striving to create:the model is simply unsustainable.

Agriculture

The trade regime has dramatically altered age old agricultural practices that form the basis of both local and global communities. Until very recently communities and countries were extremely self sufficient, growing and processing most of the basic food stuffs required to provide their daily nutritional needs. They also controlled local resources and services themselves. Globalisation and international trade should enrich this state of affairs, however, under competitive and corporate driven growth models, countries have grown absurdly dependant upon imports, sacrificing food security for short term profit. According to food and trade policy analyst Davinder Sharma:

“Indonesia was rated among the top ten exporters of rice before the WTO came into effect. Three years later, in 1998, Indonesia had emerged as the world's largest importer of rice. In India, the biggest producer of vegetables in the world, the import of vegetables has almost doubled in just one year from Rs 92.8 million in 2001-02 to Rs 171 million in 2002-03… in Peru, food imports increased dramatically in the wake of liberalization. Food imports now account for 40 per cent of the total national food consumption. Wheat imports doubled in the 1990s, imports of maize overtook domestic production, and milk imports rose three times in the first half of the previous decade, playing havoc with Peruvian farmers.”

The reason for this shift is pressure from the IMF, World Bank and WTO on developing countries to concentrate efforts on specialist exports in order to maximise income and fuel growth. Results of such polices have had dire results on local communities and poverty reduction:

  • Levels of nutrition and food security have been reduced, increasing levels of malnutrition and poverty
  • The clearing of woodland, forests, mangroves and reefs for cash crops and fishing has exacerbated natural disasters such as mud slides, tsunami and increased desertification.
  • Large swathes of agricultural land once used to supply the full range of nutritional needs and food requirements have now been handed over to cash crop production
  • The switch to monocultures and the increased use of chemical fertilisers has contaminated and stripped much agricultural land of nutritional value

It must be noted that in the competitive market economy, it is agribusiness that is the primary beneficiary of large scale production for export, whilst the majority of farmers and villages are pushed further into destitution.

Imports have to be paid for, and developing countries are now forced to rely on volatile global market prices for their exports in order to receive income to buy essentials that they were once able to produce for themselves. Commodity prices can be affected by many factors such as the quantity of a product on the market, protectionist measures of importing countries or subsidy levels, all of which can fluctuate dramatically. In addition, an unexpectedly poor harvest of export crops can have grave consequences on local income and increase vulnerability to food shortages and famine. This would not be the case if local communities were allowed to be self sufficient in essential food stuffs as they have been for millennia.

PART 2: Reforming Trade and Sharing the World’s Resources

The Problem with Trade

Although free trade creates an extremely profitable system of commerce, it also increases food insecurity, poverty, inequality and environmental deprivation in many impoverished regions. Globally, the trade regime is extremely inefficient and environmentally damaging. Given the skewed distribution of income from economic growth, the existing neoliberal free trade model does not contribute to the livelihoods of the majority of the world’s population significantly enough to warrant its propagation as the predominant model for global resource allocation.

The common response to the bias in international trade is to ‘make trade fairer’ by removing protectionist measures and subsidies in the north. The argument is that, given the sheer volume of trade, by increasing its market share a developing country can enjoy significant levels of income and that this should aid poverty reduction. However, there is often a lack of capacity and finance in the poorest countries to produce enough goods to meet such an increase in market share. In addition, given the pressure to liberalise markets, agricultural multinationals are better placed to take control of production and trade in developing countries than local enterprise. Overall, there is a significant outflow of capital from low income countries, which could otherwise have been utilised for domestically owned industrial development.

High income countries, the international financial institutions and corporate interests all limit the degree to which international trade can be made fair. The history of WTO trade talks reveals that similar patters continue to repeat themselves without any significant impact on development efforts, despite the usual pledges. In the meanwhile, poverty and inequality continue to rise and control over common resources and essential services are relinquished to corporate interests who report record profits, year on year.

The core problem with the modern trade regime is the way it prevents basic human rights to be secured for the worlds poor. Because of its competitive nature, 25 years of free trade has failed to provide the basic needs for 40% of the world who continue to live on less than two US dollars a day.

If the inequality of global resource allocation is to be addressed, an economy that is not entirely driven by competition and profit must be established. The eradication of poverty could replace the profit motive as the new thrust of international trade policy. The bias in international trade can only be rebalanced if the international community prioritise the needs of the least developed countries, and replace competitive trade practices with cooperative internationalism. Short-term profits and self interests must make way to ensure longer term global economic, social and environmental stability. International cooperation must ensure that at least those resources which are essential for life, such as food, water and medicine, are made available to all who require them, regardless of cost. Policy decisions that affect international trade should be enacted by responsible governments working cooperatively and inclusively.

Such a shift in economic practice and purpose will naturally mean a reduction in wealth generation for corporations and lower growth in high income countries. Given the existing architecture of the global economy, extensive reform is the only way to achieve this goal. Corporate influence on trade and commerce must also be reduced, local food security and industry encouraged and the world’s essential resources shared more equitably across the globe to secure basic human needs.

Rethinking Global Resource Allocation

There are sufficient resources in the world to ensure that all basic human needs are secured. Mass poverty and inequality exist because essential resources are allocated on the basis of profitability. The investment in human capital should start with securing the basic human right to food, water and medicine. Thereafter, energy, education, housing and other essentials should also be provided. In this way a global welfare safety net can be established which can ensure that countries can grow in their capacity to develop economically and socially, from the ground up.

By rethinking global resource allocation (the basis of economics) to ensure that human rights and basic human needs are prioritised, economic development in low-income countries can be encouraged and poverty can be eradicated. A transfer of resources on this scale represents a significant investment in human capital, and the consequent potential for economic and social advancement throughout the world is significant. We live in an interdependent global society. In measurable and practical economic terms, what benefits one country, benefits us all.

Saving lives is not only a moral imperative, but economically crucial. Ensuring that some 50,000 people are added to the global labour force each day presents a huge economic benefit for the global community. If managed correctly, the potential for industrial, technological, cultural and humanitarian advancement for humanity is massive.

A UN Based System of Fair Trade

The necessary reform of the global economy must be coordinated by a truly representative and powerful international body. The most practical option is the United Nations, although the UN must be significantly reformed to make it more democratic and effective for this purpose.

Given its global representation and charter, a reformed UN system is clearly the only international body with the experience, resources and ability to address cooperative international economic reform. In particular the UN Economic and Social Council (ECOSOC), and UN Conference on Trade and Development (UNCTAD), are well equipped to facilitate this reform. In addition it would be necessary to create an additional organisation, such as a UN Council For Resource Sharing (UNCRS). This new body would be responsible for coordinating an international effort to transform the global economy so that it benefits the majority of the world. Its mandate would be to transform existing structures of international trade, finance, commerce and development so that they are geared towards securing all basic human needs.

The UNCRS would, in the first instance, be granted all necessary authority by the UN to coordinate an international Emergency Redistribution Program (UNERP) to mobilse and redistribute essential food, water and medicine to prevent the 50,000 poverty related deaths that occur each day.

Sharing in Practice

Under the auspices of a democratically organised UNCRS, essential resources, services and patent rights to seeds and plants, genetics and traditional knowledge could be severed from corporate influence and removed from existing trade structures. Universal access to these resources is a human right and ownership, management and provision of these resources could be shared cooperatively between all nations. In effect, the UNCRS would manage these resources in trust on behalf of the global public.

As part of its overall remit, the UNCRS could work with member countries to establish agreed criteria for what constitutes essential common resources, knowledge and services. Essential resources should include natural resources such as energy supplies and the provision of utilities such as water, essential agricultural produce required for food including wheat, rice and sugar, cotton for clothing, essential healthcare services and medication, resources for providing education and essential knowledge and technology. It could then calculate the levels of national and global requirements of these resources, source them and coordinate their efficient distribution to meet basic human needs globally. In order to facilitate this process, the UNCRS could implement a redistributive mechanism in conjunction with member countries. Wherever possible, resources could be sourced locally and used locally, ensuring that food security, nutrition and environmental concerns are prioritised. National surpluses of these resources could be shared with countries that lacked them.

Implications for International Trade

With the emphasis on local enterprise and public ownership, essential resources and services will necessarily fall outside the control of multinational corporations. A system of sharing would mean that the majority of commodities and goods that are currently traded would instead be cooperatively owned and distributed by countries through the UNCRS. Within such a framework, the excess production of essential resources would not be traded for profit but shared and distributed to where they are most urgently required. As a result, international trade in commodities would be significantly reduced to non-essential goods. The reduction in trade activity would inevitably result in a corresponding reduction in the remit and activity of multinational corporations and the WTO.

Sharing could ensure that essential domestic needs are largely met at the local level, reducing dependency on foreign imports of essential goods. The activity of small and medium sized enterprise would significantly increase, which will further aid poverty reduction. Concentrating on domestic needs would free the population to develop their own industry and economy enabling them to compete on an equal footing with wealthier nations in the global economy. There would also be less need for developing countries to sign trade agreements that are biased against them.

Sharing resources would also divorce these goods and services from speculative financial markets, which would have a significant impact on these markets by dramatically reducing the amount of stocks and financial derivatives related to the stocks that are traded. This in itself would help to reduce the global financial instability that can cause havoc in low-income countries, and that many economists and analysts believe will result in an international financial crisis.

Decommissioning the WTO and IMF, and Regulating Trade

Agreements relating to the remaining international trade activity should, where necessary, be democratically agreed through the UN Conference on Trade and Development (UNCTAD). Trade under UNCTAD, should utilise an inherently balanced mechanism similar to the International Clearing Union (ICU). The combination of these factors will allow the WTO to be progressively dismantled over a period of time. Some of the following measures should also be taken into account within any new system of trade:

  • Multilateral trade agreements should ensure that trade always supports infant industries in developing countries through the ongoing sharing of resources technology and knowledge
  • Intellectual property rights should not interfere with open access to technology, information or other resources that are deemed essential for development or for meeting global human needs
  • Rich countries should not be able to subsidise domestic industry to a point where it negatively impacts upon developing countries
  • Where necessary, low-income countries should be allowed to protect their fledgling industries, although such protectionist measures should exist within a framework which gradually dismantles them as a country develops
  • All environmental standards should be strictly adhered to

Sharing essential resources would also mean that developing nations would require less foreign exchange in reserve as they would need to purchase fewer goods from abroad. The lack of foreign exchange is currently a key reason developing countries turn to the IMF for loans, which in turn leads to crippling debt. Balanced trading between nations (using an ICU type mechanism) and the removal of debt burdens will mean less chance of countries experiencing major balance of payment deficits.

Not only could sharing result in greater financial security for a developing country, it could also mean that they are less likely to have to implement structural adjustments to their economy in order to render it acceptable to the countries that follow neoliberal principles. As a result, the mandate of the IMF would also become progressively redundant and could be decommissioned over time.

Reforming Corporate Activity and Commerce

Hand in hand with this simplification of international trade must be the regulation of the remaining corporate activity. Such regulation should include extensive revision to corporate charters, establishing corporate accountability and transparency, and ensuring that corporations are unable to exert influence over governments or the democratic process. Ultimately, business activity would be encouraged on a small and local scale, working for and not against communities and their environment. This general shift towards localisation will inherently foster democratic participation locally and nationally. Other measures may include:

  • Revoking the protections corporations have gained under the US constitution, such as ‘corporate personhood’ which gives a corporation many of the legal rights a person enjoys
  • Ending the corporate funding of political parties
  • Requiring corporations to account for the environmental, health, safety and social costs of their products and activity
  • Encouraging local enterprise and making companies accountable to the communities they affect.

Conclusion

International trade is currently neither free nor fair. Since the policy framework and institutions of the global economy are primarily determined by high income countries, this bias is firmly rooted. Until international cooperation replaces self interest and competitive economic practices, the levels of global poverty and inequality will only increase. The resulting injustice experienced by the majority of the world will continue to lead to conflict and terrorism.

The environment is also suffering through the irresponsible and inefficient use of resources, particularly fossil fuels and petrochemicals. Competitive, commercial trade structures are largely incapable of reversing this trend, and once again, those in the poorest regions will face the brunt of climate change. Despite the unsustainability of consumerism and free-market policies, economic globalization proceeds apace, reinforced by the corporate interests that stand to gain the most from them. 

Reform of the global economy is long overdue. Removing those resources which are essential to life from corporate control and allowing the global public to share them according to need can create a more sustainable form of economic globalisation. Cooperative internationalism of this kind is not regressive, but inclusive, forward thinking and economic. Global economic reform is a complicated undertaking, yet it is a vital one. It has the potential to address the underlying causes of inequality and poverty and to foster goodwill and peaceful international relations. But for reform to happen, the global public have to demand it, and politicians need to represent the interests of the public, not corporations.