Globalization vs. Protectionism

There are a few totally isolated nations in the world of trade that make international commerce with them hopeless. However, there are a few nations that have created mutual agreements to simplify trade between the states and eliminated traffic and non-traffic barriers. There are two types of international trade agreements namely Multilateral (Regional) and Bilateral trade agreements (WinGlobalPartners, 2012). Regional trade treaties are binding agreements between two or more countries that describe the guidelines that govern trade for all signatories.

Bilateral treaties bind two nations such as America-Canada, EU-South Africa, US-Australia, creating a pool for trade to occur. Examples of multilateral accords include the National American Free Trade Agreement (NAFTA), Central American-Dominican Republic Free Trade Agreement (CAFTA-DR), the European Union (EU), and the Asia-Pacific Economic Cooperation (APEC) (Smillie, 2018). The NAFTA went into effect on 1^st January 1994 where it served the purpose of eliminating trade tariffs and binding Mexico, Canada, and the United States to a trade accord. NAFTA has brought about increased trade among the member states to thrice the original amount since it was enacted.

It has also brought about an increased economic output where it is estimated to contribute to at most 0.3% per annum towards the growth of the US economy. According to (Baughman & Francois, 2010) the lions share which emanated from the NAFTA accord directly supported 5.4 million jobs. The trade compliance led to lower prices of oil imports into the U.S due to the elimination of tariffs, this resulted in lower fuel prices and reduced transit costs. One major disadvantage of the NAFTA agreement is the suppression of wages due to job migration.

The CAFTA-DR trade agreement has its pros and cons which provide a basis for argument on whether to accept or reject this accord. In the 1990s, in Central America, trade liberalization occurred due to change in tariffs and as a result, the flow of imports increased. CAFTA had the same concept of job creation and stimulation of the economy with NAFTA. A nation such as Costa Rica has received direct offshore investment in the telecommunication and insurance division due to the government creating opportunities to foreign private investors. The Dominican Republic’s economy grew up to 7% in 2015, 6.6 % in 2016, and 4.6% in 2017 (Amadeo, 2018). However, CAFTA has had more destabilizing effects in the Central American countries than NAFTA did.

APEC similar to the other trade agreements has brought about a positive influence on trading zones. It has opened new markets for developed economies while molding the economies of developing countries through the promotion and facilitation of trade agreements. APEC aims to lower or remove tariffs to promote the free flow of goods between countries which is beneficial to countries that have low labor costs. It accommodates International investment through the provision of relevant forums for economic modernization. The major miscue for APEC is the lack of clear cut defined objectives.

In conclusions, I argue for trade agreements since more trade agreements mean more opportunities to develop nations. Despite the disadvantages they face, the trade agreements have done more good than what would be experienced in absentia of these trade accords. Globalization is therefore important and has therefore paved way for technological advancements among other benefits.