For many years, the trade liberalization made many people worse off, both for developed and developing countries. It has been found that for developed countries American workers with low-skilled can lose their jobs or be paid less as the developing countries. In the majority countries around the world, we have a growing inequality as the United States, where not only is there a steady uptick in poverty but also the middle household income has been falling for the last eight years. There are many factors that contribute this change such as technology, labour unions and Trade Liberalization.
Many years ago, two famous economists Samuelson and Wolfgang Stolper explained that the trade liberalization would lower wages for unskilled workers in high-income countries. Globalization has reduced the disparities in knowledge and technology between developed and developing countries. In the developing world, the lower-paid workers now have the tools to increase their education, performing the same task as the workers of developing countries. In fact, American workers get paid more high for doing the same task as the higher-paid skilled American worker. According to some to complete in the world of Globalization requires cuts in government spending (including programs for poor). The modern economic theory has shown that in this imperfect world trade liberalization can make everyone worse off. Because of inadequate insurance markets, most of the firms shift their production form high-return risky activity to safer, but there are lower returns areas lowering national income.
Many types of research have shown that countries which increased their trade (e.g. China) have grown faster but unfortunately, they did not liberalize to the development.To reduce tariffs especially labour, we need to move from lower-productivity to higher-productivity. In most countries where there is a high level of unemployment the need to release resources to expand exports is not necessary.
There are many factors that contribute to the impediments of exporting such as absenteeism of infrastructure, the internal barrier to trade, the absence of capital and so on. Many countries are being forced to open their market to foreign banks in order to lending to multinationals and national monopolies instead of local small and medium-sized businesses. Safeguarding is the best solution for support economic growth sector, so exports create jobs but import destroys them. Moreover, trade liberalization on the basis of job creation supports export expansion advocate import restrictions. Many politicians like George W. Bush favour the free trade and also free market. In developing countries, we have what we call the free trade agreements pushed by Bush administration but of course are not free trade agreement at all. The agreements typically include investment agreements and intellectual-property provisions.
The United States keeps its agriculture subsidies while the developing countries are not allowed to impose countervailing duties. American firms have forced the developing countries to pay hundreds of millions of dollars. An example is Indonesia that was a force to pay compensation for profits lost when it abrogate an almost-surely corrupt contract by president Suharto signed. The biggest issue for the developing countries is the knowledge.
In fact, the intellectual-property provision reduces the access to the knowledge making it more difficult. It almost provides any protection for developing countries giving rise to bio piracy. Besides, the provision makes more difficult for developing countries to gain access to lifesaving medicines.
The poor countries cannot afford expensive products so for this reason thousands of people needlessly die. Actually, there are some drugs companies that only focus on profits and they don’t think about poor people who do not have money. The World Trade Organization creating international rules of law in trade. So also the unfair law is better than no rule at all.
The big countries use their economic without constraints and they put the poor countries at a disadvantage. As regarding the employment, America is one of the biggest industrial countries where there is reliance on employment related to health insurance. At the same time, they have a poor unemployment insurance system. So if a worker loses his work loses his health insurance at the same time.
For this reason, American workers are worried about losing their work.A median American worker in his thirties has a lower income (rispet ) thirty years ago so trade is not the only reason for the decline. Concluding, if the developing countries benefit from the trade liberalization we need a fairer trade regime and also if the people will benefit from the trade liberalization it will need to manage the trade liberalization better.