Trade, Globalization and Economic Policy

Abstract

This article places international trade law in the context of the rapid increase in economic growth and globalization over the last 60 years that is reducing poverty and expanding the middle class in most nations of the world. This economic and cultural integration of markets and peoples has been stimulated by two major factors: first, the increase in technological innovation in transport, information technology and manufacturing processes and second, the removal of legal barriers to the flow of goods, capital and knowledge around the globe stimulated by successive rounds of trade negotiations at the GATT and later the WTO.

The arguments for and against globalization are analyzed within the context of the history of economic ideas and with an understanding that there are tradeoffs because not all people benefit from these rapid changes. While technological innovation spurs economic growth, the full benefits cannot be realized unless technology and the resulting products are widely available through trade. The world trade regime has evolved to significantly remove barriers to trade, provide a forum to settle trade disputes, and develop uniform legal standards to resolve disputes. The chapter forecasts a further increase in the trend toward one world market, the convergence of wage rates for manufactured products and many services, the continued rise of the middle class in emerging economies and a movement toward greater international governance driven by increased pressure for uniform laws to reduce uncertainty and for international forums to reduce inconsistency in application.

Keywords: international trade, globalization, economic policy, WTO, international law, economic development, poverty, trade theory, Law and Economics

JEL Classification: K33, F1