User:Stevenarntson/group spaces/2009summeranalytical/group 2

Group members
sign in here with ":Stevenarntson" (a colon and three tildes).
 * John burbridge
 * Stevenaguilar
 * Dc.sheets
 * Karolinaberglof

Overview

 * 1.summary


 * 2.reflective assessment

On an individual level we all did a great job in completeing our own sections of the paper. We discussed the topic of international trade in an unbiased manner, and mentioned both the positives and negatives of current international trade issues. We feel that we could have had better communication outside of class. We didn't utilize the group discussion boards to the full extent possible, and as a result, our ability to get tasks done as a group diminished. Scheduling group meetings outside of class would have been very beneficial for us. In future group projects, organizing group meetings will increase group communication as a whole, make the project more cohesive, and make it easier to complete the project.

I agree, I think overall we did a good job of posting material to the discussion page, I think we started out knowing a little bit about how and where we were going to end up, but I also know that we did not let that effect what our conclusion was. As for failures, I would have to say that week to week contact and conversation was pretty minimal in class; however we did keep in touch via e-mail and wiki. As for future strategies, i think that if we set aside an hour or two to work as a group in person, we could have accomplished this task much more effectively.

Dc.sheets

History
“Do you guys take American Express?” The woman at the counter looked nervous. “Oh, sure,” I replied, “We take everything. Except pelts. We no longer accept pelts.” She laughed. “I’ve got a muskrat in my purse…” she offered jokingly. The very idea of common trade is funny now, but it really wasn’t that long ago that the trade of raw goods was a much more frequent transaction. The principle is simple: I have something you want, you have something I want, and we trade. I raise chickens, you raise pigs, I trade you eggs for some bacon, and now we both have breakfast. Except that now, I still have chickens, but no longer have a pig. It’s a great deal for me, but now you haven nothing left to barter with. Except that cow. “How about that cow?” I say, “I’ll give you 10 dozen eggs and this leg of prosciutto for that cow.” The leg of prosciutto looks vaguely familiar, but you agree. You need the eggs. A week later, I approach you again. “Have I got a deal for you. Eight gallons of milk, six dozen eggs, and a pound of beef jerky, and all I want in return is permission to fish in your lake.” You reluctantly agree. You need the milk. Very quickly, this simple exchange becomes a sticky situation. This parable is not as farfetched as it might sound. In fact, it’s a lot like international trade. Spices, furs, food, livestock, and raw materials have been traded worldwide for thousands of years. In the seventeenth and eighteenth centuries, basic rules of mercantile economics were established. It was more favorable for a country to export manufactured goods and import raw goods, and ideally, any items exported would exceed the value of the raw goods imported. This kind of balance is impossible to achieve for every country—the system invariably benefits the stronger, more established countries, a trend that continues today. The rich get richer, and the poor get poorer. Not only are these trades often unfair, they are not always sustainable. Just like in the bacon and eggs story, the weaker party gives away valuable resources in exchange for what they need in the moment. For example, using farmland to chip away at a national debt, and not directly benefiting the people. Fair trade principles include fair labor conditions, fair market pricing, democratic organizations, community development, and environmental sustainability.

Modern Trade History
The world suffered through two devastating wars in the beginning of the twentieth century. Industrial advancements enabled WWI to leave a broad wake of unprecedented destruction. Human fought machines, brutality and slaughter ran rampant through crumbling cities, garnering a death toll unmatched by any previous conflict. Some even called it "The War that Would End All Wars," but how wrong they were. After WWI, Germany was cast as the world's black sheep, further isolating an already shattered country already left in shatters. Germany was charged with funding the restoration of WWII's “winning parties." When the Great Depression struck and inflation ballooned, the German population was hit harder than the rest of Europe. Adolf Hitler rose to power by promising the Germans that he could return the nation to prosperity, to lead it out of the depression, to create jobs for the unemployed, and to provide for his people. Hitler was very successful in creating jobs and inspiring hope in a despairing nation. He proposed and commenced construction of the now-famous Autobahn, but that was before he decided to invade Poland and Austria.  The gruesome war that followed, the detonation of the first atomic bomb, the Holocaust, and the wreckage of European cities and land are all well-documented. These tragic events were the context of the Bretton Woods conference, where 730 delegates from all 44 Allied nations gathered. In this meeting, held from 1 July to 22 July 1944, agreements were signed to establish the International Bank for Reconstruction and Development (IBRD), the General Agreement on Tariffs and Trade (GATT), and the International Monetary Fund (IMF). GATT is what later turned into World Trade Organization (WTO). Also established was the Bretton Woods system of monetary management. “The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states.” Those institutions were born to provide loans to the war-torn Europe and also to find common meeting grounds, so a war of this magnitude could never again be possible.

Fair Trade
Fair trade's strategic intent is to work with marginalized producers and workers in order to help them move towards economic self-sufficiency and stability. It also aims to allow them to become greater stakeholders in their own organizations, as well as play a wider role in international trade.

Free Trade
Trade between countries which takes place completely free of restrictions. Such trade allows specialization in member states of free trade areas, and lowers costs because, together with competition, the markets are increased. Within a free trade area there are no barriers, such as tariffs and quotas. However, there is not necessarily a common trade policy governing countries outside the free trade area.

WTO
I have made a few changes to the printout I handed you guys earlier so I hope you read through this. Still hand me your thoughts on my paper though, it should be useful for further correction. Dc.sheets

The World Trade Organization is the leading entity for world trade and economics. The organization is made up of first world and even some second world nations who meet several times each year to discuss and debate then finally make into trade agreement law policies they believe are beneficial to the organization’s members. The WTO does a lot of good around the world, and according to their organization's website the WTO provides services and economic aid to countries who are in need. Some of these catastrophes include relief to Kenya, Somalia, South East Asia after the 2004 tsunami that devastated that area of the world. In other words, the WTO is made up of members who do not just talk about economic plans, they also put their plans into action.

Upon hearing this, one might assume that the World Trade Organization is a pretty good group, after all they are meeting with one another, debating an issue from all sides and then finally coming to a consensus on the matters at hand; which is a lot more than we can expect out of the United States Congress. After all they are members of the same group trying to figure out what is best for the majority of its members as well as what is best for world economics. However, the more one looks into the membership rules and application process, listed on their website, as well as who is and who is not benefitting from the policies listed on opposing organizations websites such as the Global Exchange, the more the WTO looks similar to a major corporation exploiting poor nations who will do the labor for less, just on an international level.

Corporations like NIKE have been accused of and discovered using WTO supported trade policies to exploit third world workforces to build their products. , While some maintain that the work provided to these nations help both NIKE’s economy, as well as the economy of the nation(s) providing the workers, others maintain that the wages are nowhere near enough to sustain good living conditions for those workers and ultimately result in record profits for those corporations at the cost of record poverty. , The question with the WTO is where do we draw the line between profit and responsibility, another question might be; have we already crossed that line?

As an example of how WTO economic policies are attractive to business and strong economies, if a corporation like NIKE were to open a factory in the United States and employ 500 workers to manufacture a product, at a cost of ten dollars per hour, for eight hours per day. The corporation would end up paying forty-thousand dollars per day in worker salaries. Compared that to the resulting profit if they had taken advantage of WTO economic policies and decided to open a factory in a nation like China, where they may hire as many as two-thousand workers each for twenty-five cents per hour, eight hours per day. At the end of the day, the corporation would have spent four thousand dollars on worker salaries, one-tenth the cost for four times the number of workers compared to the United States. This example highlights reasons why WTO trade and economic policies are attractive to capitalist nations, enabling both nations and companies to diminish their costs while boosting profits.

The WTO also has been accused of sifting out poorer nations from its policy meetings and keeping them as far away as possible from the organization by employing membership dues, legal status and economic status requirements upon membership applicants. Of the 193 recognized nations in the world, 153 of them are members of the WTO leaving 40 nonmember nations. There are currently 42 nations considered to be third world nations, this number includes the six nations where data was unavailable. At the very best two-third world nations are members of the World Trade Organization; leaving all real power over the world economy to developed and developing nations i.e. the wealthiest nations. This does not necessarily mean that the policies put out and promoted by the WTO would automatically use and abuse third world nations; however, the nations that abide by these policies and use them in their economic trade deals are not as scrupulous as they should be.

The WTO does have a purpose and an important use; however its power must be regulated like anything else. Trade is not always going to be truly fair and we should not expect that it ever will be; but the point we want to make is that while one group may always come out on top in a trade deal, we should not support or allow an organization who essentially bans poor nations and then exploits them economically to operate in our name and for our benefit.

Positive Effects
The pros to being a member of and/or dealing with the World Trade Organization are that you and your nation, city, company, etc. have access to what it needs to influence global trade and economics.

Basically, it means that you can vote for the policies that will benefit your pocketbook, and vote against policies that would be detrimental to your pocketbook.

If you are a member you can establish trading alliances with other nations and groups, giving each other deals, you also know in advance of possible changes in economic policies and can adjust your business model and strategy to better deal with those changes.

You also probably get a really cool mug or customized pen.

Negative Effects
The cons to using the WTO to orchestrate trade policies are that only one group is deciding the policies, even for non-members.

All power to object to and ultimately change economic policies are given to the WTO members, who would not be the ones objecting to them in the first place.

The WTO focuses the attention of big fish in the world economic structure away from what is good for all parties involved to what is good for our party, and how can we make the most amount of money with the least amount of risk.

Dc.sheets

European Union
European Union (EU) is an economic and political partnership among 27 democratic European countries, consisting of nearly a half billion citizens. With their rich diversity, EU countries are united in their commitment to peace, democracy, the rule of law, and respect for human rights.

European Economic Community (EEC) was formed in 1957 by six countries: Belgium, the Federal Republic of Germany, France, Italy, Luxembourg and the Netherlands. European Economic Community’s objective was wider market coverage on goods and services among these countries and others that might later join. This was made possible by lifting customs barriers inside the community and creating consistent customs tariffs on goods from non-EEC countries. Over the years new countries have joined the community and the actual European Union was created in 1993 when member countries accepted new a treaty, adding intergovernmental cooperation to the existing European Economic Community.

The membership to European Union cannot be bought. To become a European Union member, the country must demonstrate that they are fully committed to becoming a member, including citizens' commitment to fulfilling political, legal and technical standards and norms of the European Union. First, the candidate country needs to submit an application to the Council, which evaluates the country’s ability to comply with the EU laws. The next step is stabilization, when the candidate country begins its transition to the EU market economy. This is achieved through stabilization and association agreements, including trade concession, financial and reconstruction assistance among others. The candidate country’s progress is annually evaluated, and when the required requirements are fulfilled, the candidate is granted membership in the European Union. Each member country pays a certain amount of their GDP to the European Union, which varies by country, but is usually less than one percent.

Positive Effects
The single market is one of the European Union’s largest achievements. It provides opportunities for people, goods, services, and money to move around the Union freely without immigration constraints, custom duties or tariffs (known as the Schengen agreement). When national markets are opened by removing trade barriers, it creates more competition between companies, providing lower prices, better quality and wider selection to the consumer. Free movement inside the EU relies on secure and strong control of external borders.

In 1999, European Union wanted to create an even more cohesive economic system and market environment, by introducing a single currency, the Euro, for financial transactions (non-cash). The most important advantage of the single currency was the added security and stability of markets and an overall stronger economy. Three years later twelve countries accepted Euro notes and coins as their national currency.

The European Union is currently the world’s largest trading power and to preserve that power the EU negotiates as one with its trading partners and in the WTO. European Union countries account for only 7 percent of the world’s population and no individual country is strong enough to compete in world trade alone, but the European single market provides support to companies when they want to do business globally. EU is protecting their local markets very effectively. One of its recent actions was against Microsoft, which has a near worldwide monopoly on personal computer operating systems. The European antitrust case is focused on Microsoft’s Windows 7 which has Internet Explorer as its default internet browser, claiming consumers should have access to other browsers as options. If Microsoft and EU settle this dispute, then smaller local (EU) companies will have an opportunity to compete against the giants.

The potential for expansion of the European Union has also helped to establish closer trading links with its immediate neighbors. The first priority is the European Union candidate countries, which can have a special ‘Europe agreement’ establishing a free trade area between EU and itself even before its membership has been granted. This amendment would allow for a greater proportion of exportation to EU countries. Removing custom duties would also boost the country’s economic recovery, which will help it to sooner fulfill member requirements.

European Union is also a major financial and technical supporter of third world countries. In 2001, EU launched the ‘Everything but Arms’ initiative to 49 least developed countries, which opened up markets to unlimited quantities of all products, except weapons, without charging any duties. European Union is also trying to encourage poor countries not only to sell their products to EU countries, but to also increase trade with each other, advising that free trade agreements between neighboring countries can create larger and more effective markets, attracting both local and foreign investors.

Negative Effects
When trade barriers between the EU countries were opened, competition of larger market companies heightened in small market economies, causing many small businesses to lose market share because they could not compete with the economies of scale and availability of cheaper labor abroad. A good example of this is the German retail chain, Lidl, which has spread around the EU and offers around 20 percent lower prices than EU averages. Their inexpensive brands are already harming the business of local food producers, and expanding product offerings to overlap with local leading brands will be devastating. Now, many smaller businesses are either going under or being acquired by larger, multinational companies. As a result, a lot of products that were unique culturally or geographically have begun to disappear because they did not meet the margin standards of the larger companies. Product offerings have started to look the same all around the European Union, decreasing the cultural variety. At the same time, the higher prices and living standards associated with the larger, wealthier countries have an influence on market prices across the EU; this was especially evident after single currency was introduced.

There is also an imbalance among countries; usually the larger and stronger economies rule over the smaller and weaker ones. In the current economic recession, there have also been negative impact inside the European Union. When the trading power of the leading countries wanes, the whole EU’s economy weakens; it will have the most devastating effects on smaller market countries where larger companies have acquired local companies and hired cheap labor. The EU was intended to have the opposite impact – small market countries were supposed to be protected by the whole.

EU’s regulations and laws are designed for use in a large number of countries, meaning compromises will be made on the well-being of individual countries to serve countries of greater influence. These compromises are especially present in agriculture and technology productions. Often the larger and the older members have the most power, enabling them to brush off regulations and pursue projects that have been rejected by other members, for example, France’s current plans for new nuclear reactors.

Colonial and Native trading
The arrival of European colonies on the North American continent necessitated trade with Native Americans. The settlers introduced many European commodities and ideals to the Natives.

One example was the competitive fur trade market. In Europe at this time, there was a great demand for animal fur to make fashionable clothes and apparel. This market was especially responsible for the colonial expansion over the continent and the interaction between the Settlers and Natives.

Land was required in order to hunt for the animals, this need inspired further exploration of the continent. Due to the high demand, it was not unlikely to see a settler enlisting the help of a native to help catch game. In exchange, the Settlers would trade such things as guns, alcohol, tools, and decorative fabrics. Native Americans also traded with furs, beadwork, and food.

Unfortunately, the fur trade lead to the exploitation of the Native Americans and their land. The peaceful trading eventually turned into a fight over land. This severely depleted the tribes' food supply, and resulting in the European colonies controlling all the land on the North American continent. Trading with native tribes decreased as the tribes were forced to live on reservations that were separated by considerable distance, and the European colonial settlements increased across the continent, establishing greater trade amongst themselves.

NAFTA
The United States, Canada, and Mexico currently have very open trading policies. A series of negotiations had to be made in order to establish these policies. U.S President Ronald Reagan proposed that goods be transported more freely among the North American countries. He met with Canadian Prime Minister Brian Mulroney and on January 1, 1989, after a series of meetings the Canadian and American free trade agreement took effect.

President George H. W. Bush, Reagan's successor, began conferring with Mexico in an effort to open the trade barriers between the U.S. and Mexico. Before an official agreement had been reached, the Canadian government requested involvement, leading to the development of North American Free Trade Agreement. It was signed into action on January 1, 1994. With the advent of the NAFTA, it was the desire of the governing leaders to dissolve many of the trading and investing barriers between all three countries. Most barriers were expected to be gone within 15 years. On January 1, 2008, the last of the remaining barriers was lifted, and the NAFTA was put into full effect. Agricultural, textile, livestock, investments, and many other goods are now free of trade taxes.

Positive Effects
The United States Department of Agriculture claims NAFTA “…has contributed to significant increases in agricultural trade and investment between the United States, Canada and Mexico…”

In 1994 when the Mexican peso severely lost its value, The US and Canada were able to loan $6 billion dollars to Mexico. As a payable return, Mexico promised to send their money earned from oil exports into a Federal Reserve bank account. Money transactions such as this one are easily done and can be put into action cheaply. With the advent of NAFTA, investments between banks and companies are now un-taxed.

From its signing to the present day, trade across all three countries' borders has tripled. Not only that, but business transactions, and manufacturing production has increased between the countries. NAFTA allows for goods to be dispersed more readily and easily across the North American land mass. As such, citizens of these countries get to experience higher standards of living. Lowering the taxes on traded goods allows for companies to sell their products at lower prices.

These benefits can be especially noticeable for companies in the United States. Before NAFTA began, Mexico's tariffs on United States exports were over 100% higher than the United States' tariffs on Mexican exports. Since the foundation of NAFTA, the Mexican trade taxes have been dramatically reduced. From 1994 to 1998, Mexican tariffs were reduced by 50% and 11 years later, these tariffs have all but been eliminated. American business involved with trade between Mexico now sigh with relief.

Negative Effects
The governing bodies responsible for creating NAFTA have filled up to 900 pages of trading and goods guidelines. They have made it possible for themselves to pick and choose which goods will be taxed or and which will not. In a truly free trading system, no guidelines or restrictions would be placed on the trading barriers, making the NAFTA's claim of being a free trading system a misleading one.

When it comes to goods and services, cultural dilution is inevitable. Corporations have the money to produce goods on a large scale, and when international trading is done, large amounts of goods need to be moved. Many times these goods were manufactured in a large scale production facility, for example, pre-packaged foods, kitchen appliances, electronics, plastic toys and other "cookie cutter" items. Products like these are commonly purchased and widely dispersed. Their prices are cheap, and as the common standards of living rise, these products become increasingly in demand. As a result, local businesses are having a harder time staying afloat. They must have a specific, sought-after service that the community is willing to use. if they don't, customers often choose the less expensive product. Gradually, everyone becomes dependent on a select few companies.

Mexican farmers are unable to provide enough food for their people because the United States can sell produce at a lower price in Mexico. Naturally, the people of Mexico will buy the cheaper food. This is very apparent with corn farmers. In the United States corn is subsidized. This means that the United States government pays its corn farmers to grow corn. The reason they need federal money, is that corn farmers often do not make enough money to produce the next season's crop. The influx of corn in the United States drives the price down radically. Because the Mexican government is unable to match these extremely low prices, due to the lifted tariffs, the Mexican corn farmers cannot compete, and are left out of work.

The displacement of millions of Mexican workers, has led to the influx of Mexican immigrants coming to the United States to find work. Many workers in the United States are fearful of losing their jobs, because there is now cheaper labor that United States companies can, and have been hiring. Mexican immigrants often receive an unfriendly welcome, when in reality, it is NAFTA that needs to be held responsible for the immigration.

Solutions
In order to find and put into action a solution, it is best to become educated on the matter. If more people understand how our trading system works, the organizations behind the policies, and their motives, it is more likely that people will want to pursue a conscious effort towards change.

Knowledge of this kind enables the consumer to be awakened to the power they truly hold. As humans, especially those living in the richer countries, we do live in a consumer world. We have the ability to support certain companies and neglect others. If money stops going to companies that are abusing their trading privileges, perhaps it is the consumers' responsibility to stop supporting them.

One way to reduce the destructive nature of our current trading policies is to become less dependent on them. This requires a personal drive to support local farmers, markets, and businesses. Be conscious of how far food and goods have traveled to make it into your hands. When spending becomes localized, communities become more sustainable and economically stronger.

This course of action may require some personal sacrifice. Driving is not always necessary. After all, gasoline is imported from across the world. There is always the risk of oil spill, jeopardizing wildlife and our earth, wasting resources and money. So if circumstances allow, ride a bike or walk. Utilizing public transit is also a great way to localize one's impact. If driving is necessary, perhaps one could car pool. Also, be aware of spending habits. Saving money and shopping less is beneficial in many ways. These small sparks of change can ignite a larger movement, strengthening our economy and our world.