In the current configuration of an increasingly globalized world, the volume of global commercial transactions continues to increase. Furthermore, it can be argued that the current international trade regime has its roots in the specific neoliberal attributes of globalization. Indeed, institutions such as the International Monetary Fund, the World Bank and the World Trade Organization have been very determined to promote neoliberal values ​​in the implementation of economic and trade regulations. However, these encouragements to implement neoliberal trade policies have yet to bear fruit in most developing countries. On the contrary, there is growing concern about an international trade regime deemed unequal or “unfair”. Thus, this essay will focus on specific and serious problems related to the current trade regime (which is free), namely the issue of unequal arrangements in the existing free trade regime experienced by many developing and underdeveloped countries. developed. Solutions consisting of increasing State intervention in the market within the framework of fair trade will then be presented. Finally, case studies will be presented as final evidence of why fair trade would undoubtedly be preferable to free trade in the contemporary international trade regime. Say no to plagiarism. Get a Custom Essay on “Why Violent Video Games Should Not Be Banned”?Get the original essayFree trade, in its strictest sense, refers to the minimization of trade barriers in order to create conditions for equality of the “playing fields” between the countries of the international world. scene. Furthermore, Jagdish Bhagwati posited that “…we know what free trade means – by it we mean the absence of price or quantity interventions in trade that prevent the translation of world prices into domestic prices… ". This would imply that a free trade condition that is in turn fair (because countries do not impose specific protectionist measures to distort market competition) is generally taken for granted. Indeed, a determining economic principle surrounds this idea of ​​“free and fair” trade based on the famous principle of comparative advantage proposed by David Ricardo. He argues that even in the case where a country has a higher rate of efficiency in the production of all products compared to another country, the fact that there is inequality in the forms of different rates of labor productivity implies that a positive sum game could be achieved when these countries decide to engage in free trade, specializing in a specific product and engaging in exporting the product in which that country has an advantage comparison and importing other products. This argument in turn materializes in the attempt made by the WTO to reduce artificial trade barriers (tariffs or quotas) through negotiations and agreements registered within the WTO and binding on its member states (Stiglitz , 2006). Proponents of free trade argued that this principle would lead to a more efficient relocation of resources and would therefore be beneficial to all parties involved in free trade (Krauss, 1997: 5). However, there is an inherent flaw in this argument which leads to the current international trade regime which is unfair and unbalanced, particularly between the first and third worlds. According to Stiglitz (2006), trade liberalizations could only be beneficial for both parties if the economies and employment climate of both partiesare already mature. This condition is, however, not applicable to many developing and underdeveloped countries. Furthermore, the fact that international institutions such as the World Bank and the IMF impose certain conditions (trade and economic liberalizations combined with reduced state intervention in the market) as preconditions for granting aid to many developing countries further exacerbates this problem. Indeed, trade liberalization has had a disastrous impact on the economic development of these countries. According to Oxfam in 2002, an international organization focused on promoting social justice and eradicating poverty, "97% of the revenue generated by international trade benefits rich and middle-income countries, leaving only 3% for poor countries." ". To better illustrate the issue of inequality in current trade regimes and the potentially exacerbating impact of trade liberalizations on developing countries, a case study from Ghana is presented in more detail. The case of Ghana has proven that trade liberalizations have had a major impact on developing countries. failure, and this actually increases the rate of poverty and inequality, as well as a decline in the local poultry industry. The three phases of the liberalization process, from 1957 to 2012, resulted in an overall decrease in average tariff rates from around 44% in the early 1980s to a stable rate of around 13% during the 2000s. implies that the prices of products imported into Ghana have been falling steadily due to the reduction in duty rates applied to these products. In 1995, 42.7% of Ghana's total GDP came from the agricultural sector. This, coupled with relatively cheap labor in the country, should have given Ghanaians a comparative advantage in the production of agricultural products compared to the United States and other EU countries. However, the growth and specialization predicted from the model based on the principle of comparative advantage have not materialized. On the contrary, the Uruguay Round of GATT (General Agreement on Tariffs and Trade), which resulted in the agreements on agriculture for Ghana, proved particularly ruinous for the country (ibid.). This is due to the various flaws in the agreements signed during the Uruguay Round, the flaws of which have in fact allowed many developed countries to maintain their protectionist measures (including massively subsidizing agricultural products to be competitive on the world market), all at the same time, opening Ghana's local markets to be flooded by these heavily subsidized products, resulting in unequal price comparisons between local Ghanaian products and imported products. This case study clearly shows that greater control over the current free trade regime is needed to address the current trade regime which is disadvantageous to less developed countries. Create a fairer international trade regime that does not tip the scales. It is important to favor developed countries in trying to resolve this problem. This is why we need fair trade or trade liberalization which does not discriminate against developing countries and which is asymmetrical compared to its current configuration. In this context, fair trade could be seen as a regime system aimed at increasing the level of fairness in current international trade frameworks. This could be implemented within the framework of state interventionism, as vehemently promoted by Stiglitz in his book Fair Trade for All: How Trade Can Promote Development (2005). He argued that due to the imperfect nature of the market, particularly visible in developing countriesdevelopment, it is important that government plays a greater role in promoting economic development. The East Asian economic tiger (which includes Japan, Taiwan, China and South Korea) could be seen as an example in which trade liberalizations combined with active interventionist measures could lead to a growth and massive economic developments (Stiglitz and Charlton, 2005).A specific case study to support this idea would be the domestic regulations implemented by China with regard to its current money market system. The Chinese government actively intervened in the appreciation of the RMB, especially against the US dollar, which led to a decline in exports of Chinese products and an increase in imports of foreign products. Although some would argue that this creates an unfair playing field where China could actually export more cheaply, resulting in a net surplus in its trade balance relative to the United States due to its "fake" exchange rate. , a fairer trade regime would undoubtedly imply the need for developed economies to make trade-offs for the sake of the economy. with the sole aim of granting a greater level of fairness to the current trading system. More expensive importation would also leverage local Chinese technology products, considered one of contemporary China's crucial emerging industries, which would in turn contribute to the rise of China's IT industries. Furthermore, the benefits of implementing fair trade policies are not isolated to East Asian countries. Ruben (2009) noted that, based on the different impact analyzes he has carried out, focusing mainly on the agricultural sector of Latin American countries (Peru, Costa Rica and Ecuador), it is clear that A general trend towards improved livelihoods of small-scale farmers, although modest, can still be seen. Keep in mind: this is just a sample. Get a personalized article from our expert writers now. Get a Custom Essay The question of what fairness entails is one of the major ongoing debates in the promotion of fair trade. As Stiglitz and Charlton (2005) state, “…because the circumstances of different countries are different, any agreement that applies “fairly” or “uniformly” to all countries may nevertheless have important differential effects…”. However, it remains clear that fair trade offers an alternative route to commercial globalization through which developing and underdeveloped countries could benefit from a more level playing field in the international trading system. Free trade, with its neoliberal market principles, has failed to solve this problem, as the market alone is apparently incapable of "fixing itself" in the absence of checks and balances enforced by other entities (which, in this case, that entity would be the State). Considerable research has also been carried out and has generally shown that a fairer trade regime, implemented within the framework of state interventionism, could, to some extent, succeed in improving the level of fairness within of the current international trade regime. References BBC News, (2002). Oxfam demands an end to “unfair” trade. [online] Available at: http://news.bbc.co.uk/2/hi/business/1923986.stm [Accessed November 13, 2014]. Krauss, M. (1997). How nations get rich. New York: Oxford University Press. [online] Available on:. 2014].