Trade Liberalization - Pros And Cons

In Bangladesh, shrimp farming has increased 70% from 1990 to 1998. The shrimp export industry amounted to 1.1% of the total GDP, but land degradation, cattle loss, water pollution, mangrove destruction and loss of biodiversity offset the profit. UNEP discovered that profits could be improved 30% and sustainability could be ensured by: licensing shrimp farms, charging for water polluters, taxing land use and funding soil conservation, as well as mandating mixed land use for rice, shrimp and farming. Trade liberalization provides local fishers with an extraordinary opportunity to market their products around the world, but may also lead to over-saturation as more fishers race for the profit. Therefore, the government must use careful regulation to ensure that every man with a trawler isn't out there, hustling his shrimp to foreign nations.

A 1998 survey in the Philippines showed that 67% of domestic water users were prepared to pay an additional three cents per cubic meter of water on their monthly bills. Commercial users were less willing to pay their share, so a "one-time contribution" approach was favored for large users. The funding derived from this method could produce up to $101,062 to cover the costs of watershed protection. Prior to recent developments, there was a charge for the use of the Makiling Botanical Gardens, but most of the other recreational locations charged nothing and the required consumer contributions were mandated far too low (less than half of what people were willing to pay). Trade liberalization was not so much the problem in this case. Rather, local economics were in need of assessment.

A similar instance occurred in Romania, when water demand increased fifteen-fold and it was discovered that the national raw water price was a mere 25% of the full economic value. Ninety-percent of respondents in urban Romania agreed that water should be priced to reflect service, administration costs and value of a natural resource. Ninety-eight percent of those surveyed favored a new trade strategy and government trade liberalization, rather than local privatization.

Economics is a complex area of study. Pro globalization economists always point to the need for policy reform and fair pricing based on the global market, as in the case of Romania and the Philippines. Anti globalization activists claim that trade liberalization exploits local workers and causes environmental damage, as in the case of Chilean mining where workers can only be subcontracted, or in New Delhi where lax auto standards are wreaking havoc on the air quality in measurable ways. Studies done by UNEP are slowly exposing the problems that, with enough attention and care, can improve trade efficiency, without jeopardizing world globalization.