![]() markets in return for improved working conditions in Cambodia’s apparel sector. The U.S.–Cambodia Bilateral Textile Agreement, for example, gave increased preferential access to U.S. Over the past decade, developed countries have been inserting into FTAs and other trade arrangements language that links market access to compliance with standards in areas ranging from labor rights to restrictions on arms trading. How China Is Changing the RulesĬhina’s free trade agreements will most likely differ from the United States’ and Europe’s in one respect that’s very important to developing countries: the so-called soft issues. Officials in China need to find new markets for Chinese goods-not just Haier TVs and Li Ning running shoes but Baosteel alloys and Sinochem polymers as well. Layoffs numbering in the millions have spread a chill even to the dynamic economies of Beijing and Shanghai. ![]() Unsold inventories flooded the Chinese market at bargain prices last year at Christmas, but domestic consumers offered no remedy for China’s downturn dilemma. The collapse in orders from the developed world and the resultant shock to domestic manufacturing made clear to Chinese officials that their country had become dangerously dependent on U.S. Until recently it relied heavily on strengthening its trade ties with the United States and Europe, but the worldwide recession has brought a rude awakening. Free trade agreements allow countries to be “preferentialist” instead of downright protectionist.Ĭhina will be among the countries showing the keenest interest in FTAs. ![]() But with government bailout and stimulus money flowing freely, politicians in developed countries cannot argue too forcefully for free trade, which is often blamed for job losses and declining competitiveness at home. Today protectionism isn’t practical every country depends on imported goods and foreign markets. That scenario has implications for global corporations’ strategy and operations.įTAs, which have been proliferating since the 1990s, are a popular and politically acceptable way for countries to give an edge to firms based inside their borders, at a time when “protectionism” is universally acknowledged as a dirty word. All that attention will most likely lead to more free trade agreements (FTAs), in which countries arrange to lower or eliminate tariffs on selected goods for each other. The postrecession era will be a heady time for countries in the developing world as they find themselves wooed not just for their materials and labor but-increasingly-for their consumers.
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