Globalization and international agreements

Globalization is a concept that refers to the international integration of trade, economics, financial systems, and communication as a result of product interchange and interconnectivity, as well as the interchange and interconnectivity of worldviews, ideological principles, and components of global popular culture (Baylis, Smith, and Owens 4). Globalization, in practice, is broadening local and international perspectives to incorporate a globalist view of the world in which systems, cultures, and perspectives are interconnected and interdependent. Globalization is supported by the opening and blurring of national borders, which allows and encourages the free transfer and movement of commodities, services, talents, technology, and capital across national and regional borders. Globalization is spearheaded by rapid advancement and interconnectivity in transport, communication and related systems and technologies, resulting into intricate interdependence, especially in cultural dynamics and economic cooperation.

Globalization and international agreements

Although globalization conceptually manifested in ancient times through different forms and negligible scope, with some researchers identifying elements of the concept as far back as the third millennium BC, there is a relative consensus that the practice as conventionally identified is much recent. The term itself was just coined in the early 70s while globalization to a substantial scale started in the 1920s with the rapid expansion of world economies and cultural interaction. According to the IMF, globalization is defined by the four fundamental principles namely movement of capital and investment, dissipation of knowledge, skills, and expertise; trade and business transactions; and migration of people (Rodrik, 178). In recent studies, owing to explosion of information technology and the internet, researchers have designated globalization into three main perspectives and categories of cultural, economic and political globalization. Globalization has a great impact, influence, and effect on cultural, political, economic and environmental systems and is practically dominated by international trade. The approach has had profound consequences, with more countries adopting free and open market systems and integrating into the global financial systems.

However, since the world is a large, dynamic, multi-cultural family with different approaches to culture, trade, and priorities, there was a need for internationally binding ratification of the bilateral and international agreement. As a result, the World Trade Organization (WTO) was formed in 1995 to oversee and handle economic, legal and political issues resulting from globalization and international business. The institution is tasked with limiting and neutralizing barriers to international trade and exploring new markets while providing a framework for enactment and operationalization international trade agreements. Moreover, the WTO is a forum for negotiating terms of trade, conflict resolution and determination as well as making global economic policies in cooperation with international financial institutions like the World Bank and the International Monitory Fund (IMF) (Yarbrough and Yarbrough 53). Given the significance of international agreements in international trade and globalization and its impact on local industry, such agreements have far-reaching impacts on local business dynamics upon ratification in a way that directly influences key aspects of national sovereignty.

Subverting democracy

Governments and social commentators are increasingly concerned at the scope and extent to which bilateral agreements in international trade has become so powerful that they circumvent and override national sovereignty. In this way, citizens of a country find themselves controlled and regulated by foreign rules and impacted by events and shifts in dynamics far from their shores. This not only implies that the government of a country is tied up and limited in its ability to formulate and effect policy at a national level, especially if they are contrary to ratifications in international institutions. This power of international agreements, therefore, becomes a huge threat to democratic values and principles when duly elected governments are unable to implement the will of the people. Consequently, governments fail to act unilaterally to make and shape socio-economic and political decisions to improve local industries. This, as witnessed across the world, is creating disillusionment as populist clamors to take back control and pull away from some aspects of globalization are picking up pace.

Impact of international agreements on sovereignty

Unfair competition

International agreements undermine sovereignty by creating conditions that undermine growth and competitiveness of local industries (Hitt, Ireland, and Hoskisson 66). This is because globalization favors a free market approach to economics and trade. The model demands that market forces are solely depended on to determine flow and transaction of goods and services. As a direct consequence, large multinational companies with large capital bases and enduring supply chain can leverage on vast reserves and capital pools, the economy of scales and financial exchanges to produce goods cheaply. With such advantages, they can out- price and outcompete local industries and companies. Unencumbered competition can, therefore, ravage local companies and lead to the rise of powerful multinationals with systemic and operational advantages that can lead to monopolies and collusion to effect and entrench market control. This is particularly true in advancing economies where large-scale acquisitions have meant the gradual death of local businesses had seen collapse and inhalation of local enterprise (Büthe and Milner 742). This trend and affront to national sovereignty have meant that the benefits of globalization and international agreements have created conditions around the world where the benefits of globalization are a reserve of a few multinationals at the expense of expanding and boosting local capacity.

Dependence on foreign companies

One of the primary aspects of most international trade agreements is the bilateral commitment to fair competition and equal standing for all companies in the subject industries. This common feature has a tactical way of circumventing sovereignty when implemented in the economy. Huge foreign companies have a massive competitive edge and vast experience in their core areas. They are therefore able to outcompete local companies based on their capacity to deliver with greater efficiency. Since the international agreements and principles of globalization demand free and fair standing of companies during bidding and tendering process, these foreign companies edge out local competitors with ease by bidding lower and having better portfolios. Such companies are therefore able to hold vast operations and project in the public and private sectors. With time and continuation of the trend, such companies emerge as sole controllers and providers of government services. This poses a dilemma as the companies are foreign owned and have their allegiances to their parent companies. Some of the undertakings entrusted to these companies are sensitive state operations and services that are best handled internally. As only the large multinationals would have the capacity to initiate and sustain these projects, they are accorded unfettered access to information that could render the country in question vulnerable to vested interests and foreign influence (Higgott and Erman 450).

Foreign debt burden

Free flow of finances and investment is a key driver of globalization, and this underprops most international agreements by extension. As a result of globalization and bilateral agreements, huge sums of capital have moved cross countries in investment. In a significant number of cases, the capital flow is usually in the form of various kinds and forms of loans and grants. As economic growth continues, the amounts involved in overseas investments have risen tremendously. Populism and genuine need to invest in local economies have sent governments into huge borrowings that leave them indebted and at the mercy and discretion of foreign corporations and governments. These foreign governments and companies can use the leverage of debt owed or promise to lend to influence issues in the country to a great deal. An international agreement in such instances portends punitive action for unmet debt and agreement obligations against the borrowing country (Saskia 111). This means that countries in debt have petite control of the financial evolution of their countries, a direct attack on sovereignty.

Limiting government regulation and intervention on labor and environmental issues

International agreements have potential to inhibit government policy formulation and establishment of regulatory frameworks in their countries on environmental and labor issues. This is because international agreements on trade are also focused on removing barriers to trade, and these could include limiting or completely removing regulations and guaranteeing stability by withholding government intervention in the economy. This opens up uncontrolled competition that multinationals can exploit to establish monopolies and be able to control and lower employee wages to maximize profits (Bekhuis, Meuleman, and Lubbers 1044). Free trade and lack of regulations would allow these companies to have the final prerogative on labor issues like working conditions. Besides, the inability of the government to intervene and legislate environmental policies can be largely reduced if these relations contravene any bit of the agreements signed and ratified.

Reestablishing government control

As highlighted, globalization and international agreements pose serious threats to national sovereignty. To mitigate the adversity of these factors to local economies, governments must have in place protectionist policies to sustain certain special sectors that are integral to the local economy. There are many reasons and arguments for protectionist stances as a response to chronic capitalism. This is to enable progressive local capacity building and to protect sensitive industries to a country. Some areas of an economy that would benefit from protectionism, regulation and government interventions for the overall development of an economy include sectors that are central to national culture, those that create affirmative balance like youth, people living with disability and women enterprises, sectors that are important for national security, among many other special categories (Blanchard 65). By protectionism, economic policy maker can retain their authority over the markets by reserving the discretion to implement responsive measures and policies complement and boost the economy. In a world of diversity and varied predisposition, it is prudent economics to be able to influence and control economic dynamics in an economy.

On the other hand, international agreements and focus towards globalization has resulted in huge benefits and transformations that have not gone unnoticed. Through international agreements, countries have increased their economic status with evidence showing the massive transition from poverty into the middle class. They also open up new markets and trade destinations besides attracting crucial investment that revolutionizes local economies and expands opportunities. In light of such benefits, the entire idea should not be scorned and dismissed altogether. Instead, local governments should strike the delicate balance of determining the specific sectors, goods, and services that would impart a benefit to the entire economy if protected. To make key decisions on implementing marginally targeted protectionism, certain considerations are necessary to decide on the goods and services to protect. First, goods that are part of a national identity, culture, and heritage like indigenous forests and endangered wildlife should be protected. Secondly, goods that are made with a keen eye for sustainability should be protected as they encourage good investment ethos but cannot compete with other cheaper but similar goods. Additionally, goods that produced by special groups like women, youths, and people with disability should be protected to spur internal competitiveness. Finally, goods that are produced by a large number of local people and fall in mass employment industries like agriculture should be shielded from external competition to maintain economic stability and social order (Egger and Larch 884). These can also be companies and institutions that are in sectors that are part of the economic strategy to achieve certain policy objectives.

Conclusion

The paper has delved into an interactive analysis of the concept and practice of globalization and its evolution over time. Globalization has four basic principles that include migration, financial flow, and investment, trade as well as the flow of information. International agreements are an important enforcer of globalization which has achieved tremendous results over the years like increasing opportunities, international cooperation, economic growth and exchange of skills and information. However, they are intrusive and can have great adversity on the sovereignty of a country and its people. Adversities from globalization and international agreements can be in the form of unfair competition, huge foreign debt, overdependence on foreign companies and subversion of democratic principles. Therefore the research recommends targeted protection of various sectors, goods, and services to mitigate the adversities of globalization and bilateral agreements.

Work Cited

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