Social 10: Chapter 10 - Expanding Globalization

Vocabulary

Outsourcing - A business strategy that involves reducing costs by using supplies or products and services in countries where labor is cheaper and government regulation may be less strict

Containerization - The transporting of goods in standard-sized shipping containers

Trade Liberation - A process that involves countries in reducing or removing trade barriers, such as tariffs and quotas, so goods and services can move around the world more freely

Free Trade - The trade that occurs when two or more countries eliminate tariffs and taxes on the goods and services

Consensus - General agreement

Sanctions - A penalty. Often an economic penalty, such as a trade boycott, taken to pressure a government to agree to carry out certain actions or follow certain rules

Communication Technology

Innovations in communication technology have changed the world

Technology convergence is also increasing the rate of globalization

Convergence also brings together media companies

e-commerce - radically changed since the textbook written

Trade

Technology plays an important role in the expansion of global trade

Since WWII countries have opened their economies to outside influences

Integrated supply chains have helped to reshape global trade patterns

Challenging with balance of trade - exports vs. imports between countries

Transportation

Parts and production must be shipped cheaply and in a timely manner

Containerization - the transporting of goods in standard-sized shipping containers

Just-in-time Delivery Systems

• Parts are ordered and scheduled to arrive at the factory at the moment they are needed

• This saves handling and storage costs

• Stock on the shelf is an expensive to a company

Media

Running commercials, increases market for the company

celebrities - sell things “influences”

Social Media - “free”

Impact on government regulations

Media convergence - news a very profitable business

Physical devices have impacted our world

Impact on transnationals who don’t want bad advertising

The World Trade Organization

Formally G.A.T.T. (General Agreement on Tariffs and Trade)

Established in 1995 to increase international trade by lowering trade barriers and making trade more predictable

Ensures that the terms of trade agreements are followed

Settles trade disputes between governments

Conducts trade negotiations

Decisions made by the WTO are BINDING

The WTO officially has a one-country, one-vote system but in practice, decisions are made by coming to a consensus - a general agreement

Resolving Disputes:

• When one member country says another member country is treating it unfairly in a trade matter, the WTO must settle the dispute

  • A panel of three WTO officials hears the arguments of both sides and makes a decision

  • The panel’s decision may force one of the countries to change its laws or make a payment

• The WTO has the power to use sanctions - economic actions, such as a trade boycott - to enforce its decisions

Support

• Developing countries can join global markets

• Eventually raise the standard of living of the developing world

• Global voice/input on trade

• Lays out rules for all to follow which will prevent conflict

• Ability to sanction/punish offenders

Oppose

• Too much power and force a sovereign nation-state to change rules they want for their country

• Inconsiderate of developing countries rules

• Not democratically accountable as well as not open to public scrutiny

• Do not focus on environmental damage, labor issues - conditions including child labor

CUSMA (formally NAFTA)

Trade Agreements

1989 - between Canada & the US (Canada - US Free Trade Agreements CUSFTA)

1994 - Added in Mexico (North American Free Trade Agreement - NAFTA)

2018 - Renegotiated (Canada - United States - Mexico Agreement - CUSMA)

The European Union

Created a liberalized trading area in Europe

EU has tied member countries more closely together, integrating their economies

Replacing separate national currencies with the Euro

The EU came into effect in 1991, after more than 40 years of negotiations

By acting as one large market, the EU enables members to take advantage of the opportunities created by economic globalization

A European parliament makes decisions on issues that affects the region as a whole