This article has been written by Kajal Purohit, a fourth-year law student at Auro University.
INTRODUCTION
In the contemporary world, global inequality is still a major problem that has a substantial impact on human development, economic advancement, and social stability. This inequality takes two main forms: inequality within countries, which is evident in the widening income and wealth gaps between different population groups, and inequality between countries, which is frequently typified by the economic gap between developed and developing nations. In order to achieve inclusive growth and international stability, these disparities must be addressed.
International trade law, which is a collection of rules and frameworks that regulate trade between nations, is one of the most important instruments in this endeavour. By guaranteeing fair access to international markets, preserving fair competition, and encouraging sustainable development, international trade law aims to level the playing field for all countries. It is carried out through bilateral and regional trade agreements as well as international organizations like the World Trade Organization (WTO). Although trade liberalization has contributed to global economic expansion over time, its ability to lower inequality is primarily dependent on the design, execution, and enforcement of trade policies.
This blog explores the ways in which international trade law helps to lessen inequality worldwide, emphasizing important legal frameworks, trade agreements, and regulatory systems. Additionally, it draws attention to the ongoing obstacles that must be overcome in order to improve the inclusivity and equity of global trade.
THE ROLE OF INTERNATIONAL TRADE LAW IN REDUCING GLOBAL INEQUALITY
- Promoting Policies for Fair Trade :
By addressing practices that distort markets and disproportionately harm developing nations, international trade law seeks to advance equity in trade relationships. Dumping is a destructive practice that damages home industries by exporting goods at a discount to their cost of production. Anti-dumping taxes are allowed to shield domestic industries that are less strong from unfair competition. Government subsidies can unjustly favour producers and artificially depress export prices, especially in developed nations. To counteract these effects, countervailing duties are permitted. To keep local, smaller businesses from being driven out of the market, competition laws in trade agreements forbid monopolistic practices like price-fixing and market monopolization. For developing nations to safeguard their home industries and encourage equitable economic growth, legal instruments such as the WTO’s Agreement on Anti-Dumping Measures and Special and Differential Treatment (SDT) provisions are crucial.
- Lowering Non-Tariff and Tariff Barriers :
Significant barriers that limit developing nations’ ability to participate in international trade include tariffs and non-tariff barriers. Import taxes, also known as tariffs, lower the competitiveness of exports from developing countries by raising their price in international markets. Strict quality standards, licensing requirements, and bureaucratic regulations are examples of non-tariff barriers that increase the cost and complexity of exporting goods, especially for nations with limited institutional capacity and infrastructure.
Multilateral agreements that demand gradual tariff reductions and the removal of unwarranted non-tariff barriers are two ways that international trade law actively attempts to reduce these barriers. Member states are required to lower tariffs and abstain from enacting new protectionist policies under the General Agreement on Tariffs and Trade (GATT), which forms the basis of the WTO.
The African Continental Free Trade Area (AfCFTA), which seeks to eliminate 90% of tariffs on goods traded within Africa, is a noteworthy illustration of a regional endeavour. This agreement facilitates increased intra-African trade and lessens dependency on developed countries, marking a significant step towards economic integration on the continent.
By lowering trade barriers, these legal frameworks make it easier for developing nations to access international markets, boost export earnings, and encourage domestic economic growth—all of which contribute to closing the wealth gap worldwide.
- Increasing Market Access for Developing Nations :
Due to a lack of infrastructure, a lack of negotiating power in trade forums, and limited competitiveness, developing nations frequently have difficulty breaking into international markets. By facilitating preferential trade agreements (PTAs) and initiatives designed especially for these nations, international trade law plays a vital role in improving market access.
The Generalized Scheme of Preferences (GSP) of the European Union is a well-known mechanism that offers imports from developing nations reduced or no tariffs. The Everything But Arms (EBA) initiative, which is part of the GSP framework, gives least developed countries (LDCs) duty-free and quota-free access to the EU market for all goods other than weapons and ammunition. In some of the world’s poorest countries, this encourages industrial growth and economic diversification.
In a similar vein, the United States’ African Growth and Opportunity Act (AGOA) permits qualified Sub-Saharan African nations to export goods to the American market duty-free. The development of value-added industries like manufacturing, textiles, and technology is made possible by these preferential agreements, which allow developing nations to go beyond the conventional export of raw materials.
- Encouraging Sustainable and Inclusive Trade :
The growing understanding that economic development shouldn’t come at the expense of environmental degradation or human welfare is reflected in the increasing inclusion of provisions addressing social equity, environmental sustainability, and labor rights in contemporary international trade agreements.
Trade agreements’ labor provisions seek to end child labor, ensure safe working conditions, and shield employees from abusive treatment. Gender-sensitive provisions in trade law also support equal access to opportunities for women workers and entrepreneurs in the global economy. At the same time, trade agreements’ environmental provisions aim to deter actions like overfishing, deforestation, and excessive carbon emissions.
For instance, strict labor standards are part of the United States-Mexico-Canada Agreement (USMCA), which mandates that Mexico uphold laws protecting collective bargaining, increase the minimum wage, and enhance working conditions. Fair wages and safe labor practices are guaranteed by the EU-Vietnam Free Trade Agreement (EVFTA), which requires adherence to International Labour Organization (ILO) conventions.
These accords guarantee that the advantages of globalization are distributed more fairly and do not come at the expense of underprivileged groups or future generations by incorporating social and environmental concerns into trade law.
- Countering Abuse in Trade :
The exploitation of cheap labor in developing nations, where workers frequently put up with hazardous working conditions, low pay, and long hours, is one of the more sinister aspects of global trade. By establishing legally binding ethical standards, international trade law aims to combat this kind of exploitation.
Frameworks for ensuring that workers’ rights are upheld and that trade relationships do not sustain violations of human rights are provided by agreements such as the Trade and Labour Standards Agreement (TLSA). International standards for decent work are established by the ILO’s Convention on Forced Labour, which also forbids the use of coercion in the workplace.
Additionally, “race to the bottom” tactics—in which businesses move their operations to nations with less robust labor laws in an effort to save money—are discouraged by international trade law. International law holds multinational firms responsible and encourages moral business conduct by mandating adherence to labor standards as part of trade agreements. These legal tools support social justice and human dignity globally in addition to bettering economic conditions.
INTERNATIONAL TRADE LAW’S DRAWBACKS AND REBUTTALS
International trade law still faces many obstacles in spite of its successes. The power disparity during trade talks is a significant worry. Due to their greater resources, experience, and clout, developed nations are frequently able to negotiate advantageous terms, whereas many developing nations find it difficult to represent their interests because of their weak institutional and legal frameworks.
The argument between protectionism and free trade is another divisive topic. Free trade promotes efficiency and global economic integration, but it can also hurt emerging industries in developing nations that aren’t yet globally competitive. To support their domestic industries, these nations may enact protectionist policies like import limitations or government subsidies. However, trade disputes and retaliatory actions from trading partners can result from such policies.
It is also commonly questioned whether the WTO’s dispute resolution procedures are effective. Even though the WTO offers a formal framework for resolving trade disputes, enforcement is still lax, especially when big or strong economies disregard decisions. Furthermore, the power of multilateral trade rules is frequently weakened by the growth of bilateral and regional trade agreements, resulting in disjointed and uneven trade governance.
CONCLUSION: INTERNATIONAL TRADE LAW’S FUTURE AND GLOBAL EQUALITY
There is a lot of promise for using international trade law to lessen inequality in the world. It establishes the foundation for a more equitable and inclusive global economy by upholding fair trade standards, removing obstacles to market access, safeguarding labor and environmental norms, and preventing exploitation. However, structural reforms must be implemented by the international community in order to fully realize this potential. These include making developing countries more represented in trade talks, bolstering enforcement systems, and further integrating social and environmental justice into trade agreements. International trade law has the potential to be a fundamental component of a more just, sustainable, and inclusive global economic order with further reform and a united global commitment.
REFERENCES:
- General Agreement on Tariffs and Trade (GATT)
General Agreement on Tariffs and Trade, Oct. 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194.
- WTO Anti-Dumping Agreement
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement), Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1868 U.N.T.S. 201.
- Agreement on Subsidies and Countervailing Measures (SCM Agreement)
Agreement on Subsidies and Countervailing Measures, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1869 U.N.T.S. 14.
- African Growth and Opportunity Act (AGOA)
African Growth and Opportunity Act, Pub. L. No. 106-200, §§ 101–107, 114 Stat. 251 (2000) (codified as amended at 19 U.S.C. §§ 3701–3706).
- EU–Vietnam Free Trade Agreement (EVFTA)
Free Trade Agreement Between the European Union and the Socialist Republic of Vietnam, EU–Viet., June 30, 2019, O.J. (L 186) 3.
