Summaries of the Award-Winning Essays of JFTC Essay Competition 2017
The Prize for Excellence
Is free trade the best policy?
Ms. Anna Lee Ali (Trinidad and Tobago)
As the growth in global trade flows continues to slow, international trade rules need to be revised in order to strike a balance between national autonomy and globalization while assuring mutually advantageous trade for all involved. While it is easier to advocate free trade and apply the same rules to everyone across the board, the fact remains that each country is faced with its own unique circumstances, constraints and objectives and these must be taken into account in order to formulate a better trading system. Free trade is not the nostrum that economists once advertised it to be and while it may have its advantages and some of its disadvantages can be reduced through targeted measures, there are certain circumstances and/or temporary situations where protectionism is advocated. In other cases, a deviation from free trade is necessary to protect a country’s national interests to ensure it is not sacrificed in exchange for commercial benefits in a time where literally a “take no prisoners” approach is used during negotiations for free trade agreements.
As the trading system is reformed, it is anticipated that there will be some changes to the global trade landscape as it relates specifically to the rules and responsibilities of the World Trade Organisation (WTO). The efficiency of this entity’s operations also needs to be improved given that it is very slow in settling disputes. In addition, the overhaul of the existing trade infrastructure should take into account all of the technological developments that are occurring in the international market as it is and will continue to impact and change the way trade occurs. Governments also need to be more frank with the populations that they serve about the risks and disadvantages of free trade agreements and must implement adequate domestic measures to mitigate the disruptive impact of trade on their economies if globalisation is to have a fighting chance in the face of populist pressures. Legal frameworks should be strengthened as well in order to facilitate easier trade among countries.
A relatively open global economy which strikes a balance between national autonomy and globalisation and which ensures mutually beneficial trade is a more preferable and practical solution to a completely free trade alternative. It will also avert any trade wars that may occur as a result of the perception of unfair trade which has the potential to derail the global economic recovery.
The Prize for Excellence
The Japan-EU FTA – A blueprint for improving the global trade regime
Dr. Jan-Ulrich Rothacher (Germany)
Given the deep deadlock in the WTO trade talks, it would be elusive to hope for multilateral trade liberalisation through this avenue. Instead, it will be argued in this essay that the countries should pivot towards concluding bilateral and regional agreements. Admittedly this would only be a second best solution. But it is inevitable after the failure of the multilateral WTO round. If big economic powers were to lead the charge, by agreeing on clean and deep agreements, it can be reasonably hoped that other nations would follow, so that they would not miss out on the economic rewards. The recent Japan-EU trade pact would be a case in point for such agreements.
Another challenge will be to successfully conclude such agreements, as they can be expected to engender protests by interest groups or other non-governmental constituencies. Here, the European and Japanese negotiators managed to brush off unfounded accusations and to harness the support by leading politicians and that of other segments of the business community. Therefore, in terms of design and the resolve by the negotiators, the Japan-EU FTA could indeed become a blueprint for improving the global trade regime.
The Prize for Excellence
Restructuring the Japanese Economy through Opening Markets – For Economic Growth in a Depopulating Society
Ms. Sachiko Stone (Japan)
While the Abe administration of Japan promotes free trade agreements under its growth strategy, a wave of trade protectionism that could be called nationalism is rising and spreading around the world, as witnessed by the occurrence of events typifying the rise of trade protectionism in the world, including the U.K.’s decision to leave the European Union and the advent of the Trump administration in the U.S. last year.
At present, public opposition to free trade is intensifying due to concerns over a widening wage gap, food safety, industrial hollowing, etc., and the tendency towards protectionism is accelerating. However, any shrinkage of world trade as a result of some countries adopting protectionist policies will cause the overall global economy to slump and eventually produce a negative impact even on the protectionist countries themselves, meaning that they will suffer from the problem brought about by their own actions. As prior incidents suggest, countries cannot achieve sustainable growth of their industries by resorting to protectionist measures, and invariably their citizens must shoulder the costs of protectionism.
Free trade generates positive economic effects from export promotion and reduced import prices. Of more importance are its beneficial effects on medium to long-term economic development, as free trade helps to achieve an efficient allocation of resources, productivity improvement, etc., through economic structural reform.
Although forced to incur adjustment costs to lessen the pain of structural reform as a matter of course, we must maximize the benefits of free trade through measures such as the introduction of an active employment policy, improvement of the environment for foreign direct investment in Japan, and establishment of a business model aimed at value-added agriculture utilizing the wisdom of trading companies.
Particularly for Japan which is faced with problems such as falling population and an aging society, the only way to achieve sustainable growth is to make the market open under free trade agreements, thereby restructuring the Japanese economy. In addition, free trade is expected to help Japanese industries which have been put under careful protection and thus whose growth has been restrained so far, such as agriculture, to grow significantly going forward, and provide Japan with the biggest opportunity to attract people, things and money.
The Selection Committee Chair's Special Prize
Free Trade: Satisfying the Double Co-incidence of Economic and Social Wants in the Twenty-First Century.
Ms.Surabhi Chaturvedi (India)
Since time immemorial, the mutual satisfaction of wants by buyers and sellers has ensured the survival of the human species. After all, no human being alone can be expected to have everything he needs to survive. This is a universal truth and in this lies the crux of free trade. Free trade ensures that the largest range of human wants is satisfied at the minimum cost. Clearly, free trade makes a lot of economic sense. Yet, this argument in favour of free trade is always met with a reminder that “money isn’t everything”. Despite the fact that trade has always been and continues to be the pivot of human-to-human contact, the protectionist movement brands free trade as materialistic and dehumanising. Through this essay, it is contended that the benefits accruing from free trade spill over to the socio-political sphere as well. The pacifying nature of free trade is discussed. The threat of loss of individual identity and diversity as posed by free trade is also tackled.
Further, the author recognizes that free trade is democratic. Hence, protectionists are equal stakeholders if free trade has to succeed. To this end, protectionist arguments are acknowledged and accommodated within the framework of free trade. This framework stands on two pillars: the first involves commodifying protectionist concerns and including them in the list of items that can be freely traded. Thus, giving protectionists an opportunity to reap comparative advantage in satisfying their own concerns. The second proposition requires legal systems to institute a new type of business association model, a Shosha-Cooperative hybrid. This model leverages the economic clout of a Shosha company while protecting the independence and individuality of small business. The role of each stakeholder has been assigned.