How Trade Agreements Affect State Sovereignty

¶ … Trade Agreements on State Sovereignty

State sovereignty is an issue that has attracted numerous concerns in the recent past largely because of globalization, which has become a definitive component of the contemporary society. These concerns have also been fueled by aggressive trade policies and practices that have been adopted by various governments and business organizations. Generally, state sovereignty is under severe threat because of diminishing barriers between countries and increased integration of domestic and international spheres of government. Aggressive trade policies and practices that threaten state sovereignty include trade agreements, which are entered into between countries. As trade agreements between countries are increasingly established, they fuel a conflict between free trade and state sovereignty.

Trade Agreements and State Sovereignty

Global trade and investment are the two pillars of the contemporary economic world given the increased interdependence of world economy in the recent past. This interdependence is one of the most significant economic developments in recent years since it has eliminated obstacles in free movement of goods and services between countries. The significance of this development is evidenced in fact that global direct investment in foreign countries has grown to immense proportion and become one of the major forces in global economy. Moreover, the developments have been characterized by bilateral and multinational trade agreements that focus on increased investment in foreign countries.

The major contributing factor towards increased trade agreements between countries is globalization, which has created strong links between countries and regions. According to Stiglitz (2006), globalization incorporates several concepts including the global flow of ideas and knowledge, international civil society, sharing of cultures, and international environmental movement (p.4). From an economic point-of-view, globalization involves economic integration of various nations across the globe through increased capital, flow of goods and services, and labor. Globalization has played a crucial role in the development of world economy because of its promise and potential to raise the living standards worldwide, especially in poor or developing countries. This is primarily because the concept enables access to international markets, open borders, and enable foreign investment in new products at affordable prices.

As trade agreements between countries continue to be established, state sovereignty has come under increased concerns and threats. Despite the economic benefit of trade agreements, these agreements have generated significant negative impacts on state sovereignty, particularly for developing countries. One of the ways through which trade agreements have affected state sovereignty is through creating a biased system that seemingly undermines the interests of developing countries. Developing countries have complained that trade agreements are creating systems that are biased against their interests since developed nations make the rules to govern all aspects of trade between countries (Rodrik, 2011). The biased system eventually becomes the premise through which developed nations exert their influence over developing and poor countries. As the developed nations exert their influence over their poor counterparts, the sovereignty of these developing countries is significantly threatened. In essence, trade agreements become avenues for exploitation of other countries by multinational countries, which infringes on the sovereignty of these countries. For instance, developing countries like India ended talks in 2008 for removal of barriers to global trade on the premise that developed countries like the United States wanted to exploit them to destroy their own agricultural and industrial tariffs (Rodrik, 2011).

Secondly, trade agreements affect state sovereignty by creating conflicts between the demands of globalization and national priorities (Rodrik, 2011). This emerges from the fact that these accords are social arrangements of democracies with different international demands that sometime clash with national priorities. While these agreements are geared towards enhancing relations between states, developed countries utilize them as platforms for legalizing policies and obligations of actor states in relation to an international order (Peet, 2009, p.37). Consequently, trade agreements become the basis of globalization of political authority, which is used by wealthy nations against the interests and benefit of developing countries.