{"id":8048,"date":"2021-12-31T10:51:26","date_gmt":"2021-12-31T10:51:26","guid":{"rendered":"http:\/\/calamur.org\/gargi\/?p=8048"},"modified":"2021-12-31T11:01:25","modified_gmt":"2021-12-31T11:01:25","slug":"column-the-suez-lockjam-and-international-trade","status":"publish","type":"post","link":"https:\/\/calamur.org\/gargi\/2021\/12\/31\/column-the-suez-lockjam-and-international-trade\/","title":{"rendered":"Column : The Suez Lockjam and International Trade"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">This appeared in the FPJ on the <a href=\"https:\/\/www.freepressjournal.in\/analysis\/harini-calamur-discusses-the-ever-given-jam-in-global-trade\">29th of March, 2021<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Last week, a ship got stuck in a canal, and brought international trade to a gridlocked traffic jam. The ship called \u201c<a href=\"https:\/\/www.marinetraffic.com\/nl\/ais\/details\/ships\/shipid:5630138\/mmsi:353136000\/imo:9811000\/vessel:EVER_GIVEN\"><strong>Ever Given\u2019<\/strong><\/a> is a 400-metre container ship, that was transporting containers of goods, from one part of the world to another. The Canal is the Suez Canal \u2013 a 161-year-old passage between the Mediterranean Sea and the Red Sea \u2013 which cuts short trade routes between the east, and Europe, by 2-3 weeks. Owned by the Japanese Imabari Shipbuilding, registered in Panama, carrying Malaysian cargo to Rotterdam, and staffed by an Indian crew \u2013 the Ever Given is, in a way, a metaphor for today\u2019s global trade.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">All of global trade is based on a fairly old economic principle called comparative advantage. It essentially means that any economy would be better at exporting things that it makes more efficiently \u2013 either because of access to raw materials or because of a skilled workforce \u2013 and importing things that it makes less efficiently. For example, if India made microchips more efficiently, and clothes less efficiently than, Bangladesh \u2013 then logically India should trade microchips for clothing with Bangladesh. Similarly, if China can manufacture camera lenses more efficiently than Japan, then global trade in camera lenses will move from Japan to China. And we can see various aspects of comparative advantage being played out in everyday markets. Solar Panels, for example, manufactured in India cost more than the same configuration of solar panels manufactured in China \u2013 even if you add shipping costs. And this means that Indian solar panel manufacturers are at a comparative disadvantage while competing with their Chinese counterparts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the years since the second world war, and the era of decolonization, global trade has been seen as a global good. In a way, this was to ensure that both the old colonial powers that gave up territory and the new empire of the United States, had unrestricted access to markets \u2013 especially those of newly independent countries. \u00a0While countries like India and China followed a protectionist path to their future, newly independent nations in Africa, Southern America, and even nations like Pakistan found that allowing relatively free global trade would keep their elites happy. The big change for India and China came when they liberalized their economies and liberated their corporations to compete in worldwide markets, while opening up their economies to foreign competition. China liberalized after the death of Mao, and India liberalized in 1991, after the government almost had to mortgage the family gold to get India out of the deep economic crisis it was in.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For both India and China, with their billion-plus population \u2013 the major comparative advantage comes from deploying highly skilled, and relatively low-cost labour. China can manufacture computers better and faster and cheaper, not just because it has state-of-the-art factories, but it has extremely competitive rates of wages. Similarly, India is in a unique position to offer services \u2013 especially in IT and linked areas \u2013 at a fraction of the price. It is this that enabled China to become the factory for the world, and India the back office. It is this growth that rankles.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Ever since India and China have begun gaining dominance in global trade \u2013 to different extents \u2013 the murmurs of job losses in the west have been growing too. And this has also coincided with economic downturns world over<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img data-recalc-dims=\"1\" fetchpriority=\"high\" decoding=\"async\" width=\"640\" height=\"402\" data-attachment-id=\"8049\" data-permalink=\"https:\/\/calamur.org\/gargi\/2021\/12\/31\/column-the-suez-lockjam-and-international-trade\/image-3-2\/\" data-orig-file=\"https:\/\/i0.wp.com\/calamur.org\/gargi\/wp-content\/uploads\/2021\/12\/image-3.png?fit=940%2C591&amp;ssl=1\" data-orig-size=\"940,591\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"image-3\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/calamur.org\/gargi\/wp-content\/uploads\/2021\/12\/image-3.png?fit=640%2C402&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/calamur.org\/gargi\/wp-content\/uploads\/2021\/12\/image-3.png?resize=640%2C402\" alt=\"\" class=\"wp-image-8049\" srcset=\"https:\/\/i0.wp.com\/calamur.org\/gargi\/wp-content\/uploads\/2021\/12\/image-3.png?w=940&amp;ssl=1 940w, https:\/\/i0.wp.com\/calamur.org\/gargi\/wp-content\/uploads\/2021\/12\/image-3.png?resize=300%2C189&amp;ssl=1 300w, https:\/\/i0.wp.com\/calamur.org\/gargi\/wp-content\/uploads\/2021\/12\/image-3.png?resize=768%2C483&amp;ssl=1 768w\" sizes=\"(max-width: 640px) 100vw, 640px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">According to the <a href=\"https:\/\/www.wto.org\/english\/news_e\/pres20_e\/pr862_e.htm#:~:text=Trade%20volume%20growth%20should%20rebound,smaller%20than%20in%20other%20regions.\"><strong>WTO<\/strong><\/a>, &nbsp;there have been two dips in global trade in the last 20 years -the first was just after the 2008 crash, and the other is pandemic driven. In both cases it didn\u2019t recover as well as it should have.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For the longest time, it was the conservative wing of politics that pushed for freeing up of trade. The left opposed it for its impact on jobs. Free trade was seen as something that would benefit the rich without any impact on the working class. However, the freeing up of trade saw jobs and prosperity rise both in the west, and in developing nations. Millions got lifted out of poverty in India and China as a consequence of economic liberalisation and freer trade. However, in the 2000\u2019s there was almost an axis jump for political views.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The right wing movement, that is on the same side of the political spectrum as the conservatives \u2013 began identifying with the working class voters, and their insecurity of being left behind; combined it with xenophobia and concocted a lethal cocktail of hate, insularity, and trade sanctions. Part of the right wing demand in the west has been the cutting back of trade and shipping jobs back. Trump\u2019s term as President was filled with protectionist moves, primarily against China. And the Biden administration doesn\u2019t look like it wants to reverse these.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But the real problem is not trade. The real problem is the level of deregulation of western markets to a point where nations do not have any modicum of control over transnational corporations (TNC). The bending of regulatory will to the whims of the TNC\u2019s, especially regarding taxation has led to a world where many of the largest companies pay next to nothing, in most of the nations they operate in.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The problem is not trade. The problem is greed. And unless western governments look at challenging the might of TNC\u2019s and establish a regulatory framework that covers employment laws, and taxation \u2013 trade is going to be stuck between the two banks \u2013 jobs and national pride. Economies run on money. And that money comes from consumption and taxation. A restriction on trade will reduce both. A framework that ensures TNC\u2019s pay their fair share of taxes would ensure growth and prosperity for all. The question is whether western governments are ready to take on the MNC\u2019s. else the global trade will be stuck like the Ever Given.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This appeared in the FPJ on the 29th of March, 2021 Last week, a ship got stuck in a canal, and brought international trade to a gridlocked traffic jam. The ship called \u201cEver Given\u2019 is a 400-metre container ship, that was transporting&#8230;<\/p>\n","protected":false},"author":1,"featured_media":8050,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[10,15,25,1],"tags":[1866,1868,1867],"class_list":["post-8048","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles-in-msm","category-economics","category-international","category-uncategorized","tag-ever-gren","tag-international-trade","tag-suez-canal"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - 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