Trading Ritual and Reality

Trade agreements are often contentious, raising heated protests from those fearing job loss and eagerness from businesspeople anticipating record profits. Yet since major reductions in manufacturing tariffs were instituted following World War II, trade agreements have been more about style than substance. The decline in the importance of bilateral and regional treaties can be attributed to the complexity of reducing barriers for service-based industries. Nervous about any public outcry over outsourcing and off-shoring, lawmakers make little effort for real change, instead hiding behind treaties' legalese. Complex legal hoops within agreements effectively raise the costs for businesses to participate: Only a tenth of exports within ASEAN, for instance, use the special tariff rates instituted by a 1991 regional agreement. Nonetheless, just as the dearth of opportunities to improve trade relations meaningfully have not stopped the torrent of agreements and handshakes, companies continue to find innovative ways around trade barriers. Some industries have been easier to liberalize than others and, often, trade deals follow the path of an innovative company or industry. Still nations balk about removing controls from the most protected sectors, including agriculture. – YaleGlobal