trade war

Blog Share: More free trade should be pursued|By Sri Murniati

Among arguments used by those opposing free trade agreements, especially the Trans-Pacific Partnership Agreement (TPPA) negotiations, is the potential decline of Malaysia’s trade surpluses if we join a big trade group with dominant players such as the United States. Sri Murniati, Manager of Political Economy and Governance Unit at the Institute for Democracy and Economic Affairs argues in a recent article that current debate over whether Malaysia should further opening up trade through TPP has missed its point. She said, ” They argue that Malaysia’s exports to countries in the trade group such as the TPP may probably increase but our imports from those countries may increase even more. This will result in a net reduction in our Balance of Trade (BOT), creating a trade deficit. They argue that this is a bad thing for our country.Using trade surplus to measure the impact of free trade is not necessarily appropriate, and could be misleading.” The two agreements initiated by the United States since last year are still experiencing challenges and resistance from local groups. It is a time to realize the importance educating public about benefits of trade not only to the government, but more importantly to the general public who are becoming increasingly active in shaping public policies thanks to the world wide web. In her article, she also stressed a key to today’s trade integration, “If we want to further integrate our economy into the global economy, we should not be obsessed with increasing export volume so as to ensure it is above import volume. Rather we should think about how to increase Domestic Value Added (DVA) that can be retained from increased trade. The higher the DVA retained within a country, the higher the benefit the country will gain from global trade.” Read more: 

IMG_6178

Nexus Between Trade, Rising Poverty

The relationship between trade and poverty is inverted. Countries with higher proportions of global trade tend to have less of poverty. Conversely, countries, which contribute the least to global trade have higher poverty rates. This shows the importance of good trade policies in reducing poverty rates and increasing prosperity. Also, this shows why there is intense competition for export markets even by countries that already control significant share of global trade. Trade facilitation is becoming critically important to the economy of poverty-stricken areas. Read more: