During the last two decades, the intra-industry trade between western companies and former socialist enterprises in Central and Eastern Europe gradually shifted from the subcontracting of marginal operations such as final assembly to the outsourcing of products and intermediate inputs. To further enhance their competitiveness, firms in Central and Eastern Europe have yet to take one more step forward: integrate services with manufacturing. Developing such capabilities hinges, aside from intensive training and learning on the existence of functional interactive knowledgebased innovation (...) systems. Whereas Central and East European economies exhibit conspicuous weaknesses in this last respect, they still possess a countervailing advantage that is apt to lure foreign investors into the region: lower wage rates relative to western countries across all industries and skill levels. Offshoring therefore seems to be the most appropriate means to reconcile the two sides of the coin. (shrink)

In keeping with an already entrenched paradigm, international trade in tasks exerts upward pressure upon skilled workers’ wages in both home and host countries. Yet certain empirical evidence from intra-European trade shows that sometimes things occur in reverse, that is high skilled workers’ wages in home countries may decline as a result of offshoring, an outcome that looks like an inverse “maquiladora effect”. I try to show that such deviations do not fly in the face of mainstream theory but rather, (...) they reflect the different conditions under which offshoring is performed today as compared to the ones prevailing two decades ago. (shrink)

The indisputable success of the European integration project also prompted other regions of the world to follow suit. On the other side of coin, these regional blocs cultivated free trade within but remained protectionist vis-àvis the outside, thereby impeding the progress of the multilateral trade system. But also the soaring number of WTO member states accompanied by their incompatible interests, its ambitious agenda spanning over 20 diverse issues and, in particular, the single undertaking approach emerged as the Doha’s Round “stumbling (...) blocks”. The utter dismay over the Doha’s Round deadlock has provoked countries to opt for alternative for a outside the WTO in their endeavor to expedite far-reaching trade liberalization. Besides the vast economic growth in Asia and the rise of international production networks, this urge for deeper integration represents one of the central root causes for the most recent wave of PTAs which has been gathering force over the course of the 21st century and increasingly puts the WTO’s raison d’être under critical scrutiny. (shrink)

Free trade denotes a state of international commercial relations premised on governments’ restraint from using policy instruments meant to favor indigenous industries against foreign competitors. According to the conventional trade theory advocated by classical and neo-classical thinkers, free trade makes little economic sense failing nations’ tendency to specialize based on comparative advantage, a concept with high persuasive influence despite the elapsing of time. Even though the comparative advantage rule has seldom been questioned per se, the free trade concept has been (...) fiercely disputed and not infrequently, bashed. Nations’ involvement in international trade often follows patterns that do not fit theoretical models but attempt to respond to circumstantial interests, most often the need to protect poorly competitive industries. In common parlance, free trade has had both proponents and enemies. (shrink)

Industrialization laid the foundation for contemporary civilization but also begot environmental problems, which have been building up and remained unsolved to this day. There is widespread belief that, if industrial manufacturing lies at the root of environment degradation through endless spewing of residual waste, trade among nations is to blame for scattering residual waste the world over. Yet paradoxically, it is the very international trade that might be the ground for major remedies thereto. The 20th century witnessed the shift from (...) free trade to fair trade; it is about time to shift from fair trade to clean trade. Nevertheless, such serious problems had barely been dealt with until the post-World War II period. An awareness-raising effort in this line was made by the European Union which, since the early 1970s, has been dealing with environmental and social issues, especially the ones deriving from international trade, in a decisive and responsible manner. Still, EU’s new policy in the field of environment protection has a downside in that it affects trade relations with partners from outside the Union, both developing and developed countries, thereby drawing fierce international reaction. The good part is that EU’s actions will most likely prompt other nations to follow suit. (shrink)