Just the Facts
Five Facts on Trade and Globalization
By Emma Petasis
May 15, 2019 | Blog
The ongoing trade war is only one element of the complex and politically charged effects of trade and globalization. Here are the facts.
1. Globalization began in the 19thcentury with technology breakthroughs.
With the breakthroughs of the telegraph, steamship and railroad, countries were now connecting with one another, which forced economic cooperation among countries. Through cross-border trade with goods and services, and the flow of people, technology, and culture, countries became dependent upon one another. This cooperation ultimately led to negotiations and international trade agreements.
2. The World Trade Organization (WTO) is the only international organization with the rules of trade between nations.
The WTO, which replaced the General Agreement on Tariffs and Trade in 1995, allows governments to negotiate trade agreements and is run by member governments. The WTO’s purpose is to open trade and benefit all members. WTO agreements are ratified by nation’s parliaments.
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3. A large portion of the economy depends on internationlal trade.
A graph of world economic data compiled by the World Bank shows that trade grew to a third of the U.S. economy and more than half of the world’s economy from 1960 to 2016.
4. The United States’ biggest trade partners are China, Canada, and Mexico.
The government census showed that China was the biggest source of U.S. imports, followed by Canada, Mexico, Japan, and Germany. As for U.S. exports, Canada was the top destination, followed by Mexico, China, Japan, and Germany.
5. The United States-Mexico-Canada Agreement (USMCA) is a signed free-trade agreement between the three countries.
The USMCA replaced the North American Free Trade Agreement (NAFTA) after President Trump announced he intended to withdraw the U.S. from the agreement. This was a renegotiation by the three member states and agreed to the terms in October of 2018. It is still pending ratification while negotiations with Congress continues.