POLI 330N Week 6 Assignment: Current Event – Free and Fair Trade or Budgetary Issue

POLI 330N Week 6 Assignment: Current Event – Free and Fair Trade or Budgetary Issue

Name

Chamberlain University

POLI-330: Political Science

Prof. Name

Date

Free and Fair Trade

Free and fair trade are two critical mechanisms for maintaining sustainable trade relationships between countries. However, trade wars and hostilities between trading partners can lead to significant issues such as rising costs, strained relationships, labor disputes, and broader economic challenges. This paper aims to review a recent article on free and fair trade between two countries, analyze the core trading issues, assess the impact on the global community, and evaluate the credibility of the source.

Article Overview

The article, “Whisky Redemption: Biden Administration Lifts Hated Tariffs on Scotland’s Most Famous Export,” was selected for this analysis. This article addresses both a trade war issue and the Airbus subsidy dispute, demonstrating the broader effects of free and fair trade on global commerce. By highlighting these two significant concerns, the article provides a comprehensive examination of the current trade dynamics between the United States and the European Union.

Summary of the Article

A 17-year trade dispute between the United States and the United Kingdom centered around claims that the World Trade Organization (WTO) allowed illegal subsidies for Airbus and Boeing manufacturers. This resulted in billions of dollars in punitive tariffs, with both countries accusing each other of unfair trade practices. The conflict escalated when the U.S. imposed significant tariffs on various goods, including single-malt whisky, while the U.K. faced retaliatory tariffs. The Biden administration eventually suspended these tariffs, a gesture intended to alleviate economic tensions and restore healthy trade relations (Croft, 2021).

The dispute extended beyond just the U.S. and the U.K., involving several European Union countries. Products unrelated to the aerospace industry, such as Italian cheese, Scottish and Irish whiskey, and French wine, were subject to unfair tariffs, exacerbating the trade conflict. After the U.K. left the EU, it suspended retaliatory tariffs in an effort to negotiate a settlement. This action, coupled with the U.S. suspension of punitive tariffs, sought to resolve the long-standing conflict and restore fair trade practices (Croft, 2021).

Analysis of the Issue

In 2004, the United States accused the European Union of providing illegal subsidies to Airbus, which it claimed resulted in an unfair economic advantage worth over $200 billion. In response, the European Union acknowledged subsidies but estimated the amount at only $23 billion, specifically for research and development. The disagreement led to several legal cases in the WTO, with both sides imposing punitive tariffs on one another. The U.S. levied $7.6 billion in tariffs on EU goods, while the EU responded with $4 billion in duties.

This trade war had significant global implications, particularly on goods like cheese, whiskey, olives, and other staple items, leading to increased prices and diminished trade. The broader economic impact included reduced business activity and slower economic growth, affecting global markets and industries reliant on transatlantic trade (Bie, 2021).

Importance to the Global Community

The trade war between the U.S. and the EU holds significant consequences for the global market. Goods unrelated to the aerospace sector became embroiled in the conflict, leading to increased prices and market disruptions. Both the U.S. and EU countries suffered economically, with the U.S. being a crucial market for many European industries. Increased tariffs hindered trade, exacerbating the economic strain already caused by the COVID-19 pandemic.

Additionally, the trade war negatively affected farmers and producers worldwide, especially those whose businesses rely on transatlantic trade. As key players in the global market, the U.S. and EU’s trade disputes influence supply chains and economic stability across the globe. With global trade already strained due to the pandemic, continued tariffs could further impact businesses, jobs, and the supply-demand chain, turning this into a critical global issue (Croft, 2021).

Credibility of the Source

The article in question was published by Fortune, a reputable global media organization that focuses on international business and economic issues. The source is highly credible, as the article presents a neutral perspective, supported by factual reporting and interviews with key stakeholders. The author refrains from offering personal opinions, instead using direct quotes from global leaders and representatives from both sides of the conflict. As a mainstream news outlet, Fortune is considered a trustworthy source of information for this analysis.

Personal Opinion

In my view, the suspension of tariffs is a necessary and beneficial move, especially considering the economic impact of the COVID-19 pandemic. The suspension will likely lead to an increase in trade, lower prices for goods, and improved diplomatic relations between the affected countries. Furthermore, as businesses recover from the pandemic, the removal of tariffs may lead to job creation and overall economic growth. Tariffs often force companies to cut costs by underpaying workers or engaging in unethical practices, so reducing or eliminating tariffs can lead to fairer trade practices (Wittig, 2021). By fostering more equitable trade policies, both the U.S. and the EU can promote long-term economic stability.

References

Bie, P. (2021). Global trade war: Impact on the economy and business. World Economic Forum.

Croft, J. (2021). Whisky redemption: Biden administration lifts hated tariffs on Scotland’s most famous export. Fortune.

Janes, M. (2021). Trade tariffs and their effect on businesses. The Economist.

POLI 330N Week 6 Assignment: Current Event – Free and Fair Trade or Budgetary Issue

Wittig, T. (2021). The future of free trade post-COVID-19. Global Business Review.