Globalization has opened many frontiers. With this the superpower is now open to many challenges, be that of internal or external. After years of prosperity and growth, the US economy now faces recession, which is not yet over no matter what the American economists say. This opulence in the past decades have been due to the strong dollar policies which have helped the business to grow in terms of exports and hindering the imports in the country. But just a year before the businessmen in the region was crying for a flexible dollar policy.
We are competing now not with the recently developed nations but Asian tigers and the bunch of Europeans nations, and the emerging of new industrialized nations have worsened the situation and made the global market more competitive. We might be very good in providing services, cutting back costs and economies of scale. We might have a very flexible nature when it comes to the negotiations with oil rich countries and the technologically improved nations. We might retain some grounds in the area of science and technology, but for how long. Our dominance is being challenged by the world’s increased supply of talent, especially by the industrialized democracies of Western Europe, Canada, Japan, Mexico, Brazil, South Korea, the People's Republic of China, and Israel.
There is a saying that when in 10,000 persons America produces 4 doctors, 5 accountants and 7 engineers: Japan produces from every 10,000 persons 7 doctors, 3 accountants and 400 engineers. If this is reality, we cannot survive much longer. America is seen as the world sufficient nation in every aspect. Its production is for its own people and also the exports are world competing. It has tried to put tariffs and quotas especially of steel imports and has agonized its true friend recently just to cover the trade deficit. But globalization forces the open frontiers.
The aim of the current wave of free trade agreements has been the mutual lifting of trade barriers among nations, irrespective of the countries' level of development or special national interests. The dominant parameter has been the theory of "national treatment," which means that governments should be required to treat foreign investors, investments, and products the same as their national counterparts. However, the trade liberalization should not be an end in itself for which everything else must be sacrificed. Instead, market access for foreign competitive products and investments should be evaluated and defined within the framework of national development plans. At the present time, the basic hindrance to admittance in the developed countries’ markets is not tariff barriers, but "technical barriers to trade."
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The U.S. economy has grown steadily for straight eight years with low inflation, lower unemployment and interest rates. However, it is assumed that foreign trade is not good for the U.S. economy because cheap imports hurt wages and jobs. A few believes that trade is good for the economy, creating foreign demand, economic growth and jobs.
The strong U.S. dollar has lifted the price of our exports to foreign nations and lowered the price of their imports. The result is that Americans spend about $1 billion more than they do produce and the US trade deficit has enormously expanded. For example, the steel industry has been hurt especially by the strong dollar. In 1998 the flood of imported steel primarily from Japan, South Korea, Brazil and Russia has caused steel firms downsize and push these firms near bankruptcy. The Commerce Department raised tariffs and restricted imports in 45 steel cases. Although imports of steel fell in 1999, imports have once again risen to near record levels.
This show that though we are open to challenges but one must not seek trouble. While our trade pacts compel us and make us vulnerable to external forces, to open and reduce our trade barriers, there is only one thing by which we can manage to compete and compete strategically in the global arena. As there is a marketing principle, attributes can be copied, but it takes along time to copy values. Just as Saturn created values and projected American culture, beating Japanese compact cars, similarly, in the global frontier we can strategically compete by building up the values which would be hard to copy in the long run.
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