The Need for International Trade
Write about the Introduction To International Business for US Economy.
It is not a good idea for United States to continue pushing other countries to stop trading with North Korea (Jeffries, 2010). The manner in which the two countries relate is not the manner in which north Korea relate with other countries. In fact, there some countries like China and India relate well with the country in terms of trade.
US is a strong country in terms of economy and development. Stopping other countries which want to build their economies through trading with North Korea will not be right. International trade plays a significant role in assisting a country to get what it does not have (Taylor, 2010). For example, there are countries which rely on coal and other minerals from North Korea. Failing to trade will mean such countries will experience some challenges and will have to seek for an alternative country where they can get those products.
Although in terms of global trade North Korea is not a big player, the few countries it trades with are big players (Gause, 2011). For example, china is the biggest world’s export economy and is the North Korea’s biggest trading partner followed by India. If for example US pushes china to stop trading with North Korea, there will be impact to not only North Korea but also to china.
Most of the nations which trade with North Korea also do business with the United States, and influencing the US economy much more than they impact the tiny North Korean economy (Jung, 2016). Some of these countries like for example China have serious effect on US economy. Terminating the trade between United States and china will cost US all jobs associated with goods and services exported to china.
Anything that affects China would necessarily have an effect to the global economy (Kim, 2013). Research suggest that if US was to stop purchasing goods and services from china, the likely impact would be costing the country at least 3% of GDP. This decision would also affect Asia because China is one of the biggest trading partner with most of the countries in that continent.
International relationship plays a significant role in international trade. Positive relationship will make a country to attain products which it does not have through imports and get market for its surplus through exports (Rennack, 2015). If Trump was to implement his decision, US may suffer much more than North Korea because the country seems to mind less about the welfare of its citizens and putting much efforts on its military. The country is ready for its citizens to starve as long as the military is well equipped. In fact, trump’s direction might make the Americans suffer more and have less impact North Korean’s nuclear program.
The Impact on China and India
One of the possible outcome of North Korea and the world should other countries decide not to trade with north Korea is significant economic impact. Although North Korea plays limited role when it comes to international trade, there are various countries which depend on importing and exporting products to and from this country (Wertz, 2013). Some of these countries comprise of China, Thailand, Russia, France, Singapore, Mexico and Taiwan. A country like China is North Korea’s primary defence and also a business partner, contributing to almost 90 percent of its total trade. If this country follows Trump’s direction of not trading with this North Korea, it will realize serious economies impact based on the fact that they will not have market for some of their products.
North Korea will also suffer serious economic crises because it may experience rises in demand with limited supply of goods. US also depends on other countries for trade (Huish, 2017). If it bans engaging in trade with countries which trade with North Korea, it means it will also experience serious economic crises. For example, China is a mutual trade partner between the two countries. If US bans trading with it because it trades with North Korea, it means the products which the United States was receiving from china in terms of imports will no longer exist for the Americans.
The aim of Donald’s decision is to make North Korea to experience economic problems so that it may lack resources which can support its Nuclear Programme. Although North Korea is a minor player in international trade, Trump’s direction can only make the country to experience financial impact if key players like China and India plays a role (Neberai, 2015). If the two countries play a role, the country will experience some financial challenges the problem may be faced by the citizens and not the military.
Estimates suggest that one-third of North Korea GDP is based on trade, especially selling coal and minerals. Lacking market for these products might bring economic crises which will impact its citizens but not enough to severely dampen internal resources which the country might be devoting to military arms (Chung, 2016). Although the country may experience economic pressure and lack options to ease the pain which might result, the government has already shown less concern for welfare of other people, allowing them to starve and live in misery while dedicating a lot of money and other resources to the military.
The Consequences for the US
North Korea has relations and presumably trade with 181 countries. Cutting off the trade between US and any country which trade with North Korea will mean some countries will lack market for some of their products (Gause, 2011). This means the decision will make other nations including the United States to experience challenges but have less impact on North Korea because the country is not a key player in international trade. The past sanctions only impacted approximately $1 billion of North Korea’s $3 billion in trade. This means Trump’s decision will make his country suffer but fail to meet its target.
The nuclear programme issues between US and North Korea can have a significant impact on multinational companies, based on the fact international relations plays a significant role in making decisions on which country is fine to expand a business to (Jeffries, 2010). Trump’s decision of cutting off trade partnership with countries which do business with North Korea also means not allowing companies from those countries to operate businesses in United States.
Trump’s direction will also impact supply chain processes of some of the multinational companies. This is because some of the companies have supply chains which include transporting their products to other countries (Kim, 2013). If trump implements his decisions, such companies will need to restructure their supply chains because the ban will mean some companies may not be able to transport their products to some countries.
Economic impact in countries that will cease from trading with either US or North Korea will not only impact domestic companies but also multinational companies. If for example China seizes trading with North Korea, multinational companies targeting Chinese market will be significantly impacted (Neberai, 2015). If some of the countries depend on products imported from North Korea or exports their products to this country, it will mean they may either look for other alternatives or close down their businesses.
Trump’s trade threats are likely to backlash or make him experience various consequences which will significantly impact his country. The effectiveness of his decision is questionable, based on the fact that it is more likely to harm United States economically than challenging North Korea’s nuclear option (Rennack, 2015). If I was presenting American government, I would use seek for ways which would have direct impact on North Korean’s nuclear program and less impact on US economy.
Economic sanctions would be an effective strategy of creating hardship on North Koreans but may not be an effective strategy to prevent the war. The best way to deterrent to a war is a strong defence. US can challenge North Korea by investing much on the military to ensure it has more advanced equipment (Rennack, 2015). This would make North Korea to feel a challenge and decide to withdraw its nuclear program. The fact that North Korea invest much on the military, it will always keep threatening United States because it feels to be more superior in terms of military technology and expertise. Trump should make the country to see that the United States has all what it can take to win the war through dedicating enough resources to its military.
As long as the North Korean government has already shown less concern for the welfare of its citizens, it will continue to devote huge amounts of resources to the military. This means even if the country is economically impacted, it will still use the little resources it has to finance its nuclear programme. US can challenge this programme if US government works behind the scenes with china and other countries which are technologically developed and with direct impact on North Korean economy (Taylor, 2010). Several times, US has tried to use the same strategy but has never worked. China, accounting for approximately 90% of trade with its neighbours, could have an impact but has concerns over the possibility of a large refugee influx and the implications of regime change in North Korea. Sanctions can have little impact not unless widely respected. In this case, North Korea, Iran, Cuba, Russia and other countries could step in to fill the void.
Chung, S., 2016. North Korea’s Nuclear Threats and Counter-Strategies *. The Journal of East Asian Affairs, 30(2), p. 2016.
Gause, K. E., 2011. North Korea under Kim Chong-Il: Power, Politics, and Prospects for Change. Santa Barbara, CA: Praeger.
Huish, R., 2017. The Failure of Maritime Sanctions Enforcement against North Korea. Asia Policy, Issue 23, pp. 78-90.
Jeffries, I., 2010. Contemporary North Korea: A Guide to Economic and Political Developments. London: Routledge.
Jung, S.-H., 2016. Effects of Economic Sanctions on North Korea-China Trade: A Dynamic Panel Analysis. Seoul Journal of Economics, 29(4), pp. 89-112.
Kim, S. M., 2013. The Effectiveness of Economic Sanctions against a Nuclear North Korea. North Korean Review, 9(2), pp. 25-56.
Neberai, Y., 2015. My Enemy’s Enemy: Analyzing Russia and North Korea’s “Year of Friendship”. Harvard International Review, 36(4), pp. 25-65.
Rennack, D., 2015. North Korea: Legislative Basis for U.S. Economic Sanctions *. Current Politics and Economics of Northern and Western Asia, 24(2/3), pp. 58-89.
Taylor, B., 2010. Sanctions as Grand Strategy. London: International Institute for Strategic Studies.
Wertz, D., 2013. The Evolution of Financial Sanctions on North Korea. North Korean Review, 9(2), pp. 245-345.
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