Maritime Trade, Global Economies, and the Megaports Initiative

Maritime Trade, Global Economies, and the Megaports Initiative The purpose of this posting is two-fold. Part one is to describe the importance of maritime trade to global economies, and part two is to illustrate the importance of the Megaports Initiative to international trade. Part One: Obviously, global trade involves moving finished goods and heavy commodities over long distances. From both a tonnage perspective and value perspective, an overwhelming share of inter-hemispheric and trans-oceanic trade involves the use of maritime (as opposed to aviation) transportation.

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Therefore, as I composed this response, I considered “global trade” and “international trade” nearly synonymous with “maritime trade. ” Rather than simply “describe” the importance of maritime global trade, I shall actually “emphasize” its importance so that you, the reader, know right away that I am a staunch and firm proponent of free trade. Free, unfettered, and unregulated global trade (with some notable exceptions below) is hugely beneficial to the aggregate welfare of the world at large.

The explosion of global trade over the last 5 decades has lifted entire segments of populations throughout China, India, Vietnam, Brazil, and nearly ALL of Korea out of poverty and into a new working and stable middle class. Ancillary benefits include significant improvements in literacy, life expectancy, and gains in personal freedom and self determination, with China being a frustrating exception. Critics of global trade (a wily bunch ranging from thoughtful academics to concerned unions to undisciplined and uninformed “anarchists”) have all sorts of counter arguments against a global economy.

Their protestations are far too numerous to address at length in this forum, but a quick review of some of the fallacious and unfounded concerns would include: global trade suppresses the “locally grown” movement; it enriches the wealthy at the expense of the world’s poor; it “increases” global output of carbon dioxide, etc. These “fringe” concerns are fallacious because world trade allows the most efficient producer access to all markets. Efficiency, by definition, means the producer who uses the LEAST amount of ggregate raw material (be it feed-stocks, acreage, labor, energy per unit produced, scarce components, etc) will be rewarded with global business. A more valid concern, generally advanced by American unions, might be the loss of manufacturing and textile jobs in the United States. A painful reality of global trade is that the benefits are NOT pareto optimal: they are not distributed evenly, and there will be both winners and losers. In this context, trade unions and isolationists in the U. S. ave felt the economic pain as cost conscious manufacturers have moved production overseas. In some industries (automobiles, in particular) overseas competitors simply beat long dominant American producers at their own game. In response, American unions have sometimes confused protectionism with patriotism. There is nothing “patriotic” about preserving an uncompetitive and underperforming industry. On the contrary, protectionism denies the American consumer choices and it stifles American innovation.

Global trade, which is realized by a robust maritime trade, encourages all producers to be innovative, and it elevates the real purchasing power of the world consumer. As promised, there are some brief caveats, however, to the argument I advanced above. Free, unfettered, and unregulated trade should strive to resemble “fair trade” to the maximum extent possible. The world economy should not benefit from the producer who achieves a competitive edge through the use of child labor, slave labor, indentured servitude, or a total disregard for the environmental effects of his production.

The mechanisms to establish those standards (much less enforce them) is a topic for another paper, but it should be mentioned in light of the argument I have advanced above. Part Two: The exact statement we are being asked to consider is the following: “Illustrate the importance of the Mega Ports to International Trade. ” Here’s my contrarian assessment: The Megaports initiative is a SECURITY measure, NOT a trade measure.

So I would argue that it has little “importance” to international trade, but very significant importance with respect to national security. The Megaports initiative is a U. S. lead, internationally coordinated effort to scan containerized cargo for radiation hazards and threats. Thus, Megaports WILL become an important concern to international trade only if it manages to DISRUPT it… which it might, depending upon the capabilities of the screening equipment used and the rigidity of DHS/DOE’s ambitious goal of screening 50% of containerized cargo by 2015.

I have some reservations about the ability of the federal government to reach its stated goal of 50% screening, and I also am skeptical about the efficacy claims of the equipment that is to be deployed. The manufacturers of expensive, high tech screening equipment that cater to DHS have a pretty solid record of over-promising (or, at least exaggerating) the abilities of their wares. Radiological detectors can produce some impressive diagnostic results, but they are too slow to handle large volumes of cargo.

Full spectrum scans can take several minutes for a 56 foot intermodal ITU (International Transport Unit). The larger U. S. ports handle upwards of 2000 imported containers per day. In layman’s terms, there is simply not enough time in the day to screen 1000 TEU’s per day with existing technology. I’m also concerned that the deployment of screening equipment (the most precise equipment is not mobile, but fixed) will create chokepoints around ports and may delay trade and interfere with the well choreographed transfers between railways, trucking companies, and shipping.

My final concern deals with what is perhaps an unavoidable obstacle. Exactly what is the point of screening for radiological WMD’s when those WMD’s have already arrived at a U. S. port? If a nefarious group has the means to procure a nuclear device (either “dirty” or truly fissile), then we can safely assume those same bad actors could incorporate inertial navigation (which does not rely on GPS reception) to detonate the device at a desired location along the transport route.

In conclusion, I am skeptical of the cost-benefit mix of this initiative. If it’s going to be deployed, it should be deployed honestly: as a “spot check” mechanism of deterrence. The United States should also do everything in its power to screen U. S. A. bound cargo at the cargo’s port of origin, rather than at the port of destination. References: The National Nuclear Security Administration, Megaports Initiative (October 2009), U. S. Department of Energy. (Retrieved from the AMU HLSS 645 course materials folder on 14 December 2009)

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