Trade Disputes: Definition, Types, Functions & Settlement

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Meaning & Settlement of Trade Disputes

What is a Trade Dispute?

A trade dispute refers to any discontentment or dissatisfaction arising out of anything connected with the organization that any employee thinks or believes or feels is unfair, unjust or unequitable.

Trade Disputes
Trade Disputes

A trade dispute is the confrontation between two or more countries through the imposition of tariff and non-tariff barriers.

Trade dispute can be generated for two main reasons:

  • You want to protect local industry to the detriment of foreign producers, and
  • It is desired to improve the trade balance by reducing the deficit.

To carry out this action, governments use the following tools:

  • Tariff Barriers: Tariffs are imposed on the commercialization of goods, either imports or exports, or both. In this way, foreign trade becomes less attractive for companies. Because the rate makes the price of products more expensive for buyers.
  • Non-tariff Barriers: With this type of measure, specific restrictions on trade are imposed. For example, a marketing quota is established in monetary units or quantities for a certain good or service. It can also be completely disabled. Another example would be to establish cumbersome requirements that discourage entrepreneurs.

Types of Grievance in Trade Disputes

  • Collective grievance violation of collective agreement such as non payment of salaries.
  • Individual grievance such as denial of a privilege to an employee.

Why do we have a Grievance Procedure?

  • To protect workers interests.
  • To give them security against errors, mistakes or malicious actions of supervisors.
  • To provide the union and the employer with a regular and peaceful means of discussion and settlement of differences.
  • To establish the rule of law in industry by allowing the right of appeal until a final and binding decision is made.

Settlement Procedures of Trade Disputes

  • Internal procedures: These include all arrangements made within the organization to resolve problems.
  • Conciliation: This involves the choice of a third party to assist in bringing about solutions to the problems.
  • Arbitration:

(a) Industrial Arbitration Panel (IAP): This panel is established to intervene in industrial disputes by examining the issues at stake critically and recommending solutions to the Minister of Labour.

(b) National Industrial Court: This is the court of appeal on labour matters. Its findings are final, though its functions are just like those of a normal court.

Protectionism and Trade Disputes

Protectionist policies are contrary to free trade and the free market. Although it represents restrictions on economic activity, the motivations are not necessarily to maintain them in the long term.

For example, a government may be interested in the proliferation of the textile industry. Since it is a fairly competitive sector, it can establish commercial barriers that allow it to be developed locally. Subsequently, the measurement can be reversed.

However, it may also be the case that the protectionist measure only seeks to favor a particular group. This, without any economic consideration in this regard. These are the most damaging measures for countries.

Balance of Payments and the Trade Disputes

Reducing the trade deficit is another important motivation for implementing trade barriers. Therefore, the country in question reduces financing for external activities to reverse it and boost national industry. Since the commercial deficits imply the impulse of the foreign economies.

Benefits of Trade Wars or Trade Disputes

The national industries that are favored by protectionism are the privileged ones. Either because of unfair competition or to promote its growth. Since these companies may experience an increase in demand for their products or services. Finally, local employment is stimulated and there are possibilities to invest in the activity.

Harm of Trade Wars

Trade wars generate immediate negative effects on consumers:

  • The product or service becomes more expensive, reducing consumer surplus. That is, inflation is generated.
  • The supply of products is reduced, preventing consumers from acquiring the amount they want or need.
  • These options discourage consumption, that is, the utility of buyers is reduced.

Geopolitics and Trade Wars

A country can impose restrictions on trade with another country considering its unfair or unethical practices. The sensitive industry of another can be punished with the imposition of these measures and affect its economic growth. The purpose of this action is to change the economic policies of the counterpart.

Unfortunately, as a consequence, diplomatic relations between nations deteriorate. In addition, the cultural exchange can stop as a result of the confrontation.