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Directions (96–100) : Read the following passage carefully and answer the questions.
These are difficult times for America’s free-traders. There is anger at ‘globalism’. Even Americans who were in favour of the Trans- Pacific Partnership (TPP)-an ambitious new agreement between 12 Pacific-rim-countries- have turned against it. This may be linked to a globalisation of supply chains. Production of traded goods has become ‘unbundled’. Firms once tended to design new gadgets and order the supplies needed to build them in a single factory or city. In the past few decades, more efficient global shipping and improvements in communications allow firms to spread production across far-flung locations to design a phone in America, source parts from several Asian economies, and assemble it in China. The share of parts and components in trade rose from 22% to 28% between 1980 and 2000. In 2005, trade in ‘intermediate inputs’ accounted for an estimated 56% of trade in goods and 73% in services across rich countries. This contributed to a dramatic acceleration in global trade growth. It also changed the way many workers view trade. As production has spread around the world, countries have specialised in different segments of the supplychain. While those, such as China, with lots of low-cost labour, focused on manufacturing and assemble, more advanced economies followed a different path. Cities like New York and San Francisco enjoyed an initial advantage in the most lucrative bits of the modern supply chain: research and development, engineering and finance. As a result, growth in supply-chain trade has been a boon for the powerful and profitable firms with headquarters in those cities, and for the highly skilled, well compensated workers they employ. America’s lot in this new world is, on the whole, a happy one. Many countries envy its fortunate position as a hub for innovative cities. Most studies of the potential effects of TPP conclude that the deal would raise American output by a small but meaningful amount: just under a percentage point of GDP, perhaps over the next 15 years. But the obstacles confronting new trade deals are formidable. More generous redistribution, perhaps through an expanded programme of trade-adjustment assistance, could help neutralise some opposition. But discomfort with TPP is mostly rooted in a mistrust of the elite. Voters who are sceptical of the value of TPP will be unlikely to change their stripes without some demonstration that pacts of its kind benefit the many rather than just the few.
These are difficult times for America’s free-traders. There is anger at ‘globalism’. Even Americans who were in favour of the Trans- Pacific Partnership (TPP)-an ambitious new agreement between 12 Pacific-rim-countries- have turned against it. This may be linked to a globalisation of supply chains. Production of traded goods has become ‘unbundled’. Firms once tended to design new gadgets and order the supplies needed to build them in a single factory or city. In the past few decades, more efficient global shipping and improvements in communications allow firms to spread production across far-flung locations to design a phone in America, source parts from several Asian economies, and assemble it in China. The share of parts and components in trade rose from 22% to 28% between 1980 and 2000. In 2005, trade in ‘intermediate inputs’ accounted for an estimated 56% of trade in goods and 73% in services across rich countries. This contributed to a dramatic acceleration in global trade growth. It also changed the way many workers view trade. As production has spread around the world, countries have specialised in different segments of the supplychain. While those, such as China, with lots of low-cost labour, focused on manufacturing and assemble, more advanced economies followed a different path. Cities like New York and San Francisco enjoyed an initial advantage in the most lucrative bits of the modern supply chain: research and development, engineering and finance. As a result, growth in supply-chain trade has been a boon for the powerful and profitable firms with headquarters in those cities, and for the highly skilled, well compensated workers they employ. America’s lot in this new world is, on the whole, a happy one. Many countries envy its fortunate position as a hub for innovative cities. Most studies of the potential effects of TPP conclude that the deal would raise American output by a small but meaningful amount: just under a percentage point of GDP, perhaps over the next 15 years. But the obstacles confronting new trade deals are formidable. More generous redistribution, perhaps through an expanded programme of trade-adjustment assistance, could help neutralise some opposition. But discomfort with TPP is mostly rooted in a mistrust of the elite. Voters who are sceptical of the value of TPP will be unlikely to change their stripes without some demonstration that pacts of its kind benefit the many rather than just the few.
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