We take cognisance of the fact that; trade liberalisation policy is essential, a designed global conduit to access foreign markets as done in a free-market economic setting. It involves a simplified process of reducing or removing restrictions on international trade. It is true, no gainsaying the fact that this policy results in international competition that makes for greater global efficiency but, the big question we shall continue to ask is, “to what extent does it protect the poor and the less developed countries whenever such economies sign up or are exposed?”
It is known that governments negotiate and sign these bilateral and multilateral trade agreements for the purpose of helping producers of goods and services, exporters, and importers to conduct their business with the goal to improve the welfare of the peoples of the member nations.
Furthermore, these signed agreements are the legal ground-rules for international commerce which, essentially are contracts that guarantee member countries important trade rights, which equally bind governments to keep their trade policies within agreed limits to every body’s benefit.
Consequently, it is observed that the higher cost of doing business across borders than domestic trade, prompted many countries to continuously seek to lowering barriers on trade within their regions by way of further going into Preferential Trade Agreements; giving partners special treatment and often times, may discriminate against non-members (with respect to certain policies). Some of these regional agreements include Free Trade Agreements, Customs Unions, Common market, Economic Unions, etc.
In environments where free trade agreements are signed, two or more countries come together, agree to abolish all international barriers to trade among themselves. Although these countries still continue on dependent trade policies with countries outside agreement; their other aspects of economic unions involve co-ordinations and harmonisation of economic and social policy within the environment; which includes the use of single currency, allowance for the free movements of factors of production (labour, capital, information) as in common market.
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Common policies range from agriculture to taxation; and extensive political union. These mechanisms applied by economic associations to foster and promote global trade among regional blocs through co-operation, and economic integration exists in the Middle East (the gulf region), Asia Pacific, Europe, Americas and Africa.
However, it is indeed unfortunate at this point, to observe, note and remark that these poor and less developed countries, mostly in the sub-Saharan Africa, Asia and Latin America suffer a great deal of economic hardship from such trade programme of change and exposure by automatically losing direct controls on both internal/domestic and international transactions due to trade liberalisation, which introduces reliance on price mechanism in co-ordinating economic activities and in the long run perpetuates poverty, as it were presently.
By this policy, locally produced goods are priced out by imports occasioned by flooding of new, cheaper, better marketed products. Their farmers are steadily edged out of the market and are no longer able to sell their crops in the face of superior and cheap food imports, further making their people jobless because, many firms manufacturing consumer goods are thrown out of business based on little or poor access to capital or technology to competitively improve their quality and productivity.
In this light, their domestic market turns into an extremely unequal market, where imports from developed countries are often heavily subsidised, and the fall in demand of the domestic goods further stifles development of domestic industries.
This observed impact on poor countries ranges from reduced production, lower incomes and the eventual unemployment rise, both in the manufacturing and agricultural sectors. This adverse effect, far much more outweighs the gains of the so called financial aids that normally come with policy-strings attached for the poor countries (i.e. the prospective beneficiaries of such facilities, particularly from the World Bank or the International Monetary Fund, IMF). It is then, ironical to note that the goal of this trade arrangement (“to improve the welfare of the peoples of the member countries”) is being skewed and directly against the interests of the poor countries because, the engaged programme exposes them to live far above, and beyond their means, at a deficit trade balance that is not sustainable in the long term, due to imbalance in trade flows (i.e. increased demand for cheap food imports at a faster rate than the demand for their exports).
This situation eventually results to reduction in demand for locally produced goods, thereby keeps affecting both the local farmers and the domestic manufacturers; to either produce or sell at a lower price, which amounts to going out of business and retrenching employees, altogether increasing unemployment. Looking at one of the 10 cardinal functions of the World Trade Organisation, (as earlier remarked) “give the weak a stronger voice;” this scenario leaves the global institution, yet to prove her mettle because, the poor nations keep getting poorer.
The uncertainty surrounding the future of Doha Development Round as a result of the conflict between the request by the developed countries for free trade on industrial goods and services, at the same time retaining “protectionism” on farm subsidies to domestic agricultural sector, as against that of the developing countries, which is “substantiation of fair trade” on agricultural products, still adhering to the international liberalisation; ought to have been sincerely dealt with by the WTO long before now.
Otherwise, the WTO could be viewed (in strong terms) as encouraging national chauvinism obviously being flagrantly exhibited by the developed countries (probably based on economic inequalities), which amounts to breach of WTO’s rules (do’s & don’ts) because, there is really no justification why the parliament of the representative Finance Ministers of the member nations at the WTO sessions since 2001 should not allow meaningful mutual economic benefits (as enshrined in WTO’s functions) to flow as against the respective domestic or selfish interests.
The 21st Century global trade need not encourage any trace of hegemony and free trade imperialism of the leading economic powers, rather member nations should be considered and treated as equal partners for mutual purpose and benefits on trade liberalisation for the general good of the global economic integration.
Nwachukwu writes from Onitsha, Anambra State.
