Free Trade and Poor Countries Essay Example | Topics and Well Written Essays - 1500 words

Free Trade and Poor Countries - Essay ExampleThis is an ideal blank space where each country would be able to export those goods at cheap rates which atomic number 18 backbreaking to be manufactured there. However, when taxes are levied, a country A might import goods from country B and make them available in the topical anaesthetic markets at cheap rates but country A cannot export any goods to country B as B might sop up levied superior tariffs for export. When proud taxes are in practice, the development of one country might prosper who have the ability to get more and export it around but do not need any imports. On the otherwise hand, trading of developing countries looking for guile outside gets hampered. It has been observed that the just income of developing countries has been more for countries with light trade barriers.Even though free trade gives trading opportunities to developing countries, it is not alone equal for development. The Department for Internati onal Development (DIFD) in UK believes that the least developed countries (LDCs) should even reform their internal trade institutions and develop stable economic situation. Also, if free trade is allowed then the local manufactures of developing countries suffer waiver as their goods do not find a marker due to imported good cosmos available at same prices. Therefore, LDCs need to create market incentives so as to gain the local market space in their home markets.Let us refer to a case written report related to free trade. In January 1994, Mexico and US entered North American Free Trade Agreement (NAFTA). Mexico did not benefit at all from this agreement as its markets went into the hands of US without any gains falling in Mexicos hands. This happened because US did not open their markets as it would lead to more competition and less profit for US. They preferred to buy into nations in the form of investment. Similarly, Canada also signed FTA with US in 1988. Since then more tha n 10,000 companies have been taken over by US corporations. Over 85 per cent of Canadas exports now go to the US, and more or less 70 per cent of Canadas international trade is handled by US corporations, was said by David Orchard of Canada. As a result, Canada is the most foreign-owned developed nation. Thus we can say that free trade is alone not sufficient for development of any nation.At present what the poor countries want is not foreign goods in their market only. More than that, they need opportunities to export their products in the outside market. Since most poor countries have copiousness of jade-intensive products and agricultural products, they need markets where they can export these without facing too much competition and high tariffs.The developing or least developed countries find it difficult to expand their world trade in the main because of the tariffs applicable in most parts of the world. Average tariffs on LDCs have been reduced marginally. However, still t he average tariff on agricultural products is as high as 40%. With such tariffs applicable in most countries, LDCs are finding it difficult to expand their trade in these countries. Apart from tariffs, there are also non-tariff barriers which affect LDCs more. There might be quotas which can restrict a country to trade in a developed country. Health and safety hazards also play a role. Since LDCs have labor oriented products, the products