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WTO – CONNECTIVITY OF TRADE
WTO – CONNECTIVITY OF TRADE
We have seen that the liberalisation of foreign trade and investment in India was supported by some very powerful international organisations. These organisations say that all barriers to foreign trade and investment are harmful. There should be no barriers. Trade between countries should be ‘free’. All countries in the world should liberalise their policies.
World Trade Organisation (WTO) is one such organisation whose aim is to liberalise international trade. Started at the initiative of the developed countries, WTO establishes rules regarding international trade and sees that these rules are obeyed. At present 164 countries of the world are currently members of the WTO.
Though WTO is supposed to allow free trade for all, in practice, it is seen that the developed countries have unfairly retained trade barriers. On the other hand, WTO rules have forced developing countries to remove trade barriers. An example of this is the current debate on trade in agricultural products.
Debate on Trade Practices
You have seen in Chapter 2, that the agriculture sector provides the bulk of employment and a significant portion of the GDP in India. Compare this to a developed country such as the US with the share of agriculture in GDP at 1% and its share in total employment a tiny 0.5%! And yet this very small percentage of people.
Developing countries are, therefore, asking the developed country governments, “We have reduced trade barriers as per WTO rules. But you have ignored the rules of WTO and have continued to pay your farmers vast sums of money. You have asked our governments to stop supporting our farmers, but you are doing so yourselves. Is this free and fair trade?” who are engaged in agriculture in the US receive massive sums of money from the US government for production and for exports to other countries. Due to this massive money that they receive, US farmers can sell the farm products at abnormally low prices. The surplus farm products are sold in other country markets at low prices, adversely affecting farmers in these countries.
A typical cotton farm in USA consists of thousands of acres owned by a huge corporation that will sell cotton abroad at lowered prices.
Let’s work these out
1. Fill in the blanks.
WTO was started at the initiative of_____countries. The aim of the WTO is to _____ WTO establishes rules regarding _____ for all countries, and sees that _____.In practice, trade between countries is not _____. Developing countries like India have _____, whereas developed countries, in many cases, have continued to provide protection to their producers.
2. What do you think can be done so that trade between countries is fairer?
3. In the above example, we saw that the US government gives massive sums of money to farmers for production. At times, governments also give support to promote the production of certain types of goods, such as those which are environmentally friendly. Discuss whether these are fair or not.
Source: This topic is taken from NCERT TEXTBOOK