Geography Reference
In-Depth Information
development. However, negotiations have broken down since 2008 due
to disagreements over agricultural imports and subsidies. Led by India
and Brazil, many poorer nations have campaigned to get rich countries
like the US to remove farm subsidies and import tariffs that penalize
developing countries. The protectionist agricultural policies adopted by
the European Union (EU), for example, can lead to the stockpiling of
food surpluses and the subsequent dumping of products in the global
South, a process that destabilizes local food markets and prices. The
increasing resistance by India, Argentina, Brazil and China against
unequal trade liberalization strategies in the North could finally be
signalling a shift in the traditional power base of the WTO.
Trade Liberalization and Development
Trade liberalization is the broad term given to the removal of trade
tariffs and restrictions deemed necessary if countries are to follow the
principles of free trade (Murray, 2006). Tariffs are the taxes paid on the
value of imported goods at the point of entry into the importing country,
and they are seen as a major barrier to global free trade. Non-tariff
trade barriers can include quota limits on the quantities of items that
may be imported, such as cars or electrical items. Neoliberal supporters
argue that free trade has the capacity to promote economic growth and
eliminate poverty in every country; as a result trade liberalization poli-
cies have been heavily promoted in the global South by a range of mul-
tilateral institutions, including the IMF and the World Bank. Trade
reforms, such as tariff reductions, the elimination of quota restrictions,
relaxation of import licensing or the removal of protectionist strategies,
have been routinely applied in countries undergoing Structural
Adjustment Policies. In the 1990s, a surge of regional trade agreements
and Free Trade Associations including the European Union, North
American Free Trade Association (NAFTA), Association of Southeast
Asian Nations (ASEAN), and the Common Market of the South
(MERCOSUR), were also introduced to promote free trade between
regions. The creation of the North American Free Trade Association
(NAFTA) in 1994, a free trade zone comprising the US, Canada and
Mexico, was welcomed by American businesses searching for cheap,
unregulated labour but criticized for reducing wages and labour stand-
ards in Mexico.
Trade liberalization may have served to increase foreign exchange
earnings and levels of Foreign Direct Investment (FDI) in export-oriented
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