High tariff against the export of industrial goods from the poor countries cover 63 per cent of all export items of the poor countries. High tariff rates against the export of agricultural products from the poor countries constitute 97.7 per cent of all agricultural export items of the poor countries. That is not all. Tariff rates escalate along with the number of processing of a natural product. Table 2 shows the final effects of tariffs in the developed countries for some select export items from the poor countries.
Thus, the idea that the developed countries have already reduced their tariff rates is a myth; they did only for those products, which are not going to cause unemployment. If there is even a vague tendency for any export item from the poor countries to cause unemployment in the rich countries, anti-dumping measures are adopted vigorously by the developed countries. Nearly 50 per cent of all anti-dumping measures approved by the WTO are by industrialized countries. Thus, the developing countries do not have much market access but they are forced to open their markets to the rich countries. The rich countries have developed their economies under tariff-walls and are still protecting their economies with various measures of tariffs and non-tariff restrictions. Thus, their advice that the growth prospects of the poor countries will be magnified if they remove all trade restrictions means that the poor countries should not do what the developed countries have done to prosper.
Conclusion
If India wants jobs created by ?business process outsourcing?, it must accept agricultural imports from the United States and remove all restrictions on foreign financial services industries. The developing countries are in a trap. If they press for removal of subsidies and import tariffs, they themselves need to do the same on a reciprocal basis. That would imply acceptance of the ?free trade? regime that would ruin their own agriculture and prospects for any industrial development. In addition, the developing countries would have to accept a new investment regime of free flow of capital, which would give total unrestricted access to the multinational companies to dominate and control almost all investment programmes in the poor countries. The people of the poor countries will not have the freedom to determine their own economic future, which will be dictated by the corporate plans of the multinational companies. Thus, by pressing upon removals of subsidies in agricultural and improved market access for industrial goods, developing countries are digging their own graves.
The alternative is not a total destruction of the international trading system either, as the developed countries are saying, but a more tolerant economic system for the developing countries. For the last twenty-five years, developed countries are being persuaded by the World Bank, IMF and now WTO to abandon economic planning and a managed foreign trade regime, but to accept an unplanned economic system or a liberalised economy. Although India came into this picture quite late in 1991, other developing countries in Africa and Latin America had introduced the liberalised system much earlier. We are yet to see any success story so far.
On the other hand, since 1945, European countries, both western and eastern, along with Japan, have made rapid economic progress through systematic economic planning, industrial policy, and in general a protected and managed foreign trade regime, which are abhorrents for Anglo-Saxon economics. That is the reason that neither the European Economic Community nor Japan is willing to part with a system, which has provided them so much for the last fifty years. They are in a very strong position to withstand any pressure. The poor countries, rather than accepting the failed doctrine of ?free trade? of the unreal Anglo-American economics, should, in this situation, follow the European countries and impose a managed and balanced foreign trade system.
Having a lot of jobs for telephone operators is not a development strategy for a self-respecting nation. Building up huge foreign exchange reserves, buying US government bonds and, in effect, lending money to the United States cannot develop India'seconomy. Policy makers in India must think about a nationalistic economic and trade policy, which may anger the developed countries and the WTO, but will be beneficial for the majority of the Indian people.
(Concluded)
Leave a Comment