The EU should not force developing countries to adopt free trade
The EU was founded as a free trade organisation, and free trade is still its guiding principle. How much should this principle affect its dealings with the developing world? Is free trade the best process for development, or are there better processes to help poor countries?
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Free trade only serves the EU's interests
The EU wants developing countries to liberalise their trade in order to gain access to emerging markets and raw materials, and has used its economic clout to achieve this. But many developing countries, particularly in Africa, the Caribbean and Pacific (ACP), have rejected this approach as they feel it could undermine their development. The EU’s willingness to impose policies on the developing world which their leaders do not agree with illustrates that their commitment to development is limited.
Free trade is not conducive to development
Developing countries’ economies are, by their very nature, still developing. They are often wholly agricultural or based on very few exports. Their governments are often unwilling to sign up to free trade agreements with western countries because their limited economies would not stand up to global competition. These countries need to go through a period of protectionism in order to strengthen their economies so that when they do begin to trade with richer nations they can do so from a stronger starting point.
If developing countries open up to free trade with the west, the likely result is that big companies will move to those countries in search of cheap labour and raw materials. Because they will be bringing a lot of money to the area they will have a high level of influence over law enforcers who could be willing to turn a blind eye to illegal practices or exploitation of workers. His already happens in many developing countries to the detriment off their people. It will be in the best interests of many countries to avoid this happening by keeping out of global trade agreements.
Easier to get trade to happen
Free trade is a good thing for developing countries as it allows them to trade with more developed countries without any restrictions placed on either products they want to bring into the country, or products they want to export.
This means less costs on the developing countries to bring in products they need to use to make other products, and also less costs on exporting them to other countries, which make the whole trade process easier, which then allows them to get more money into the country through this trade, and allows them to start developing quicker.
Also, the prospect of free trade, and cheaper costs, may attract big organizations to these countries, and as such this may bring lots of investment opportunities and provide jobs for the work force helping the developing country to develop quicker. Also, it would bring in other benefits associated with big organizations, such as these companies training part of the work force of the country, allowing them to acquire skills, which helps train the workforce of a country, which helps them to get more jobs, and allows the country to develop quicker.
Global markets help development
How is a country meant to develop if it does not have outside investment pumping money into its economy? If developing countries refuse to trade freely then western businesses would have less of an incentive to trade there, because as an external business they would be subject to more taxes, less help etc. So if fewer foreign businesses are willing to invest, less foreign money is coming in. Foreign money is essential to development in 2 ways. Firstly new businesses provide employment in poor areas. Secondly, Western businesses like to invest in developing communities because it makes them look good at home. So as well as building a factory, they might fund schools or provide clean water for their workers. All of these things have a tangible effect on improving the quality of life in these areas.
Big multinational companies also have a history of exploiting these communities as well as helping them. One of the most famous examples would be the Nestle babymilk scandal in Africa. Other western businesses have used forced and child labour in developing countries and saw no real harm done to their sales figures or reputation.
Free trade counters corruption
Keeping developing markets closed off to international trade creates an insular mindset on the part of the government. They know that their markets will not be open to international scrutiny and thus have no reason to clamp down on corrupt practices. If these markets are opened up to international businesses, they will bring with them international standards. Big businesses have a lot of influence over governments, particularly when they are contributing to the economy in a major way as they would be in the developing world. It is in businesses best interests to use that influence to campaign against corruption, because operating in a corrupt system is likely to be costly for them. So open markets in third world countries can help development because corruption is harmful to all but those at the top of society.
What do you think?