Double standards in ‘Free Trade’

Wealthier countries in Europe make extensive use of import taxes to make imported goods more expensive and protect domestic business. At the same time they cajole African countries to sign free trade agreements which prevent them from imposing import taxes on European products which puts local farmers in Africa out of business.

This means that there is double standard in how trade rules are applied and that global trade works to benefit rich countries at the expense of poorer countries.

This is according to an interesting DW documentary called ‘the deceptive promise of free trade’ which suggests that Free trade is not an effective tool for global development.

EU countries imposing tariffs

Wealthy countries such as Germany and Switzerland make extensive use of taxes on imported goods (tariffs) to increase their price and protect domestically produced goods and jobs.

China has one of the most efficient bike manufacturing factories in the world, and mass produces bike more cheaply than any other country, so Germany has put a tax on bikes imported from China so as to protect the German bike manufacturing industry.

It also does the same with bikes manufactured in countries close to China such as Cambodia as bike manufactures in such countries also benefit from cheap parts made China and can produce them almost as cheaply.

As a result of these import tariffs, companies manufacturing bikes in China are able to survive – NB they still import all the parts from China, but they assemble the parts in Germany – it’s only the finished bikes which have an import tax on them.

In contrast the United States which does has not historically taxed bikes manufactured in China has seen all of its American bike production companies go out of business.

Another example of tariffs being used to protect domestic producers is in Switzerland which has the highest wages in Europe – here food production would be unfeasible if it had no import taxes because wages are so much lower in other countries.

However, there is still food produced in Switzerland because of protective tariffs on some products. These are flexible – they are quite low most of the year but during harvest time they increase several times – as with strawberries for example.

Producers in Germany and Switzerland are obviously highly supportive of nationalist protectionist policies. Saying they are good for jobs and the environment.

Free Trade Agreements prevent African countries from imposing tariffs.

In Cameroon, we get to see a local onion farming co-operative which used to produce onions, but has had to stop (and switch to cassava) because of cheaper onions being imported from Europe and flooding the market.

Cameroon is not allowed to raise tariffs further on EU onions because of a free trade agreement it signed with the EU (the EPA agreement).

As a result local farmers are either going out of business or having to switch products, the problem is that the product they switch to might also be undercut by cheaper EU imports in the future – the farm in this documentary is now growing Cassava, which is used to make flour, but there is already a history of cheap imported Wheat flour from the EU undermining local economies in Senegal, so it’s probably only a matter of time

Double Standards in the use of import taxes

It seems that we live in a world where richer countries increasingly ignore the World Trade Organisation and use tariffs to protect their domestic industries from cheaper products produced mainly in China.

While the EU cajoles countries in Africa to sign trade agreeements (probably in return for much smaller sums of development aid) which prevent them from protecting their own domestic food producers from EU agricultural products.

Subsidies also benefit farmers in the EU

The documentary also covers subsidies, showing how EU farmers benefit from government hand-outs which make their goods artificially cheap, a topic also dealt with anther DW documentary.

Relevance to A-level Sociology

This is a crucial update to the ‘free trade topic’, which is a core part of the global development option.

A Level Sociology: Global Development Module Overview

Globalisation and its consequences

  • There are Economic, Cultural and Political elements of Globalisation
  • Optimist view of Globalisation
  • Pessimist view of Globalisation
  • Transformationalist
  • Traditionalist
  • Also…
  • Does Globalisation mean the decline of the nation state?

The problems of defining and measuring development and underdevelopment

  • How should we define and measure development?
  • The strengths and limitations of Western notions and categories of development – 1st, 2nd and 3rd World, North-South Divide, World Bank economic indicators (High to Low Income Countries)
  • The strengths and Limitations of using Economic indicators – mainly GNP/ GNI but also GDP, and HPI
  • The strengths and limitations of using Social Indicators – HDI, MDGs and others…

Different theories of development, underdevelopment and global inequality

  • Modernisation Theory – Internal cultural barriers to Development// Official Development Aid, Industrialisation, Capitalism
  • Dependency Theory – Colonialism, Exploitation and Extraction by the West// Breaking Away/ Socialism
  • World Systems Theory – Global Capitalist System – Core – Periphery –Semi-Periphery// Core Nations tend to remain dominant
  • Neoliberalism – Too much aid breeds corruption// More Trade – Deregulation, Privatisation, Low Taxation
  • People Centred Development – No Fixed path to development// Sustainability/ Democracy/ Justice
  • Bottom Billion– Four Traps//Aid and Fairer Trade and Peace

Aid, debt and trade and their impact on development

  • The strengths and Limitations of Official Development Aid
  • The strengths and Limitations of Non-Governmental Organisation Aid
  • The strengths and Limitations of Private Aid
  • The strengths and Limitations of ‘Free Trade’
  • Lots of complex stuff in the criticisms of the above – About Trade Rules! (Dumping/ Subsidies etc.)
  • The strengths and Limitations of Fair Trade
  • Also be ready for a question about ‘Debt’ and development

The role of transnational corporations, nongovernmental organisations and international agencies in local and global strategies for development. (This is done as part of the previous 4 topics!)

Development in relation to industrialisation and urbanisation

  • Arguments for Industrialisation AND Urbanisation (Modernisation Theory)
  • Arguments against Industrialisation (PCD/ Sustainable Development/ Dependency Theory
  • Arguments against Urbanisation
  • Slums (case studies!)
  • Theories – Dependency Theory/ Global Pessimism

Work, employment, education and health as aspects of development

  • How are they different in the developing world
  • How does poor education etc. act as barriers to development
  • How might improving them promote development?
  • Why might western models not be appropriate to the developing world
  • What are the limitations of each of these strategies in promoting development
  • How important each of these development goals is compared to other development goals
  • Relate all of this to theories of development

 War and Conflict in relation to development

  • The nature of conflict in the developing world (small scale civil wars, not big scale techno wars)
  • Causes of conflict in the less developed world
  • How conflict prevents development
  • The role of the developed world in conflict

Gender and Development

  • The extent of gender inequality and oppression of women in developing countries
  • How might promoting gender equality lead to development?
  • How might women be disadvantaged in the process of development?
  • Why do global gender inequalities exist? Modernisation Theory/ Dependency Theory/ Radical Feminism

Population and Consumption in relation to development

  • Intro – Higher Birth rates in the developing world and population growth.
  • Malthusian Perspectives on the causes and consequences of population growth
  • Malthus
  • Paul Erlich’s Population Bomb (Neo-Malthusianism)
  • Criticisms of Malthusianism (alternative perspectives on the causes and consequences of population growth)
    • Science and Technology can feed more people
    • Increasing wealth = decreasing birth rates (Hans Rosling ) Population Growth is due to decreasing death rates – demographic transition, an indicator of increasing wealth!)
    • Dependency theory arguments – ‘Overpopulation’ is only a problem because of resource scarcity caused by the wests overconsumption (land grabs and bio fuels).
    • Uncertainty
  • Explanations of why birth rates are higher in developing countries
  • Strategies for reducing birth rates in developing countries
  • Both of the last two – contrast modernisation and dependency theories.

 The Environment and Development

  • Context – Development has been fundamentally linked to the burning of fossil fuels, industrialisation, urbanisation and high levels of consumption
  • As a result we now face environmental problems (e.g. global warming, deforestation, pollution, toxic waste).
  • These primarily affect developing countries and harm development (outline how!)
  • Since the early 1990s – the concept of sustainable development has become big news – There are some limited International agreements – e.g. Kyoto Protocol/ MDG7.
  • Limitations of sustainable development –
  • Economic growth comes first, protecting the environment second
  • No legally binding international agreements limiting the burning of fossil fuels
  • Perspectives on what we should do about environmental problems
  • Technocentric
  • Ecocentric

Global Development Revision Notes

If you like this sort of thing, then you might like my Global Development Revision Notes

 Global Development Notes Cover53 Pages of revision notes covering the following topics within global development:

  1. Globalisation
  2. Defining and measuring development
  3. Theories of development (Modernisation Theory etc)
  4. Aid, trade and development
  5. The role of organisations in development (TNCs etc)
  6. Industrialisation, urbanisation and development
  7. Employment, education and health as aspects of development
  8. Gender and development
  9. War, conflict and development
  10. Population growth and consumption
  11. The environment and sustainable development