The nature and control of trade

The nature of global trade is that free trade has come to dominate trading relations
The WTO has led a series of trade agreements since the 1950s which have removed
1. Taxes and tariffs on imports
2. Quotas on imports
3. Subsidies for domestic producers
The result has been a huge growth in trade and wealth
Some parts of the world have benefited from trade growth, such as Asia, and in particular China and India
On the other hand, Africa's share of world trade has declined since 1970
Explanations for trends
1. International trade is very much in the hands of the TNCs. These have chosen to invest heavily in India and China but not in Africa
2. In Asia, free trade zones have been used to attract investment by offering companies tax breaks, non-union areas and limited regulation
3. Africa will remain unattractive to much investment until it has more developed infrastructure, higher skills levels and greater political stability
Free Trade?
1. Trade has certainly become freer, but for some countries this is an illusion
2. Much trade takes place between countries which are members of trade blocs such as the EU, NAFTA and ASEAN
3. Trade within a bloc tends to be tariff-free
4. Trade between blocs may also have low tariffs if agreements have been reached
5. For developing countries outside any trade bloc, there can still be considerable trade barriers which prevent access to markets
6. Many African countries are still trapped in a colonial trade pattern of exporting raw materials such as coffee, copper and timber to the developed world
7. The prices of commodities are set on the global stock exchanges and are prone to extreme volatility
8. Commodity prices rose steadily between November 2007 and July 2008 - good news for African exporters - only to collapse by November 2008, leaving exporters 20% worse off than they had been 12 months earlier
Control
1. The superpower economies also control innovation and technology
2. New inventions such as drugs, microchips and engines are patented, and users must pay a royalty or licence fee to use the technology
3. 7%5 of these fees go to just three powers, with the USA dominating
4. This is another way in which the superpowers and developed economies control both trade and the availability of technology and innovation

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The nature and control of trade

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	Created by Jodie Goodacre over 10 years ago