In the above example, we saw that the US government gives massive sums of money to farmers for production. At times, governments also give support to promote production of certain types of goods, such as those which are environmentally friendly. Discuss whether these are fair or not.
Government support to farmers in developed countries raises serious concerns about fairness in global trade. The US government provides massive sums of money to its farmers, even though agriculture employs only 0.5% of the population and contributes just 1% to GDP. This support allows US farmers to sell products at abnormally low prices in other country markets, which adversely affects farmers in developing nations.
This practice is unfair because developing countries have reduced trade barriers as per WTO rules, but developed countries have continued to provide protection to their producers. Developing countries face a situation where they are asked to stop supporting their farmers while developed nations do the opposite. This goes against the principle of free and fair trade.
However, government support for environmentally friendly goods serves a different purpose. Such support aims to protect the environment and promote sustainable development, which benefits society as a whole. Unlike agricultural subsidies that distort trade and harm farmers in other countries, support for eco-friendly production addresses global concerns like climate change. Therefore, while general agricultural subsidies by developed countries are unfair, support for environmentally beneficial goods can be considered justified.
Explanation
The question asks students to evaluate fairness of government support. The textbook context clearly shows that US agricultural subsidies create unfair competition for developing countries like India. Students should distinguish between harmful subsidies that distort trade and beneficial ones that promote environmental sustainability. The answer must reference the WTO rules violation and the adverse impact on farmers in developing nations.