Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?
Developed countries want developing countries to liberalise their trade and investment because they argue that all barriers to foreign trade and investment are harmful. They believe that trade between countries should be ‘free’ and that all countries should liberalise their policies. The World Trade Organisation (WTO), started at the initiative of developed countries, aims to establish rules to liberalise international trade.
However, in practice, developed countries have unfairly retained trade barriers while forcing developing countries to remove theirs. For example, they have retained barriers in agricultural products. This creates an uneven balance of power, allowing developed countries greater market access while protecting their own industries.
In return, developing countries should demand 'fairer rules' at the WTO. They should insist that developed countries remove their own trade barriers rather than just forcing developing nations to do so. Developing countries need to fight against the domination of developed countries by aligning with others who have similar interests.
Furthermore, developing countries should demand the flexibility to use trade and investment barriers if necessary. This would allow them to protect the interests of their small producers and workers until they become strong enough to compete globally.
Explanation
The answer is derived from the textbook context which highlights that while developed countries advocate for liberalisation through the WTO, they often unfairly retain their own barriers (like in agriculture). The suggested demands for developing countries are based on the text's mention of negotiating for 'fairer rules', aligning with similar nations to fight domination, and using barriers to protect small producers.
Solution Steps
Step 1: State the reason for developed countries' demand: They view barriers as harmful and advocate for 'free' trade via the WTO.
Step 2: Highlight the hypocrisy mentioned in the text: Developed countries unfairly retain their own barriers (e.g., agriculture) while forcing others to remove them.
Step 3: Formulate demands for developing countries based on the text: Demand 'fairer rules' at the WTO.
Step 4: Add further demands: Align with other developing nations to fight domination and use barriers to protect small producers.