Unfair trade

Dumping

Dumping is an unfair trade practice where products are exported at prices below their production costs.

The EU and the US subsidise some produce and goods, dumping them on developing countries while concurrently keeping international prices at low levels.

Millions of poor farmers in developing countries cannot compete against produce dumped in their countries at low prices.

Forcible opening of markets

For a long time, rich countries have been urging poor countries to open their markets, through the World Bank, International Monetary Fund (IMF) and international trade agreements, partly in order to dump their subsidised produce in these markets.

They are now utilising international trade agreements to eliminate all trade barriers.

Patent rights

In order to protect the interests of their businesses, rich countries have raised the levels of protection on intellectual property rights, making developing countries suffer an extra cost of $40 billion per annum.

Affluent and powerful multinational corporations pressure their governments into increasing their levels of protection for intellectual property rights. This raises the prices of necessities such as seeds, medicines and computer software.

As a result, many people in poverty cannot afford the medicine they need. Experts believe that 14 million people die from curable illnesses every year.

If the price of medicine was set lower, more people’s lives could be saved.

Trade alliances

Towards the end of the 1990s a number of regional trade agreements came into existence.

Today there are in excess of one hundred. It is thought that just about every country in the world is involved in at least one agreement.

These agreements strengthen the political base of a country, ensure security and can even ensure food security between neighbours and trading partners through the use of price fixing, quotas and tariffs.

Some agreements have even worked to allow countries into the global economy. Vietnam's present day success is due almost exclusively to its entry into the Asian Free Trade Area (ASEAN).

The diagram below shows the different countries involved in various partnerships.

world map with boxes outlining the location and stature of different trading groups

Globalisation is now the dominant business environment and we are seeing new patterns of trade clearly emerge.

Developing countries are sometimes locked into unfair trading agreements with larger companies or large multinationals.

They can’t afford to withdraw as multinationals can easily take their business elsewhere.

Globalisation has not benefitted developing countries in the same way as developed countries.

75 per cent of world trade is carried out by Transnational Corporations. These are multinational companies, with a headquarters in a developed county, but many factories in developing countries.

They take advantage of cheaper labour costs in developing countries. Transnational companies include Coca-Cola, Microsoft and Ford.

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