Rule Bound Trade System

Do developing countries benefit from a rule bound trade system?

Do developing countries benefit from a rule bound trade system?

Introduction

The WTO system contributes to development. However, developing countries need a flexible time to implement the system's agreements. The agreements themselves inherit the earlier provisions of GATT that allow special assistance and trade benefits for developing countries (Rodrik, 2001, p.28-30).

Developing countries were willing to assume the obligations of most developed countries (Narlika, 2005, p.33). However, some time they have been provided in the agreements to allow them, during a transitional period to adapt to the more known and perhaps most difficult of the WTO Agreement, in particular the most poor - less developed - of them. Rule bound trades are therefore fairly helpful to support internal industries and economic growth.

There are many reasons that make governments impose various rules or barriers to foreign trade. If a country spends too much on imports, compared with revenues from exports, it has to be limited. Also, every government to protect young, only growing industry whose products are more expensive in comparison with similar imported goods. In addition, some industries are classified as strategic and protecting them is a must. The country must also protect themselves from unfair competition in international markets.

In foreign trade, there are two approaches to restrictions i.e. liberal and protective. Liberalism trade means reducing the level of protection of the internal market by reducing the elimination of customs duties and quantitative restrictions. Full liberalization would lead to the absence of barriers to access to the national market for goods of foreign companies. While protectionism is on the use of a number of difficulties in access to its own market and active promotion of exports.

Discussion

Rule Bound Trade System of Developing Countries and External Economic Relations

The time when foreign trade was heavily regulated by the developing countries, is already gone. Currently, the developing countries do not dictate what and when will be exported and the situation is much more liberal as compared to past (Rodrik, 2001, p.28-30). However, it cannot be said that now foreign trade was not influenced by the developing countries. The developing countries impose different rules on foreign trade of different duties, taxes, fees or the need to obtain official permission (Berger, 2006, 201-208).

The basic rule in trade system includes some measures on import and export of products and licensing procedures. The WTO agreements are lengthy and complex because they are legal texts covering a wide range of areas: agriculture, textiles and clothing, banking, telecommunications, government, industry standards and product safety regulations food hygiene, intellectual property, and more. However, a number of simple, fundamental principles are the common thread in all these instruments (Narlika, 2005, p.33). They are the foundation of the multilateral trading system.

Under the WTO agreements, countries cannot, in principle, discriminate between their trading partners. If you give someone a special favor (by reducing, for example, the customs duty on its products), you must do so for all other WTO ...