Free and Fair Trade for Poor Nations

Paper Info
Page count 7
Word count 1888
Read time 7 min
Subject Economics
Type Essay
Language 🇺🇸 US


Free trade is a system that encompasses trade policies which allow traders to perform or discharge their mandate without government intervention. This essay discusses how free trade has paralyzed developing countries. It points out that protectionism policy and liberalization of trade by developed nations have provided a hindrance to full participation in a free and fair trade.

Besides, the essay explores how fair trade has expanded the hope of developing nations. Waivers on trade tariffs such as quotas, developing nations have attracted foreign investments which have contributed to growth of economy and expanding the already fixed industries therefore raising the living standards of the population. Further, fair trade enables developing countries to be self sufficient hence depending less on aids and charities from developed countries.

The essay concludes that protectionism and liberalization continue to be major causes of trade imbalance in the developing world unless actions to contain it are established. Developing nations need trade barriers to protect to develop their industries and jobs for the citizens.

Free Trade

Free trade involves exchange of goods and services among nations without limits or conditions. Trade barriers such as Quotas or custom duties are not allowed to control trade engagement between the nations (George, 2008). Free trade policies aim at breaking all barriers in the global market.


Quotas and tariffs are the main trade barriers used in the implementation of Protectionism. It is applied to discourage imports of some commodities in quest of protecting home markets. Developing countries have encouraged the use of protectionism as barriers to weaken developing countries economies in practicing a fair and free trade.

Protectionism creates an ambiance of seclusion by hindering liberal participation in trade (George, 2008). Whereas free trade would be a conceivable as a way to accelerative free trade, it can only be achieved to be free and reasonable if big industrialized countries do not endure protectionist policies for some of their trading practices, while deceitfully compelling poor countries to unrestraint such actions, to the possessions that it commands trading equilibrium unethically in their approval (George, 2008).

Major protectionism policies that develop countries establish to safeguard their business includes; negotiating a one-sided trade agreements, employing intervention in areas such as technology shift, falsifying market roles, giving vast subsidy to home industries and involving military mission to provide new and inflate assets access. Further, wealthy nations policy bills such as the United States Farm Bill, thwarts the efforts of free trade among the developing countries (George, 2008). The bill aimed at supporting the United States agribusiness for the next 10 years.

The bill encouraged overproduction therefore failing to help United States farmers. Moreover, the bill had negative effects to the developing countries and other markets abroad (Dunkley, 2004). This is was due to overproduction in the United States, the developing countries will still be faced with difficulties of finding markets of their agricultural products in the US markets because of such protectionism policies. Whereas the farm bill provides an opportunity for agribusiness with United States taxpayers’ money, it perpetuates poverty to the world poor (Dunkley, 2004).

Besides, wielding international loaning organization such as the World Bank, International Trade agreements and International monetary fund, The United States is providing an avenue for foreign markets for exports consequently compelling developing countries to remove state subsidies and dropping tariffs whereas the United States armors itself from foreign rivalry by growing its subsidies and preserving tariffs (Dunkley, 2004). Developing nations have often critiqued the double principles exercised by developed countries such as the United States and Europe of challenging and sometimes compelling a free marketplace philosophy and relaxing economies of developing countries but defending their identifiable home industries. Agriculture is major area of interest (Dunkley, 2004). Developing countries produce more agricultural products such as coffee, tea, cotton among others. These products have forms a backbone of economy; the protectionism policy has influenced the imbalance of trade of these agribusiness products.

Trade Liberalization

Pressure to liberalize trade by the rich countries has been another trend to discourage free and fair trade in developing countries. Developed countries have mounted pressure on industrial products though the profligate benefits appealed are not visible (Smith, 2009). For example, in Uruguay, a developing country, combined liberalization increased the universal economy welfare by over $ 75 billion. Of this sum, only a $ 5 billion went to developing nations while the rest was shared up among developed nations. There is none of the money that was distributed to developing nations.

Trade liberalization has affected many developing countries. Some of these countries include Malawi. Liberalization of trade in Malawi began in 1989. Its GDP was $1.7billion in the year 2000 (Smith, 2009). If Malawi wouldn’t have liberalized its trade, it is believed that in the year 2000, its GDP would have increased to $1.9billion. In 2000, Malawi had a populace of 10.3 million; this implies that it lost more than $20 per person. In the same year, Malawi admitted aid and charity of $43 per person. Since liberation took place, Malawians have lost more than $196 per person.

Uganda is another casualty. Liberalization of its trade began in 1991. In 2000, the GDP was about $6billion (Smith, 2009). Uganda would have benefited by amassing a profit of $735m in 2000 if it would have defied liberalizing its economy. Accumulating the loss since 1986 to 2001, it gives a loss of $5b over the period. Uganda lost $32 per person this was because of trade liberalization. For the ten years since trade liberalization, a total loss of $204 per person has been witnessed by Ugandan government (Smith, 2009).

Trade Interests

Rich countries hidden interests have influenced the imbalance of trade in developing countries. The generosity extended to most developing countries has been done with vested interested by developed countries. It has resulted in unfair and free market participation (Page, 1994). For example; the United States participation in African Growth and Opportunity Act, (AGOA) has been received joyfully by most African countries. Superficially, the AGOA spells openness for various products produced such as the textiles, garments and footwear.

But if you detail what the act entails, it is a different picture. The raw materials which are used to produce apparels are imported from United States or a major African country which has distinguished relationship with the United States (Page, 1994). If the products are developed in Africa, a ceiling of 1.5% or more is credited to the United States economy. AGOA treatment is less that inclusive. Because, it creates more than 900 tariffs unaccounted for and this averages to more than 11% (Page, 1994).

Basing on the results of IMF, AGOA initiative would have benefited countries by increasing GDP to about $420m. If the United States abolishes the so called “rules of origin” precincts, the income accrued from AGOA can triple. However, these precincts mirror the veracities of commercial trade policy (Page, 1994). United States policy allows that, a developing country can only participate in a free export zone with United States if its products are incorporated in its the exports. America, a country allegedly prominent campaigner for undefended, nondiscriminatory international market, it is interestedly archaic to trade rule therefore encouraging unfair and free trade in developing countries (Page, 1994). The blind pursuits called for by rich countries because of their economic and corporate gives impediments to forming a global transaction system adept of spreading the advantages of globalization to the developing countries (Page, 1994).

State vs. Market Interests

State vs. market problem has also discouraged free trade participation in developing countries. Most poor countries have unfavorable relations between the State and markets of their products which discourages free trade (Oman, 1994). This has been contributed to market failure. The incapacity of private markets to supply all the constituents of growth coupled with flawed mechanisms of markets has resulted in market fiasco that influences state intrusion.

The dignity of state however has been questioned. Most developing states are extensively ineffective and are impropriety handled (Oman, 1994). The institutions responsible are characterized with; nepotism, mismanagement, malpractice, corruption, bribery, overstaffing and personal prosperity pursuing. This has resulted in availability of either imperfect or incomplete markets for the produced products.

Exploitation by multinational companies has also credited to unequal fairness in trade. Multinational company’s wwhich performs in developing countries exercise exploitation and employs the relaxed labor laws to their merit (Oman, 1994). They refute the workers their rights and prolong working hours to fulfill their profits needs. Besides, workers are subjected to unsafe situation with fewer undeserving low pay. Further, the use of patents in products emerging from multinational companies to protect their vast company’s for instance pharmaceutical companies is also a challenge (Oman, 1994). It means that, generic products of essential products wouldn’t be allowed and therefore this would double the costs of products. The effects are that most developing countries faced with endemic such as HIV/AIDS will continue to suffer (Das, 2004).

Fair Trade

Fair trade entails a trading partnership which is anchored on transparency, negotiation and reverence that follows superior fairness in international trade (Das, 2004). Fair trade underwrites justifiable growth by providing better trading environments to and safeguarding the privileges of ostracized producers and workforces.

Despite of the drawback of unfairness that is credited by free trade to developing countries, fair trade provides a new ground which can provide necessary measures to effectively adore the benefits of international trade.

Poverty Alleviation

The benefit of fair trade is far-reaching to the developing countries. First, it provides a potential whereby poor nations can work towards their way out of poverty (Jarman, 2006). By setting up suitable strategies such as streamlining policies that compel production and growth and providing effective support on good produced by its population, a country can raise the living standards of its people (Jarman, 2006).

Foreign Investment

Fair trade has charged to more tangible benefits to developing countries. The waiver of trade tariffs to strengthen the growth of developing nations has attracted foreign investment by foreign multinational companies in developing countries which has contributed to improvement of the economy (Carbaugh, 2006). It has further contributed to expansion of already fixed industries to provide competitive advantage in global trade.

Welfare Improvement

It has led to improved education system whereby new schools have been built, it has increased life expectancy because of creation of clinical and health care which provides affordable health care to the population (Johanson, 2009).in addition, fair trade has contributed to better housing, construction of new roads and simplified workplace democracy among others in developing countries.

Less Dependence on Foreign Aid

Fair trade provides a better improvement for developing countries to improve on local production rather than depending on charities and aids (Singh, 2001). It gives developing countries an upper hand in openly edifying a sustainable and hopeful prospect which is based on its own produce, resources and skills.


Dominating developed countries by using protectionism policy and liberalization will adversely create an imbalance of free trade. This will hinder growth and development in the developing countries. Measures have to be outlined to ensure an equal opportunity for both parties exist to raise common corporation and competition.

By participation in fair trade, developing countries can economically be viable therefore sound policies such as creating policies ad frameworks that can serve as a tool to guide them in realizing the full benefits of participation.


Carbaugh, R. J. (2006). Contemporary Economics: An Applications Approach. Michigan: Cengage Learning.

Das, D. K. (2004). Regionalism in Global Trade. Massachusetts: Edward Elgar Publishing.

Dunkley, G. (2004). Free Trade: Myth, Reality and Alternatives. Florida: Zed Books.

George, H. (2008). Protection or Free Trade. Charleston: Biblio Bazaar, LLC.

Jarman, M. (2006). Rich World, Poor World. Minneapolis: Black Rabbit Books.

Johanson, P. (2009). Making Good Choices about Fair Trade. New York: The Rosen Publishing Group.

Oman, C. (1994). Globalization and Regionalization: The Challenge for Developing Countries. Michigan: ECD Publishing.

Page, S. (1994). How Developing Countries Trade: The Institutional Constraints. New York: Routledge.

Singh, N. (2001). Free Trade versus Fair Trade: A Movement for New Strategy. New Delhi: Anmol Publications PVT. LTD.

Smith, A. (2009).The Wealth of Nations. Kansas: Publishing.

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EduRaven. (2022, January 5). Free and Fair Trade for Poor Nations. Retrieved from


EduRaven. (2022, January 5). Free and Fair Trade for Poor Nations.

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"Free and Fair Trade for Poor Nations." EduRaven, 5 Jan. 2022,


EduRaven. (2022) 'Free and Fair Trade for Poor Nations'. 5 January.


EduRaven. 2022. "Free and Fair Trade for Poor Nations." January 5, 2022.

1. EduRaven. "Free and Fair Trade for Poor Nations." January 5, 2022.


EduRaven. "Free and Fair Trade for Poor Nations." January 5, 2022.


EduRaven. 2022. "Free and Fair Trade for Poor Nations." January 5, 2022.

1. EduRaven. "Free and Fair Trade for Poor Nations." January 5, 2022.


EduRaven. "Free and Fair Trade for Poor Nations." January 5, 2022.