The developing countries are significantly far behind the developed countries in context of their economic activities, per capital income earnings, social inclusion of people, technological advancement et cetera which actually are the real parameters for wellbeing. Though trades between these two segments of the globe have uplifted and better off the parties, the question for discussion has always prevailed about the reciprocity. Some doctrines in international trade have inclined for reciprocity whereas some schools of thoughts are towards the non- reciprocity.
The principal of non-reciprocity will help to better-off the developing countries and ultimately the global market in days ahead with an increased global production and consumption. The concept was formally incepted during the Tokyo round of trade negotiation, where the voice was raised that developing countries should be given special preference in trade. To take an example, under the Generalized System of Preference (GSP), many developing countries have enjoyed preferential access to the markets in developed countries. United States has provided duty-free entry to approximately 5000 different products to Nepal (LDC), in 2011 U.S business imported products worth $18.5 billion under GSP program out of which export from Nepal amounted $5.1 million. These not only benefited developing and least developed countries (LCD) by creating thousands of job and revenue for the government but also facilitated the USA with duty-free, less-costlier products.
The trade-related investment measures (TRIMS), advocates for the local content requirement to promote the domestic/local industry, but the Uruguay round agreement eliminated these rules where developed, developing and least developed countries were given a time frame of 2,5, 7 years respectively to eliminate the provision. These amendments facilitated companies like Apple, Toyota to reap the benefits of cheap labor resources from China and India respectively. These regional and preferential agreements have created win-win situation for developed as well as developing countries. Here the non-reciprocity in TRIMS provision has supported the domestic industries of developing countries.
The tariff is the main source of revenue for the developing and least developed countries, so at least for them, the liberalization in decreasing the tariff rate has been stretched over longer time periods providing them to bring in custom reforms. Since the developed countries are always way ahead in terms of advancement in technologies, social and structural reforms, strong domestic currency having ability to import at a cheaper rate, the facilities that the developed countries provided to developing countries pay them back with even more qualitative and economic products in long run.
Liberalized trade policy helps the developing countries basically located in small countries to reach the minimum scale required for sustainable growth, it helps them to exploit economies of scale, improve productivity, opportunity for the firms’ increases, can upgrade their technologies and gain access to the world market. This kind of access is a milestone in the transformation of labor-intensive economies to become a resilient supplier for multinational buyers. To take an example, many Asian developing countries which initially used to export the raw-material to developed countries have now become a global manufacturer of finished products. The relaxation in trade restrictions agreements to this LCD and developing countries by the developed countries are based on non-reciprocity.
Nevertheless, the non-reciprocity has its darker side also. It’s even blamed that the resources of developing and LCD are being sucked by the developed countries at an exponential pace. Perhaps, these free trade has helped the developed countries with their strong currency to take away the cheap resource and export back the finished product to developing countries at higher prices even jeopardizing the trade balances of developing countries(poor countries)
Ironically, it is seen that the moment the countries initiates the trade liberalization, they soon had also experimented new tariff and non-tariff barriers (NTB). One of the heated discussions on the table between these strata(developed and least developed ) of the countries is an issue of labor standard and subsidies in agriculture industries. The developed countries are bargaining with the LDC to harmonize the international labor codes. Developed countries have time and again expressed their reservation about child labor, unsafe and unstandardized working conditions of developing countries making their(developed countries) products uncompetitive (production cost is higher in developed than developing countries), creating laws like Anti-dumping laws which are used by the developed countries to counteract developing countries, for example; USA using the anti-dumping law against the Chines steel imports. On the other hand, abiding with the labor standardization could be a handy decision for developing and LDC as often in poor countries a minor or jubilant is the bread owner of the family, if they have to abide by the labor standards with developed countries, I believe that they will be at the losing point for the non-reciprocity to export the products as they lack the qualified labor resources and safe working conditions to make the products as specified by developed countries.
The developing countries are continuously raising their questions against the agriculture subsidies provided by the developed countries which are making their product uncompetitive in the international market and hurting their agricultural industry. Countries like the United States, EU are heavily subsidizing their agricultural industries. Similarly, the developing countries have been in the losing end when it is about securing intellectual property, the trade-related of intellectual property (TRIPS) has made a compulsion for countries to enact strong laws relating to securing intellectual property. This non-reciprocity has made a compulsion for developing countries to pay for the intellectual rights of developed countries which they are currently imitating free of the cost. Further, the phase-out of Multi-Fiber Arrangement and its replacement by tariff has helped the developed countries to earn revenue but on the other hand, developing and least developed countries have lost the quota rent that they used to earn.
The provision of non-reciprocity towards the labor standard to developing countries may not only raise question about the international code of conducts but I believe it will also create structural deformities in the labor market of developing countries, generally, the developed countries are using the labor market(from developing country) for the unskilled or semi-skilled job, for the purpose of which the young people at cheap wage rates from the developing and LDC are recruited, ultimately, the developed countries are being benefited with low cost but the engagement of young labor force in unskilled jobs will ultimately affect the intellectual growth of human capital in the long run. The issue has happened to the LDC like Nepal, where most of the young generations have plied to countries like Qatar, Japan, and Malaysia for earnings.
From the above facts and figures, we could infer that the principle of non-reciprocity has both positive as well as negative implications for the developing countries and in the same way it has various effects in developed countries too. The countries like the USA, EU are raising their voice against trade practices followed by developing countries like China and India who are destroying their market. Nevertheless, this non-reciprocity has ignited trades in developing countries and has created a paradigm shift in sectoral employment and output patterns of the developing countries. And since in this present era of globalized community where countries have to stand together for various environmental clauses whose negligence could have global detrimental implications like global warming, it’s a real necessity by the developed countries to uplift the LDC and developing ones. And I have my firm conviction that LDC and developing countries have gained from the non-reciprocity of trade restrictions in terms of technology, industrial revolution, medical innovations, and telecommunications which has uplifted the wellbeing of their citizens and ultimately benefited the developed countries with greater market scope to trade and opportunities to escalate positively, a win-win scenario for all.
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