The Relative Impact of Trade Liberalization on Developing Countries
Author(s)
Weisbrot, Mark; Baker, Dean
Abstract
This paper sets out to initiate reflection upon the real costs of trade agreements. The authors believe that it is necessary to deflate grossly exaggerated claims about the benefits of trade. They establish that very little would be gained if rich countries dismantled all their barriers to exports originating from developing countries. In fact many developing countries would no longer benefit from a fixed export volume sold at prices above competitive levels; trade terms would worsen; and agricultural exports subsidies would be lost forever. Bearing this in mind, these countries would risk their socio-political stability as a result of large-scale migrations of the rural population. Further liberalization would amount to costs as yet unconsidered, such as the dire fiscal strait-jacket that would be required by countries losing income from tariffs; the costs of the recent TRIPS provision within the WTO ; and the opportunity-cost of holding the exchange reserves that the developing nations would require to guarantee their macro- economic stability.
