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Unrestrained Competition in Free Markets: Developing Countries and the Wto Reform

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UNRESTRAINED COMPETITION IN FREE MARKETS: DEVELOPING COUNTRIES AND THE WTO REFORM

FE2036 Globalization

By

Nora Adel

TABLE OF CONTENTS

1. Abstract 3

2. Introduction 4

3. The Two Sides of the WTO 5

4. Protectionism 6

4. Unrestrained Competition: 7

5. The Main Debate 8

6. Primary function of the Global New Deal 11

7. Conclusion 12

8. References 13

9. Bibliography 17

1. Abstract

In this paper, the debate about whether free trade is beneficial to third world countries is explored. On one hand are the WTO advocates ranging from powerful WTO members like the United States to full-fledged commercial corporations supporting globalization and the benefits free trade has brought with it and on the other hand are the left-wing critics who consist of democrats, governments, cultural custodians, and environmentalists, etc. who argue about the activities and the competition the WTO has brought along with it .This paper argues for the reform of the WTO internally with the aid of richer countries to help Third World countries become more developed and for this to occur change within the WTO is vital.

2. Introduction

Globalization is the buzzword of the 21st century but globalization is not really new. Even though it is difficult to define globalization it is generally thought of as being the “free flow of capital and trade between nations unhindered by geographical barriers or government policies” (Albert 2000).The term globalization came into being in the 1980’s but the concept is hundreds of years old. Events leading to globalization can be traced back as far as 1492 B.C.E. This was a time when people began to communicate and travel around the world. After World War II, in 1944, 44 nations came together at Bretton Woods, New Hampshire, to further strengthen globalization. Thus, the IMF (international monetary fund), the World Bank and GATT (General agreements on tariffs and trade) were then set up to promote globalization.

In 1995, the WTO was established replacing GATT (Britannica). The WTO is an international organization of 134 member countries. The world trading system came under pressure as Japan became more economically successful (Hill 2008). Also, the US developed a trade deficit as domestic producers lost out to foreign competitors this resulted in a rise in unemployment and the US congress called for protection against imports (Hill 2008). Many countries found ways to get round GATT regulations and, therefore, there was a call for greater protectionism (Hill 2008). Globalization is paving the way for powerful multi-national companies to come into developing countries, which is the least to say a new form of imperialism (Hargrave and Ashwin, 2004). Critics of the WTO say that although it is protectionist, it is only protecting multinational companies and not the developing or lesser developed countries. Of the largest hundred greatest economies in the world, 52 of them are not countries but MNC (multi-national corporations). If there are no restrictions then the multinational companies can force countries to compete against one another (Weisbrot 1999). If free trade means that US corn

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