Trade, Protectionism, And The Developed Countries

1845 words - 7 pages

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3.0) TRADE, PROTECTIONISM AND THE DEVELOPED COUNTRIES

The World Trade Organization refers to an organization formed in 1995 with a stated goal of supporting and liberalizing international trade. Although it is in line with free international trade it allows governments to impose short term protectionist measures under specific circumstances (Shrybman, 2001). Developed countries have imposed remarkable protectionist measures since 1975 despite the fact that they have joined WTO (Takatoshi and Krueger, 1993). An example of protectionism justification is Russia, which represents one of the strongest developed economies worldwide and is a recent WTO member since August 2012. The effects of its membership can be characterized as largely disappointing at least in the short term due to various reasons. According to the ministry of economic development of the Russian Federation, imports reported a substantial increase in the first half of 2013, while trade turnover and exports dropped significantly. As a result, the Eurasian Economic Commission, applied protectionist measures against agricultural combine harvesters and light commercial vehicles from several countries (Seeger, 2013). Therefore in the case of Russia protectionism is seen favourably up to the time being. Furthermore, a remarkable example of a developed country taking protectionist measures is that of the US against imports from China. The US has taken protectionist measures in 2013 in order to shield against patent infringement and trademark infringement by imported goods from China. The US International Trade Commission has conducted section 337 investigations which refer to quasi-judicial trade measures against various Chinese electronic companies. Here it should be noted that by the time a 337 investigation has been initiated, the ‘accused’ products and companies may be banned forever from the US. On the other hand, the vice president of the Chinese chamber of commerce has stated that ‘given increasingly fierce international competition, certain U.S. companies have alleged patent infringement and taken the Section 337 investigation as a business strategy to drive out competitors and grab a larger market share’( Lan, 2013). Finally the main benefits through these practices gained by the US which is a remarkable example of a developed country are various. Less competition for the domestic companies due to decreased imports drives to smooth flowing of the local economy. Moreover, due to the fact that imports are decreased, employment rates are high and consumers refer to domestic products, thus capital remains in the country and strengthens the local economy.

3.1) TRADE, PROTECTIONISM AND DEVELOPING COUNTRIES

In contrast with the so called higher- income countries which view protectionism favourably in many cases, developing countries present a trend for free international trade. This is due to the fact that developing countries have realized that by opening their...

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