Published by The East African, 2004-08-30

Liberalisation: We need more of it

In his article, "WTO: talk of reducing Subsidies is Mere Illusion" (The East African, August 23-29), Devinder Sharma expresses his critical opinion about the outcome of the WTO negotiations in Geneva in late July.

Basically, Sharma is right about the subsidies. They must be abolished, and the promises from the developed countries to do this could, and should, be more precise. But when he criticises trade liberalisation in general, and specially lower trade barriers in developing countries, he is wrong. Sharma writes that trade liberalisation, among other things, is responsible for ruining the agriculture sector in many developing countries. In fact, it is the other way around. It is because world trade is not more free that some countries, especially the developing countries, suffer. The big villain is, of course, the subsidies within the agriculture sector. But high trade barriers in the developing countries are also a problem.

What Sharma clearly illustrates in his article is the very common but wrong view that exports are good and imports bad. The truth is that imports are also desirable and necessary. Without imports, no country can develop. It is true that it was exports that made the Southeast Asian countries rich in the 1970s and the 1980s, but their exports would be impossible without imports.

Thatīs why it is important to also open up the markets of the developing countries. High trade barriers in many developing countries are hampering not only exports from the developed countries, but also exports from other developing countries. To trade more with each other, which means exporting and importing, will be one way of boosting growth in the developing countries. And to support that we need more trade liberalisation, not less.