The nature of global trade is that free trade has come to dominate trading relations
The WTO has led a series of trade agreements since the 1950s which have removed
Taxes and tariffs on imports
Quotas on imports
Subsidies for domestic producers
The result has been a huge growth in trade and wealth
Some parts of the world have benefited from trade growth, such as Asia, and in particular China and India
On the other hand, Africa's share of world trade has declined since 1970
Explanations for trends
International trade is very much in the hands of the TNCs. These have chosen to invest heavily in India and China but not in Africa
In Asia, free trade zones
have been used to attract
investment by offering
companies tax breaks,
non-union areas and
limited regulation
Africa will remain unattractive to much investment until it has more developed infrastructure, higher skills levels and greater political stability
Free Trade?
Trade has certainly become freer, but for some countries this is an illusion
Much trade takes place between countries which are
members of trade blocs such as the EU, NAFTA and ASEAN
Trade within a bloc tends to be tariff-free
Trade between blocs may also have low tariffs if agreements have been reached
For developing countries
outside any trade bloc, there
can still be considerable trade
barriers which prevent access
to markets
Many African countries are still trapped in a colonial trade pattern of exporting
raw materials such as coffee, copper and timber to the developed world
The prices of commodities are set on
the global stock exchanges and are
prone to extreme volatility
Commodity prices rose steadily between November 2007 and July 2008 - good news for African exporters - only to collapse by November 2008, leaving exporters
20% worse off than they had been 12 months earlier
Control
The superpower
economies also
control innovation and
technology
New inventions such
as drugs, microchips
and engines are
patented, and users
must pay a royalty or
licence fee to use the
technology
7%5 of these fees go
to just three powers,
with the USA
dominating
This is another way in
which the superpowers
and developed
economies control both
trade and the availability
of technology and
innovation