The myth of free trade

Free trade.. that’s what developing countries should opt for. We all have heard this statement. The neo-liberal discourse on globalization is the conviction that free trade is the key to prosperity. WTO and World Bank have always been in favour of opening up and free trade. The defenders of free trade argue isn’t free trade how all developed countries have become rich? Then why are some developing countries not willing to accept this tries and tested recipe.

But the answer is NO. A closer look at history does not support this. The truth lies in the fact that virtually all of today’s developed countries didn’t practised free trade in their developing stage.

Some of the major examples are:

BRITAIN

Britain had entered its post feudal age as a relatively backward economy mainly relying on export of raw wool. To transform it to woollen manufacturing nation major schemes were implemented. They included increased duty on export of raw wool, temporary ban on its export.  The major change came only in 1721 when duties were reduced.

United States of America

U.S industries are claimed to be most protected until 1945. It was only after the Second World War that U.S liberalised its trade.

Germany

Average tariff rates show that level of protection was one of the lowest in Germany. Although this does not mean that Germany had a free trade approach. Various other range of policies were adopted like monopoly rights, trade protection, export subsidies etc.

These examples clearly reveal that how tariff protection and other tools were used by the Now Developed Countries to protect their industries in the initial stages of development. Hence, it can be claimed that all these countries have used interventionist policies. So advocating free trade for now developing countries will mean they are kicking away the ladder that they themselves used to develop.

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