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CAUSES OF UNFAIR TRADE - Coggle Diagram
CAUSES OF UNFAIR TRADE
Dumping
Dumping is an unfair trade practice in which goods are exported at a lower price than their manufacturing costs.
The EU and the US subsidize some commodities and produce, dumping them on underdeveloped countries while simultaneously maintaining low international pricing.
Millions of impoverished farmers in emerging countries are unable to compete with low-cost produce imported from other countries.
Balance of Trade
Countries with a trade deficit will see their currency decline, while those with a trade surplus will see their currency gain, according to conventional economic theory. Consistent trade deficits can have a severe influence on the domestic economy, resulting in job losses, deflation, and strained government finances.
World Market
The agreements between countries strengthen the political base of a country, ensure security and can even ensure food security between neighbours and trading partners through the use of price fixing, quotas and tariffs.
Some accords have even allowed countries to participate in the global economy. Vietnam's current success is nearly entirely owing to its membership in the Asian Free Trade Area (ASEAN).
Trading Blocs
Typically, trading blocs are organizations of countries in certain regions that manage and promote trade. Because members are regarded more favorably than non-members, trading blocs contribute to trade liberalization (the removal of trade barriers) and trade creation between members.
Tariffs
Tariffs are bad for trade and consumers since they raise the cost of imported goods. Importers must pay a tax in the form of tariffs on the items they are bringing into the country, and they pass this cost on to consumers in the form of higher pricing.
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Globalization
Globalisation has become the dominant corporate environment, and we are witnessing the emergence of new trade patterns.
Developing countries are sometimes trapped in unfair trade deals with larger corporations or multinationals because they can't afford to pull out because multinationals may easily take their business elsewhere.
Patent rights
Rich countries have increased the levels of protection for intellectual property rights in order to protect the interests of their enterprises, costing developing countries an additional $40 billion every year.
Affluent and strong multinational firms exert pressure on their governments to strengthen intellectual property protection. This drives up the cost of essentials like seeds, medicines, and computer software.