International Free Trade Analysis

In the present configuration of an increasingly globalised world, the volume of global trade transaction has been continually increasing. Furthermore, it can also be argued that the current international trade regime has its root on the specific neo-liberal attributes to globalisation. Indeed, institutions such as the International Monetary Fund, the World Bank, and the World Trade Organization have been very staunch in promoting neo-liberal values in the implementations of economic and trade regulations (Lyon and Moberg, 2010:1-2). However, these promotions of the implementation of neo-liberal trade policies have yet to bear fruits in most of the developing countries (Stiglitz, 2006). Rather, there is an increasing concern of an international

(Malgwi and LeBlanc, 2014:14). Furthermore, as quoted from Bhagwati ‘…we know what free trade means—we mean by it the absence of price or quantity interventions in trade that prevent the translation of world prices into domestic prices …’ (The Economist, 2010). This would entail that a condition of trade that is free is in turn also fair (because countries do not impose specific protectionist measure to distort the competition in the market), is usually taken for granted. Indeed, one main defining economic principle surrounding this idea of a ‘free and fair’ trade rooted from the famous Comparative Advantage principle proposed by David Ricardo. It holds that even in the condition where one country has a higher efficiency rate in the productions of all products compared to another country, the fact that there exist an inequality in the forms of differing rates of labour productivity infers that a positive sum-game could be reached when those countries decided to engage in a free trade, specialising in a specific product and engaging in the exportation of the product in which that country has a comparative advantage and importing the other products (Krauss, 1997:5-6; O’Brien and Williams, 2013). This argument is in turn materialised in the attempt made by WTO to reduce artificial trade barriers (tariffs or

The three phase of liberalisation process from 1957 up until 2012 has resulted in an overall decrease of the average tariff rates from approximately 44% in the early 1980s to a stable rates of around 13% during the course of the 2000s (ibid.:17). Furthermore, the Uruguay Round from GATT which resulted in the Agreements on Agriculture for Ghana has proven to be particularly ruinous for the country (ibid.). In 1995, with 42.7% of total GDP of Ghana contributed from the agricultural sector, coupled with a comparatively cheap labour prices (ibid.), should have given the Ghanaian a comparative advantage in terms of agricultural products compared to the US and other EU countries. However, growth and specialisation predicted from the comparative advantage principle model did not result. This is exacerbated by the fact that various flaws in the agreements signed in the Uruguay Round has actually allowed many developed countries to maintain their protectionist measures (among which is to heavily subsidise agricultural products to compete within the global market), while at the same time opening up local markets of Ghana to be flooded by these heavily subsidised produces, resulting in an unequal price comparisons between Ghanaian local produces and the imported produces