Question

Build a case for and against non-reciprocity principles in developing countries. Be sure to provide a comprehensive rationale for each position and examples.

Answer 1

Under multi national favorite status of GATT legal framework the developed countries offer differential treatment to developing countries such as zero custom duty ot lower impirt duty on product getting impirted from developing countries to the developed ones. This creates additional benefits to developed countries as goods can be imported at lower prices if bulk tades and cess are removed as countries discount their goods, secondly it improves bilateral relationships, thirdly it reduces trade deficit for developing nations and helps their currency appreciate.

However such non reciprocate principles entail that developed countries do not get sake benefits in return and hence their trade deficit as well as current accounts deficut widens and so does fiscal deficit because of lower tax inflow. Sometimes it steals away local employment opportunities and creates subdued consumption and hit on local real GDp of developed countries. All in all it is balanced only if there is sufficient threshold level kf trase which maximises utility for both and assures competitive advantage for one and profitability for other.