04/11/2017

Is Foreign Aid The Answer? Nope, It’s Free Trade

Ben Ramanauskas, Economic Collapse News

In his recent Guardian article, David Cameron, the former UK prime minister and newly appointed Chair of the Commission on State Fragility, Growth and Development, argued that it is right for the United Kingdom to continue to give aid to developing and unstable countries. Mr. Cameron argued that it is the responsibility of the UK government to give aid supporting developing countries as not only is it the moral thing to do, but it is also in the interests of the UK.

Following on from Mr. Cameron’s article, I would like to argue for a better way in which the UK can help less developed countries and also advance its own interests: free trade.

As the UK prepares to leave the European Union, it gives the government an unprecedented opportunity to examine its trade policy and to forge new free-trade-based relationships with the EU and with the rest of the world. Free trade has brought economic prosperity and lifted millions of people out of poverty in a way which is unmatched in human history. Free trade not only benefits all countries involved economically but also promotes peace and goodwill between those countries. Therefore, the UK should aim to pursue free trade with countries all over the world.

However, the newly formed Department for International Trade might face opposition — especially from developing or fragile states — in the form of protectionism. If such a situation were to arise, the UK should pursue a policy of unilateral free trade with these less economically developed countries. It should do so for two main reasons.

The first reason is that it is the morally right thing to do. As mentioned above, free trade brings economic prosperity to all parties involved. As a result, if the UK removed tariffs on its imports from developing countries in regions such as Africa, this would be incredibly beneficial for some of the poorest people on the planet.

To illustrate this point, let’s think about coffee and the EU’s protectionist approach. A 7.5 percent tariff is imposed on roasted coffee from Africa in EU countries. However, non-decaffeinated green coffee attracts no such tariffs.1 Such protectionist policies can keep countries trapped in a situation where they can only realistically export raw materials; it prevents them from adding value to their produce.

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