Question

1. How can trade liberalization exist on a nondiscriminatory basis verses a discriminatory basis? (provide some examples of each)
2. The Bible tells us the poor will always be with us; is this declaration inevitable or can we solve the problem of poverty through a proper strategic approach?
3. Is it inevitable that some countries are destined to be perpetually corrupt, dysfunctional, unlucky, or economically backwards nations?

Answer 1

Trade liberalization on a non-discriminatory basis occurs where participating nations acknowledge that tariff reductions agreed to by any two nations will be extended to all other members. For example, GATT (The General Agreement on Tariffs and Trade) and its successor, WTO (World Trade Organization). This means there could be no discrimination in the WTO where one member can discriminate against another member by keeping a tariff at a higher rate.

Trade liberalization on a discriminatory basis occurs when nations form preferential trading arrangements in which tariff reductions are limited to member nations. For example, regional trading within a small group of nations, where member nations share benefits in the form of reducing, or in some cases removing all trade barrier only for the member group of nations and excluding all the other nations. Examples of regional trade agreements include the North American Free Trade Agreement (NAFTA), Central American-Dominican Republic Free Trade Agreement (CAFTA-DR).