Page 107 - Understanding Economics for Class 10

 Despite the World Trade Organization (WTO) being designed to facilitate free trade for
all, in reality, developed countries have been observed to unjustly maintain trade barriers.
 Conversely, WTO regulations have compelled developing countries to eliminate their own
trade barriers. An ongoing example highlighting this issue is the current trade debate
Goyal Brothers Prakashan
concerning agricultural products.

Debate on Trade Practices
 A significant portion of the GDP and huge employment is contributed by agriculture
sector in India. Whereas in developed countries like U.S, only 1% of GDP and 0.5% of
employment is contributed by agriculture.
 Substantial financial support is received by this very small percentage of people who are
engaged in agriculture in the US by the government for production and for exports to other
countries due to which, US farmers can sell the farm products at abnormally low prices.
 Consequently, the surplus farm products are sold in international markets at low prices,
which negatively impacts farmers in these countries.

LET’S WORK THESE OUT (Page No. 66)
1. Fill in the blanks.
(i)
WTO was started at the initiative of __________ countries. The aim of the WTO is
(ii)
(iii)
to ____________________________. WTO establishes rules regarding _____________
(iv)
for all countries, and sees that __________. In practice, trade between countries is not
(vi)
(v)
__________. Developing countries like India have ______________ whereas developed
countries, in many cases, have continued to provide protection to their producers.
Ans. (i) developed (ii) liberalise international trade. (iii) international trade
(iv) these rules are obeyed (v) free (vi) removed trade barriers

2. What do you think can be done so that trade between countries is more fair?

Ans. Trade barriers should be removed by all the countries. Then only fair trade can take place
between the countries of the world. Developed countries should not force developing
countries to remove trade barriers when they themselves unfairly retained them.

3. In the above example, we saw that the US government gives massive sums of money to
farmers for production. At times, governments also give support to promote production of
certain types of goods, such as those which are environmentally friendly. Discuss whether
these are fair or not.
Ans. Support provided by US Government to farmers for production is not justified and fair
specially for the goods that enter into the international market. If government provides
support, then the goods become more competitive, they can be supplied at comparatively
lower price. This puts a negative impact on the countries which are exporting it without
getting any support. Major effect is seen on developing countries.

If support is to be provided for social welfare like environment friendly products, then all
the countries should unanimously decide the ways to promote such goods without hurting
others.

Economics Class X E-93