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Mainstream, Vol XLV, No 34

Possibility of Free Trade and Identity of Nations

by Pranab K. Banerjee

Saturday 11 August 2007


When trade originated in some parts of the world, especially between parts of the traditional markets and fast-developing Europe, there emerged fresh technologies of production for goods and some amount of services. At that point of time, those primarily engaged in agriculture were exchanging goods from Europe, which had a different modus operandi. Though the exchange of certain goods from the agrarian markets of the reasonably weaker parts of the world occurred with different markets having superior production methods, international inputs had brought certain issues closer too. Their trade policies and their roots played a key role to decide the strength of a market. It was an old practice, which some economies of the world have not been able to change while trading even today. What we found in trading even centuries ago was subjugating the agricultural economics through trade. What is being experienced presently is not much different from the earlier methods.

After World War II, on the one hand there has been tremendous growth in science and technology, and on the other GATT was signed in 1994 followed by the emergence of the WTO reasonably redesigning the factors of world trade. The history of the world has not been documented for an exceptionally long time and most factors known to us are transforming in such a fashion that exploitation of the poor is still continuing. As a result, despite a large number of developments and changes in the global scenario, free trade is yet to emerge. Though in reality there is much of free trade in goods and services, how the order of the world trade can be justified, is a great question.

The classical political economy of the advanced parts of the world, known to us through trade, failed to recognise the strength of the other parts of the planet. The history of the majority of the world has subsided because of the alternative interests of small groups of economics with power to colonise the other races.

Free trade is a concept with a series of complexes, especially for markets with agricultural and mining products only. It is a continued marketing strategy of the industrially advanced societies to buy and sell items or even to offer items with or without conditions, but if possible, it must be examined in the short and long run, though one may not have the necessary inputs to perform the job. Identities of any two countries are endless issues and the initial ones originate in historical perspectives. Incidentally, India’s concept of history came from Europe. As a result, the history of the economy of India is neither independent, nor has it gone through the most ingredients necessary to understand a huge country with a number of diversities. However, the history of Canada is a different story that tells the world how races interacted with each other and the world experienced an altogether different paradigm for men, society and the market. Historically, India and Canada have two extremely different origins and in the modern context too, their marketing identities are not very close to each other. We can possibly discover interesting areas to examine and understand these two parts of the world to get into their roots and identities from the past to the present.


IT is more or less clear that free trade is a hypothetical concept that was raised by those who are ahead of the developing nations. Many of them are confused and they are unable to protect their own interests. Surely, GATT identified a number of issues of exchange of goods and services and a group of developing nations was, to some extent, sure of getting equal treatment from others, especially from the powerful nations. Objectively, the world market forces are competitive and if at some segment, at least hypothetically, it is not observed in most of the areas of international trade and business, each one is expecting a higher point of profit. For weaker nations are not sufficiently competent to bargain, eventually they lose and keep losing.

So far Canada is concerned, they are behind a number of faster nations. So on the one hand the nation is reasonably harsh, and on the other surely, Canada’s interests are influenced by its business partners. As 80 per cent of the country’s goods and services go to the United States, Canada seems to be influenced by the business partners. It is not casual. So one can assume American dominance on the northern nation.

Every nation of this planet is subjective, emphasising only its own interest and widely helping those not far from various interests of certain countries/interests. Incidentally, most weaker nations are not much investing time in Research and Development and there is little cooperation among themselves. This has resulted in depending on certain economies which may not be in their favour. Many developing countries many a time fail to understand the concept of protection and what they have to do in the long run. As a result the world market, in some way or the other, is dealing with competitive market forces and weaker nations are so fragmented that different market blocks are maximising their rates of profit in the real sense. Now it is clear the complex factor of production and pricing can only be controlled if the market is monitored and various market forces are thoroughly examined.

It may be understood well that there is so much of ambiguities in foreign markets as well as in the domestic ones. Surely, all market factors cannot be examined and the partial results obstruct free trade even if there is some amount of possibility.

It must be understood that the world economy has been undergoing a series of changes not only over the last few decades but all this has been happening right from the beginning. Evidently, it indicates considerable impact on the role of services and goods sector in economic development. The first of these developments is the continuous internationalisation of economic activities including services for a global market. Complex new international division of labour is to emerge. As transnational firms expand their global reach, there is an expansion of such firms specialising in various activities, in some cases, as inputs of final consumption of national enterprises, and sometimes as providers of global support of transnational acts in a number of areas.1

Another set of developments involves the emergence of new technology of production and the organisation, and the technological revolution based on a new range of technology which has arrived in some countries at no easy terms. Every new technology does not move from the point of origin and every technology has a particular implication for the other ranges which, in many ways, has vast scope to be transformed through the use of new methods. In the new development scenario of the world, various areas are the major users of certain technologies, amount for up to eighty per cent of investment in some areas in industrially advanced regions and are accordingly changing their levels of capital intensity and the structure of this capital is not easily found in the developing countries. This has led several analysts to suggest that though many services are now in the early stage of revolution, they are as profound as the industrial revolution in some other crucial areas.2

At this juncture the complexity of free trade demands objectivity of economies in their own way. An economy never existed without correlation with others. It is usual because be it factors of production or services or manpower, these are supplied by different other economies and every economy is linked with each factor of some or many nations some way or the other. The question of free trade basically in the modern time arose with the expansion of the market forces. But earlier too, when the economies were altogether low, almost the same questions arose.

Free trade has some amount of complexity in sharing if one goes by opinions of higher economies. For the time being if it is accepted, the shares of trade in services under different definitions shows the importance of some types of trade for some economic groups of countries and a change in the definitions of trade and free trade can give a completely different picture of the share of free trade in the trade of different groups of the world. At the first instance of the importance of free trade in different countries, one can go through the natural ups and downs. Evidently, different countries do not indicate variations in the stages of development of an economy. However, there is a need to look into the type of international markets including exports provided by different groups of countries. An important fact that emerges from the above analysis is that developing economies like India and reasonably advanced groups like Canada are widely dependent upon a lot of crucial imports. The disparity in free trade between the advanced countries and the developing ones is due to the reason that the total trade of developing economies is very much lower than that of advanced countries.3

At the same time it is a fact that the price is altogether decided by the latter on the basis of convenience and profit. Weaker economies, for some reason or the other, have been accepting it unless the powerful transnationals change the terms of trade, exchange of goods and services will unlikely to find an encouraging solution. GATT has been working on various terms of trade for many years. Despite all this, there have been many shortfalls though the world has no choice but accepting it. After the Eighth Round of GATT, the WTO was set up in January 1995 in order to monitor trade all over the world. The allegations against them primarily include their partial attitude favouring advanced economies. There are certain issues that have to be addressed by the world. Hopefully an objective result will surface before it is too long.


THE identity of a nation has been repeatedly raised and the concept repeatedly changes. Usually changes come up following the military strength and industry of a country. These two factors are not static and the concept of a nation is regularly changing. Earlier some countries of Europe colonised a number of least developed countries to acquire natural resources from different parts of the world. It continued for a long time but after the end of the Second World War this was not easily possible. In 1945 when the United Nations (UN) was set up though many wars were not stopped, surely the UN played a crucial role. The concept of a nation has been highly influenced by change taking place all over the world.

In countries like India and Canada surely certain basic factors are altogether different. India’s history has a number of factors. India was invaded by a number of countries and many of them settled down here. This is a crucial fact as India has become a country of various countries with different religions and economies. It continued for a long time and this country was fragmented into more than 800 States. Though of them some were bigger with some wealth but mostly ordinary people had little resources. States with scanty resources just survived on their own. They had nothing for themselves and their populations, in the absence of information and education, knew little about themselves. In statehood there are endless questions to think about. Though some of them are irrelevant now but it may be useful to know the history. India’s history is long and many facts are still not known or some remain unexplored. Incidentally, the country has, on the one hand, experienced a series of conflicts, on the other India developed nationhood with the help of religion. Though the Islamic population in India had some differences with the Hindu population, many a time both were friendly. Factors changed after politics entered religious issues. The question of nationhood and the concept did change with several political factors following religion. At the present time it may not be easy to define the importance of a particular sector, which is in the midst of several issues.

Though statehood is usually dependent upon many factors including history, this may not be true for North America. One knows that India inherited a lot from other peoples, but it is true that the country in the medieval age was having numerous conflicts with other countries. As India is an old nation, its concept of statehood naturally changed from time to time but the most interesting aspect is within India small or medium size States were coming in conflict with others not on any solid ground. This continued endlessly and due to feudal reasons several provinces are not friendly with others. For many States have different political administrations; though statehood is national, there are differences in the concept among provinces. History and philosophy are evolving through political interests in various parts of the country. They are so temporary and fluid that it is difficult to come to a precise point. The issue of statehood, despite being crucial, is either based on some concepts or result in depression. All over the world it is fluid and changing all the time. Given the circumstances it is still not clear how much time it will take to evolve a concrete character.

Contrary to India’s history, Canada is a state of native Indians which has gone to European immigrants. Though some Asians and Africans joined Canada from time to time but the issue of statehood, generally, was at all times decided by the English immigrants and the French. After the native Indians were defeated by the Europeans the question of statehood was transformed by the Europeans and over a period of time Canada became a country of mainly European immigrants. Those who joined Canada later, they had gone to a new land to earn mostly money. They had no conflict with the Europeans. They had no power or sufficient intelligence to stand against Europeans.

Englishmen and the French immigrants were not completely friendly with each other. Despite differences they helped the other group and the statehood of Canada was redefined by the Europeans. Over a period of time the original inhabitants were suppressed so much that the native Indians had no role for their country. This has gradually changed nationhood in the country and the values of the country got altered. Earlier Europeans went to do business in a new country. After they captured power, the values of business and economic activities of the country started changing. Evidently Canada was mostly influenced by Britain and France which gave new values to the country and both European countries designed nationhood of the new land. Though the country has a border with the United States, with noteworthy business and political influence of Britain and France they are the major factors in Canada’s assumption of nationhood.


THERE is democracy in both the countries, India and Canada. Though Canada has English and French as languages, in India English is understood in business and government offices. Despite the fact that exports to Canada in 1999 amounted to $ 1.2 billion, India could import from Canada goods and services worth only $ 500 million. It is significant that bilateral trade between the two countries has been less than $ 2 billion while India’s foreign trade figures $ 70 billion and that of Canada was recorded at $ 260 billion.4 These points are raised by only those seriously interested and surely not by the Government of Canada. We find that Canadian identity has been reasonably different from that of the United States despite exporting about 80 per cent to that country. This is a crucial issue to examine Canada objectively. India goes through series of hurdles some of which are neither examined nor recorded. In the midst of so many bottlenecks the questions of free trade and identity of nation seems to be a complex question at least in the short run.

[Paper presented at a Seminar on “Market Forces and Cultural Change: Canada-India”, M. S. University of Baroda, Vadodara, February 24-26, 2004]


1. Banerjee, Pranab K. (1995), “A Note on Services in the Context of Technological Change in Trade Invisibles”, edited by H.A.C. Prasad and Rajendar Kapoor, New Delhi, Commonwealth p. 62.
- 2. Ibid, pp. 62-63, 1995.
- 3. Prasad, H., Ashok Chandra (1995), Trade in Invisibles, Some Important Issues in the Indian Context in Trade in Invisibles”, edited by H.A.C. Prasad and Rajendar Kapoor, New Delhi: Commonwealth, pp. 6-7, 1995.
- 4. The Hindu, New Delhi, March 21, 2001.

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