One sided trade agreements by any name are designed to help developing nations develop by encouraging business to make difficult decisions and become more efficient. Decisions on supply of raw materials, effectiveness of plant and machinery, availability of skills and technical procedures and the type of marketing needed. The only solution is to employ efficient strategies that make the business model competitive in targeted markets, noting that even long-term free trade agreements will not support inefficiencies.Business associations should be totally honest with their members, even to the point of losing them. Many developing nations have traditionally supported an inefficient “so called” manufacturing sector which could not be sustained while getting full access to foreign markets as this would retard that foreign market’s manufacturing sector. So called because a true manufacturer does not have to import more than 50% of its raw (naturally occurring) materials - manufacturing is the process of combining raw materials (farmed or mined locally) into finished usable products.
The plant and machinery, purchased or developed, used in the processing is commonly perceived as capital investment and as such enjoys duty free entry and taxation credits, incentives that benefit both equipment users and suppliers.
Local skills and technical procedures also can benefit both the developing nation and the producer. A developing nation with a highly skilled work force can attract more business, creating more jobs and paying more taxes. Further incentives for the producer come from apprenticeship training programs, where experience is gained on-the-job and again, more tax credits for participating in such a program.
The type of marketing needed, for a producer operating out of a developing nation, to compete with larger and more efficient (because of economies of scales) producers is called prestige marketing. The focus here is not to consider cost, let the tariff come, but to obsess on quality and quantity while building a brand. Make the best product in small amounts, add some mystique to it and demand the best price.
Efficiency may require the producer, who must compete on cost and volume, to relocate or open another plant in the nation with more competitive sources of raw materials or in the nation with their main targeted market.
Rationale
T.A.J & Associates Company Limited uses this occasion to comment on topics that have been covered, both academically and by the mainstream media, to add its opinion and point out investment opportunity, not to invoke any social action.
