Trade restrictions in the OECD countries also have adverse environmental and economic consequences, for their own societies as well as for their trading partners in the Global South. Tariff escalation by the stage of processing inhibits the development of finishing industries that add value to raw materials produced in the South. The Multi-Fibre Agreement and other trade barriers impose serious quantitative restrictions on exports of labor intensive manufactures from developing countries. Such barriers affect not only textiles and apparel, but also footwear and other relatively labor-intensive products. By impeding the access of low-cost producers with comparative advantage in these manufactures to industrial country markets, these restrictions substantially lower incomes in developing countries and raise consumer prices in industrial countries.
In the 1980s, American consumers paid about $18 billion per year in excess costs just for clothing and textiles. Protection reduces potential employment in developing countries but has done little to save jobs in industrialized countries, where producers have rapidly automated production to raise productivity.
By impeding exports of labor-intensive manufactures and downstream processing industries, especially when pressures on developing countries to meet high debt-servicing requirements are intense, these trade barriers virtually force developing countries to raise exports of natural-resource based commodities. Eliminating these trade barriers would have significant economic and environmental benefits. Output would expand in labor-intensive processing industries, enabling developing countries to add more value to their exported primary materials. Growth of alternative sources of foreign exchange earnings would mitigate the overexploitation of natural resources for export.
It is clear that while the rules-based international trading system seeks to establish a level playing field, remaining trade barriers have a negative impact, particularly on developing countries. Whilst trade barriers in the main markets are now generally low for most trade of developed countries, there is a lack of equal opportunities for developing countries' exports in the present system. Thus, a number of export products of particular interest to developing countries such as textiles are often subject to high import barriers, including non-tariff barriers. Further, support for agricultural production, investment and exports in developed countries may have/has negative effects on many developing countries' export and production capacity where it is of a trade-distorting nature.
And high protection for the domestic food industry in some developed countries hampers diversification and value-added production in developing countries. WTO rules are stringent with respect to subsidies primarily used by developing countries. Also, anti-dumping measures and countervailing duties are used by many countries in sectors where exporters from developing countries are competitive. Finally, there is an asymmetry between liberalization of trade in goods and services on the one hand and labour-intensive services on the other, which particularly affects developing countries.