Description
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Nigeria is a middle income, mixed economy and emerging market, with expanding financial, service, communications, technology and entertainment sectors. It is ranked as the 21st largest economy in the world in terms of nominal GDP, and the 20th largest in terms of Purchasing Power Parity. It is the largest economy in Africa; its re-emergent, though currently underperforming, manufacturing sector is the third-largest on the continent, and produces a large proportion of goods and services for the West African sub-region. Nigeria recently changed its economic analysis to account for rapidly growing contributors to its GDP, such as telecommunications, banking, and its film industry (Adeleyo, 2002).
Nigeria’s trade relations revolve around the oil and natural gas sectors. After the economic reforms of 2005, the government is making efforts to diversify its export profile beyond the oil sector, such as minerals and agricultural products. Oil and natural gas are the most important export products for Nigerian trade. The country exports approximately 2.327 million barrels per day, according to the 2007 figures. In terms of total oil exports, Nigeria ranks 8th in the world. As of 2009, Nigeria has approximately 36.2 billion barrel oil reserves. Prior to oil production, which surged after the 1970s, agricultural production was the largest export sector for Nigeria. After the country became a largely oil-intensive economy, the agriculture sector took a back seat. However, it still provides employment to almost 70% of the total working population.
Due to high international oil prices, Nigeria’s import trade is able to balance export revenue. According to the 2009 figures, the country’s imports grossed over US$42.1 billion. Machinery, heavy equipments, consumer goods and food products are the major imports. A large portion of the imports arrive from the EU, particularly the Netherlands, the UK, France and Germany. China, the US and South Korea are also major import trade partners.
The abolition/review of many restrictive businesses and financial regulations and the Nigeria’s membership of the World Trade Organization (WTO) have enhanced the Nigeria’s position in multilateral trade system. The World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. There are a number of ways of looking at the WTO. It’s an organization for liberalizing trade (Weldon, 1999). It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules (Hart, 1997). Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO’s current work comes from the 1986–94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the “Doha Development Agenda” launched in 2001. Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to liberalize trade (santos, 2009). But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease.however, all these calls for need for the assessment of the World Trade Organization rules and implications on Nigerian trade.
The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system (Adeyemi, 1999).
1.2 STATEMENT OF THE PROBLEM
Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers concerned include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively.
Since, Nigeria registered the world trade organization treaty in December 1994, there has been occasional focus on the economic implication of this treaty for the Nigerian economy. Nigeria registered the WTO treaty in December 1994 and thus became a funding member of the organization in January 1995. The researcher is seeking to assess how Nigerian external trade fared since she became a signatory to the W. T. O. in 1995 and how the adherence to the provisions of the organization affected non-oil exports and trade liberalization in Nigeria. Although, WTO agreements allow countries to introduce changes gradually through progressive liberalization. Developing countries like Nigeria are usually given longer period to fulfill their obligations.
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this study:
To examine the rule of the World Trade Organization.
To examine the Implication of World Trade Organization rules on Nigerian trade.
To examine the effect of trade liberalization on Nigerian trade.
1.4 RESEARCH QUESTIONS
What are the rules of the World Trade Organization?
What are the Implication of World Trade Organization rules on Nigerian trade?
What is the effect of trade liberalization on Nigerian trade?
1.6 SIGNIFICANCE OF THE STUDY
The outcome of this study will further draw the attention of the government, managers of the economy as well as the general public to the problems associated with the full liberalization of trade. It will also assist policy makers in the choice of policy options as it relates to trade, as issues raised in this study will serve as guide. It will further enhance the available literatures on the trade dynamics between developed and developing countries or between centre states and peripheral states. Finally, it is our hope that the findings of the study will stimulate further researches in this field which will further expand the understanding of the position of third world economies in the global trade system.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study will cover the rules of the World Trade Organization and its implication on both internal and external trade.
LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.