CHAPTER ONE

INTRODUCTION

1.1 Background Of The Study

International trade is an unavoidable activity that nations in the world are practicing. Many nations have limited capacity to produce all the goods they need to produce all the goods they need to consume due to limited resources, smaller domestic market to import from other nations. Hence, trade is the exchange of goods and services for the flow of foreign exchange. International trade is seen to have started in the 15th century with the emergence of nation state like Britain (1485-1509), France (1453), Spain (1464), Germany and Italy (1870).

The emergence of these, nations was forced with the problem of consolidating their authorities. As such they had to carry out trade which could generate some income to run their economy. Thus, they exported goods to their colonies and other nations and receive adequate supply of gold and silver. The volume of international trade has increased as all nations in the world are trading international. They are either exporting to other nations or gaining foreign exchange importing from other nations and spending their currencies.

For 1990, the volume of trade amongst countries in goods and services measure in dollars has surpassed four trillion dollars. In the year 2000, the growth rate of the world trade merchandise was around 10% and double the rate recorded in 1999. This was due the resumption of economic activities in Western Europe (WTO, 2007).

The United Nation council for trade and development (UNCTAD) which is the only trade agency for the united nations which deals with trade, investment and development issues. It is made up of 191 member states and help to foster trade in the world. In Central Africa, the Central African Economic and Monetary Community (CEMAC) is the organization that help to foster trade in Central Africa and Cameroon became member in 1972.

The World Trade Organization (WTO), which is based in Geneva, establish in 1995 seek to encourage the reduction in trade restrictions and to settle trade dispute amongst member state, smooth trade and to help to administer trade agreement between nations and act as a forum for trade negotiations (Baden.B.Catherine, 2005).

The United Nations Council has helped a nation like Cameroon to enjoy a brotherly friendship with other nations like USA, France, Germany and China to name a few. Cameroon has established strong diplomatic ties with China since 1972. They both have developed fruitfully corporations in political affairs, economic and trade, cultural and education. In 2005, Cameroon exported 6.43million tons of goods with a value of 2.99 billion dollars that is a fall of 6.8% in value term and a rise of 2% as compared with 2004.

On the other China’s value share of world export rose from less than 2% in 1987 to over 7% in 2005. China, apart from petroleum, other export terms are: cocoa, coffee, aluminum lumber. On the other hand, Cameroon import includes machinery, transport, cereals, equipment, fuel, food and electronic equipment. In 2009, Cameroon’s import volumes rose at 4.3 billion dollars. (Baden, B. Catherine, 2005).

1.2 Problem Statement

International trade is an activity which most countries or all countries take part in. This constitutes a significant share of their gross domestic product especially for the less developed countries (LTC). The trade between Cameroon and China has evolved over the year.

Both countries have developed successful corporation in political, economic, cultural, educational and most importantly trading affairs.

China – Cameroon trade is based on the concept of mutual benefit and win-win principle. In most part of this agreement, Cameroon has offered China raw materials to support China in their speed of growth and on the other hand, china has provided Cameroon with techniques to help Cameroon to develop and combat poverty.

This study examines the trade between Cameroon and China and the mutual benefit both countries experience. The finding reveals that through both countries benefits from this trade, it has not been mutually beneficial and skewed in favor of China. Due to this research, we try to investigate the problems and bring out solutions to promote mutual benefits in future trade between the countries. The following questions therefore come up to help us analyze the trade between Cameroon and china.

1.3 Research Questions

1. What are the causes of the problem?
2. To what extent does Cameroon’s exportation of raw wood to china impact economic growth and development in Cameroon?
3. To what extent does China’s importation of plastic materials in Cameroon impact economic growth and development in Cameroon?
4. To what extent does China’s importation of machinery transport in Cameroon impact economic growth and development in Cameroon?
5. What recommendations can be made?

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