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Free trade is a trade where countries carries out economic activities ‘without restrictions or barrier such as import and export tariffs’, barrier to market entry and policies (Johnston, Gregory, & Smith, 2011, free trade). Many countries have reaped benefits from free trade and especially developing countries. Some benefits include improvement in infrastructures, expanded markets, access to technologies, free movement of labour and capital, investment, and political relations in form of integrations. These benefits have played a major role in the economic developments of developing countries. However, some countries argue against free trade claiming that it is a burden to developing countries and they object it. Some arguments against include exploitation of developing countries by industrialised, environmental pollution, unemployment of domestic workers, and underperformance of domestic industries thus affecting the country’s economic growth. Free trade has positively impacted to developing countries by stimulating their economic development goals such as millennium development goals thus it can be said to be realistic in the real world.

Free trade was found to work out for countries such as Japan, South Korea, China, other East Asia countries, and most of the developed countries in the world. Trade liberalization led to development of these countries and to attainment of their current level of ‘developed countries’ in the world. The countries formed ‘free trade and economic partnership agreements that helped in negotiations of trade across borders was important in facilitating trade,’ technical support, services, environmental and social issues (Zeng, 2010 p. 651). The guidelines helped countries to carry out trade in a defined environment that prevented them from exploiting each other in terms of natural resources. As a result, the countries realised developments. This has also worked out for developing countries such as those in sub-Sahara Africa for example Egypt. Moreover, free trade agreements encourage foreign direct investments in developing countries increasing inward revenues to these countries. The increased revenues to these countries are channelled to development projects such infrastructures and improving social amenities to citizens. In addition, foreign direct investments create employment for domestic workers thus helping developing countries to lower their unemployment rates. This is one of the achievements that have contributed greatly to shifting of countries from undeveloped cycles to becoming developed. For example, foreign direct investment has contributed to development of China. China is among the developing countries that’ has the largest reserve of foreign direct investments’ (Chen, & Emile, 2013 p. 120). China has attracted many foreign investors due to reduced market barriers such as ‘uniform tax for both domestic and foreign investors’ and trade liberalization resulting to increase in its gross domestic product (Davies, 2013 p. 11). As a result, China’s economy has continuously grown making it among the most developed countries. This has shown how trade liberation impacted on the development of countries through trade agreement that encourages foreign direct investment.

Free trade allows free movement of labour and capital across countries and regions. Free movements of labour and capital ensure that countries under the trade treaties are able to acquire the necessary factors of production for their businesses that will help them to improve their productivity and output. In late 1950, some of the countries in Europe suffered shortage of labour while other experienced high levels of unemployment. For example, Italy experienced economic problems such as high levels of unemployment while other countries such as Germany were lacking different types of labour and shortage on experts (Zaiceva, & Zimmermann, 2008 p. 429). Presence of free trade that was steered by European Economic Community ensured that Germany could be able to get labour from Italy at no cost. As a result Germany was able to get experts that it lacked while Italy benefitted from reducing the level of unemployment. Free trade helps to settle unemployment problems in developing countries as it allow free movement of people from their countries to more developed ones where they are able to get employments. This in turn helps them to reduce unemployment rates and realise their economic goals from increased income from abroad. Consequently, the income of people increases resulting in improved standards of living for the people in developing countries. Free movement labour created employment raising the economic status of people, which was a greater achievement towards country economic goals on reduction of unemployment (Nicoleta, & Camelia-Daniela, 2011 p. 303). As a result poverty is reduced in these countries, which is one of the millennium development goals for them. Movement of highly skilled labour to developed countries also results in high performance of domestic industries thus increasing their productivity, which in turn contribute to economic growth of the recipient country. The initiative was purely inclined to economic gains and there was no any political involvement or interference during the whole process. Moreover, the policy saw drastic improvement of the economy in the region. From this literature, it can be noted that free trade provision to free movement of labour contributed both to reduction of unemployment and poverty, increased productivity, and increased living standard of citizens in developing countries thus fostering the economic developing goals of the countries.

Free trade policies enhanced trade, transport, agriculture, manufacturing industries, imports and exports in developing countries. ‘Free trade area covers all manufactured and agricultural products, although the timetables for reducing tariffs and removing quantitative restrictions and other non-tariff barriers differ, (Association of South Asian Nations, 2009 update on free trade). Due to entry of various industries in the market, infrastructures are improved in collaboration of state’s government and the industries for their market accessibility. Improvement of infrastructures such as roads, railways, communication, electricity, and social amenities by these industries serves as a gateway to developments in these countries. Increased developments results to increase in investments and thus a country realize its development goals of. Although a country does not benefit directly through revenues from tariffs and taxes, the industries help it to meet its development goals. , its development vision is addressed. Improvements of infrastructure such as transport, electricity and social amenities results to improvement of investment capacities of regions and countries, which in turn contribute to economic growth (Jovanovic??, 2013 p. 971). Policies that lift barriers on export and imports by lowering or elimination tariffs and duties encourage export and import of both goods and services to across the region. Developing countries are able to gain revenues from exports while imports supply them with necessary services and goods that are important in steering economic development. For example the European Economic Community elimination of import and export tariffs for its member states encouraged free movement of goods and services across the region in a common market (Bento, 2009 p. 73). Therefore, free trade has contributed greatly to development of small nations through improved trade that encourages export of goods and services without barriers.

Trade liberalization has increased countries integrations and as a result aid to trade inflow to developing countries in terms of technologies and capital has been increased. This has led to strong economic growth, which has been reflected by the increasing gross domestic product and exports for developing countries in East Asia, Africa and Latin America. For example, most of Latin America middle income level countries have integrated with developed countries such as china resulting to improvements of their financial system and consecutive developments (Chen, & Emile, 2013 p. 118). Consequently, technology transfer has led to shift to manufacturing industries, which has attracted investors to the countries. Technology has resulted to increase of improved productivity through lowered cost of production by lowering the cost of labour and increasing relative labour productivity. According to comparative advantage theory by Ricardo, a ‘country should concentrate on production of goods that is best suited at lowered cost in order to improve productivity and economy through export to a second country that is not good in production’ (Bento, 2009 p. 28). Developing countries have been able to achieve improved productivity and specialization through adoption of technologies that have been introduced in their countries by other developed countries through trade liberalization. For example, India has evidenced comparative advantage by employing labour intensive production skills in manufacturing and services that employs intensive skills as in software industries. This has led to its increased exports in its production to other Asians countries thus increasing its revenues and gross domestic income that has played a major role in its economic development. High technologies attract foreign investors and investments increase. Increased investments in the developing countries also results to significant decrease in levels of unemployment. Consecutive increase in exports from developing countries has been due to decreased barrier and reduced tariffs (Johnston, et al 2011, free trade). Therefore, it can be concluded that free trade is has helped countries to advance economically and realise their economic goals such as millennium development goals.

Free trade has led increased access of economic resources to developing countries and utilization of limited available resources thus stimulating their economic and social development. Small developing countries struggle with scarce and underutilised resources. Free trade allows free entry of other countries and investors to small developing countries and as a result, they participate in conversation of the available resources to economic development resources through ‘mobilization of capital and labour thereby improving the status of the country in the economy’ (Unger, 2010 P 171). Moreover, free trade gives small developing nations chances to obtain resources such as capital from already developed countries that assist them to attain economic development resources or utilize what they have. For example, countries from Asia such as India have developed due to trade liberalization where they have been able to obtain capital, labour and other necessary resources from already developed countries. If there were restriction and barriers between countries, it would have been very difficult for countries like India to realize their development. Therefore, free access to economic resources by developing countries have shaped their economies and helped in consecutive developments.

However, free trade has been argued to be unrealistic to small developing countries and instead it is detrimental to its economy by increasing level of unemployment, exploiting domestic companies, increasing pollution and lowering people’s standard of living. Free trade is viewed as means by which developed countries exploit domestic industries of developing countries thus affecting their economic development. Multinational companies such as Nike have been reported to exploit developing countries, (for example Asian countries) by recruiting cheap labour and taking advantage of reduced barriers to maximise on their profits (Irwin, 2009 p. 204). Free trade causes increased influx of imports in a country resulting to increased supply of goods in the market. This causes decrease in prices of goods and services causing domestic companies and industries to reduce their prices, which may result loss and reduced share of the market. Therefore, they become less competitive. This may affect the domestic industries by causing decreased growth and as a result crippling. Hence, for countries to protect their domestic industries, they ‘impose taxes on imports and policies that restrict imports’ that may cause price fluctuations in the market (Hanson, 2010 p. 204). For example, increased steel import to UK from Asia resulted in ‘decreased prices of motor vehicles and thus the car manufacturers and sellers experienced reduced prices thus making losses’ (Verband der Automobilindustrie, 2005 p. 34). The imposition of tariffs on imports decreases entry into a country market thus increasing the prices and the supply of goods by domestic companies. On the other hand, free trade has increased imports resulting reducing the price of good in the market, thus increasing the demand of imported goods and decreasing demand of domestic products thus affecting domestic industries economic growth and that of the host country.

Free trade has also been argued to be the cause of unemployment to domestic developing countries. Free trade does not limit both the entry of entrepreneurs and labour in a countries. This means that there will be transfer of skilled labours from different countries coming together with their manufactures and other entrepreneurs in the country to carry out their operations. This limits the country’s domestic workers from getting such employments and hence increasing the levels of unemployment to developing countries (Trentmann, 2008 p. 73). This increases dependency ratio to these countries and hinders them from realizing developmental goals such as decreasing unemployment rates. Similarly, due to lack of tariffs and barriers to market, many industries are established in the developing countries resulting to losses of some of the industries due to competition and hence the industries move to other countries leaving a gap in employment in the previous country. According to Isis Women, (2014 Free Trade Causes Massive Unemployment) free trade caused massive unemployment in Philippines in 1995 to 2001 with 53 firms being closed down resulting in loss of jobs for 80,319 workers as 29 downsized their human resource causing unemployment of 4,019 jobs. Similarly, free trade in US has led to relocation of most of companies to Mexico, India and other place of the world where tariffs could restrict industries from entry and thus enjoying a stable market. This led to mass unemployment in US. Free trade has been argued as form of colonialism and imperialism in disguise and instead of contributing to developments it results in exploitation of small developing countries (Igwe, 2013 p. 113). Free trade is believed to benefit industrialized countries because of their capital potential. Most developed countries target the third world countries as the host countries where they carry their investment through exploitation of their resources. They dominate in the economy of the host country ending up controlling most of its resources, revenues, and most development projects. In 19th century, free trade helped European countries such as ‘Britain to obtained natural resources from small developing countries and this became disadvantageous to colonized countries over years, creating a gap development between the countries’ (French, 2008 p. 13). This may lead to industries or companies controlling the government though being independent. Therefore, for government to avoid this problem, it imposes barriers, taxes and customs duties so that it can limit industries and also control their operations within the country (Hanson, 2010 p. 204). This has seen countries deviating from policies of free trade and moving back to controlled trade with little free trade that is allowed to the level of regions where countries have similar economic capacities and so there would be no likelihood of exploiting each other or feeling of unfairness for example in European union. Countries argue that free trade deny them access to sources of revenue from foreign investors that could otherwise be used in their development projects. The argument is laid on the fact that ‘free trade allows trade between countries without imposing tariffs and taxes’ (Wacziarg, & Welch, 2008 p. 197). Hence, the trade is exploitive to the developing countries. Most governments and particularly those from developing countries steer their economic development projects and caters for wages from revenues that they get from tariffs, taxes and licensing of businesses that operates within its territories and so, free trade deny them from accessing these funds. Hence, their development projects may end up taking time and making a country poorer as most of its resources are utilized at no benefits.

From the discussion, it can be concluded that free trade has been a reality to developing countries since it contributed greatly to development of current developed countries such as china, South Korea, and other European countries such as Germany and Britain. For example, China is one of the developed countries that have achieved its developments through taking advantage of free trade to attract investors to its country and it investing in small countries such as those in Latin America thus boosting its developments. Although free trade has been attributed by negative impacts on small developing countries, positive impact surpasses the negative one and thus contributing to most of developments in the small countries. Therefore, based on my opinion, I think that free trade has positively impacted to developing countries as it has stimulated their economic development goals such as millennium development goals. Hence free trade has been a realistic aspect to developing countries.

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What Is Free Trade? Definition, Theories, Pros, and Cons

U.S. Economy
Supply & Demand
Archaeology
B.S., Texas A&M University

In the simplest of terms, free trade is the total absence of government policies restricting the import and export of goods and services. While economists have long argued that trade among nations is the key to maintaining a healthy global economy, few efforts to actually implement pure free-trade policies have ever succeeded. What exactly is free trade, and why do economists and the general public view it so differently?

Key Takeaways: Free Trade

Free trade is the unrestricted importing and exporting of goods and services between countries.
The opposite of free trade is protectionism—a highly-restrictive trade policy intended to eliminate competition from other countries.
Today, most industrialized nations take part in hybrid free trade agreements (FTAs), negotiated multinational pacts which allow for, but regulate tariffs, quotas, and other trade restrictions.

Free Trade Definition

Free trade is a largely theoretical policy under which governments impose absolutely no tariffs, taxes, or duties on imports, or quotas on exports. In this sense, free trade is the opposite of protectionism , a defensive trade policy intended to eliminate the possibility of foreign competition.

In reality, however, governments with generally free-trade policies still impose some measures to control imports and exports. Like the United States, most industrialized nations negotiate “ free trade agreements ,” or FTAs with other nations which determine the tariffs, duties, and subsidies the countries can impose on their imports and exports. For example, the North American Free Trade Agreement (NAFTA), between the United States, Canada, and Mexico is one of the best-known FTAs. Now common in international trade, FTA’s rarely result in pure, unrestricted free trade.

In 1948, the United States along with more than 100 other countries agreed to the General Agreement on Tariffs and Trade (GATT), a pact that reduced tariffs and other barriers to trade between the signatory countries. In 1995, GATT was replaced by the World Trade Organization (WTO). Today, 164 countries, accounting for 98% of all world trade belong to the WTO.

Despite their participation in FTAs and global trade organizations like the WTO, most governments still impose some protectionist-like trade restrictions such as tariffs and subsidies to protect local employment. For example, the so-called “ Chicken Tax ,” a 25% tariff on certain imported cars, light trucks, and vans imposed by President Lyndon Johnson in 1963 to protect U.S. automakers remains in effect today.

Free Trade Theories

Since the days of the Ancient Greeks, economists have studied and debated the theories and effects of international trade policy. Do trade restrictions help or hurt the countries that impose them? And which trade policy, from strict protectionism to totally free trade is best for a given country? Through the years of debates over the benefits versus the costs of free trade policies to domestic industries, two predominant theories of free trade have emerged: mercantilism and comparative advantage.

Mercantilism

Mercantilism is the theory of maximizing revenue through exporting goods and services. The goal of mercantilism is a favorable balance of trade , in which the value of the goods a country exports exceeds the value of goods it imports. High tariffs on imported manufactured goods are a common characteristic of mercantilist policy. Advocates argue that mercantilist policy helps governments avoid trade deficits, in which expenditures for imports exceeds revenue from exports. For example, the United States, due to its elimination of mercantilist policies over time, has suffered a trade deficit since 1975.

Dominant in Europe from the 16th to the 18th centuries, mercantilism often led to colonial expansion and wars. As a result, it quickly declined in popularity. Today, as multinational organizations such as the WTO work to reduce tariffs globally, free trade agreements and non-tariff trade restrictions are supplanting mercantilist theory.

Comparative Advantage

Comparative advantage holds that all countries will always benefit from cooperation and participation in free trade. Popularly attributed to English economist David Ricardo and his 1817 book “Principles of Political Economy and Taxation,” the law of comparative advantage refers to a country’s ability to produce goods and provide services at a lower cost than other countries. Comparative advantage shares many of the characteristics of globalization , the theory that worldwide openness in trade will improve the standard of living in all countries.

Comparative advantage is the opposite of absolute advantage—a country’s ability to produce more goods at a lower unit cost than other countries. Countries that can charge less for its goods than other countries and still make a profit are said to have an absolute advantage.

Pros and Cons of Free Trade

Would pure global free trade help or hurt the world? Here are a few issues to consider.

5 Advantages of Free Trade

It stimulates economic growth: Even when limited restrictions like tariffs are applied, all countries involved tend to realize greater economic growth. For example, the Office of the US Trade Representative estimates that being a signatory of NAFTA (the North American Free Trade Agreement) increased the United States’ economic growth by 5% annually.
It helps consumers: Trade restrictions like tariffs and quotas are implemented to protect local businesses and industries. When trade restrictions are removed, consumers tend to see lower prices because more products imported from countries with lower labor costs become available at the local level.
It increases foreign investment: When not faced with trade restrictions, foreign investors tend to pour money into local businesses helping them expand and compete. In addition, many developing and isolated countries benefit from an influx of money from U.S. investors.
It reduces government spending: Governments often subsidize local industries, like agriculture, for their loss of income due to export quotas. Once the quotas are lifted, the government’s tax revenues can be used for other purposes.
It encourages technology transfer: In addition to human expertise, domestic businesses gain access to the latest technologies developed by their multinational partners.

5 Disadvantages of Free Trade

It causes job loss through outsourcing: Tariffs tend to prevent job outsourcing by keeping product pricing at competitive levels. Free of tariffs, products imported from foreign countries with lower wages cost less. While this may be seemingly good for consumers, it makes it hard for local companies to compete, forcing them to reduce their workforce. Indeed, one of the main objections to NAFTA was that it outsourced American jobs to Mexico.
It encourages theft of intellectual property: Many foreign governments, especially those in developing countries, often fail to take intellectual property rights seriously. Without the protection of patent laws , companies often have their innovations and new technologies stolen, forcing them to compete with lower-priced domestically-made fake products.
It allows for poor working conditions: Similarly, governments in developing countries rarely have laws to regulate and ensure safe and fair working conditions. Because free trade is partially dependent on a lack of government restrictions, women and children are often forced to work in factories doing heavy labor under grueling working conditions.
It can harm the environment: Emerging countries have few, if any environmental protection laws. Since many free trade opportunities involve the exporting of natural resources like lumber or iron ore, clear-cutting of forests and un-reclaimed strip mining often decimate local environments.
It reduces revenues: Due to the high level of competition spurred by unrestricted free trade, the businesses involved ultimately suffer reduced revenues. Smaller businesses in smaller countries are the most vulnerable to this effect.

In the final analysis, the goal of business is to realize a higher profit, while the goal of government is to protect its people. Neither unrestricted free trade nor total protectionism will accomplish both. A mixture of the two, as implemented by multinational free trade agreements, has evolved as the best solution.

Sources and Further Reference

Baldwin, Robert E. " The Political Economy of U.S. Import Policy ," Cambridge: MIT Press, 1985
Hugbauer, Gary C., and Kimberly A. Elliott. "Measuring the Costs of Protection in the United States." Institute for International Economics, 1994
Irwin, Douglas A. "Free Trade Under Fire." Princeton University Press, 2005
Mankiw, N. Gregory. " Economists Actually Agree on This: The Wisdom of Free Trade ." New York Times (April 24, 2015)
Ricardo, David. " Principles of Political Economy and Taxation ." The Library of Economics and Liberty
Understanding the Pros and Cons of Protectionism
Rostow's 5 Stages of Economic Growth and Development
History of the North American Free Trade Agreements
The Globalization of Capitalism
What Is Globalization?
The Arguments Against Free Trade
Regionalism: Definition and Examples
What Is an Embargo? Definition and Examples
The Protectionist Smoot-Hawley Tariff of 1930
The Economic Effect of Tariffs
Mercantilism and Its Effect on Colonial America
The International Monetary Fund
Why Tariffs Are Preferable to Quotas
Absolute and Comparative Advantage
What Was the Open Door Policy in China? Definition and Impact
Product Dumping: A Danger to Foreign Markets

Benefits of free trade

Free trade means that countries can import and export goods without any tariff barriers or other non-tariff barriers to trade.

Essentially, free trade enables lower prices for consumers, increased exports, benefits from economies of scale and a greater choice of goods.

In more detail, the benefits of free trade include:

1. The theory of comparative advantage

This explains that by specialising in goods where countries have a lower opportunity cost, there can be an increase in economic welfare for all countries. Free trade enables countries to specialise in those goods where they have a comparative advantage .

2. Reducing tariff barriers leads to trade creation

Trade creation occurs when consumption switches from high-cost producers to low-cost producers.

The removal of tariffs leads to lower prices for consumers (Prices fall from P1 to P2)
This fall in prices enables an increase in consumer surplus of areas 1 + 2 + 3 + 4
Imports will increase from Q3-Q2 to Q4-Q1
The government will lose tax revenue of area 3. Tax revenue from imports was T (P1-P2) × (Q3-Q2)
Domestic firms producing this good will sell less and lose producer surplus equal to area 1
However, overall there will be an increase in economic welfare of 2+4 (1+2+3+4 – (1+3)
The magnitude of this increase depends upon the elasticity of supply and demand. If demand elastic consumers will have a big increase in welfare
Essentially, removing tariffs leads to lower prices for consumers – so the price of imported food, clothes and computers will be lower. When the UK joined the EEC – the price of many imports from Europe fell.

3. Increased exports

As well as benefits for consumers importing goods, firms exporting goods where the UK has a comparative advantage will also see a significant improvement in economic welfare. Lower tariffs on UK exports will enable a higher quantity of exports boosting UK jobs and economic growth.

4. Economies of scale

If countries can specialise in certain goods they can benefit from economies of scale and lower average costs; this is especially true in industries with high fixed costs or that require high levels of investment. The benefits of economies of scale will ultimately lead to lower prices for consumers and greater efficiency for exporting firms.

5. Increased competition

With more trade, domestic firms will face more competition from abroad. Therefore, there will be more incentives to cut costs and increase efficiency. It may prevent domestic monopolies from charging too high prices.

6. Trade is an engine of growth .

World trade has increased by an average of 7% since 1945, causing this to be one of the significant contributors to economic growth.

7. Make use of surplus raw materials

Middle Eastern countries such as Qatar are very rich in reserves of oil, but without trade, there would be not much benefit in having so much oil. Japan, on the other hand, has very few raw materials; without trade, it would have low GDP.

8. Tariffs may encourage inefficiency

If an economy protects its domestic industry by increasing tariffs industries may not have any incentives to cut costs.

Economists on Free Trade

Adam Smith , The Wealth Of Nations (1776) Smith generally supported free trade arguing countries should specialise in their areas of expertise. He made the argument there is no point in protecting the Scottish wine industry if it would cost 30 times the price of importing wine from warmer countries. Smith also argued that if our competitors become better off, they will be able to buy more of our exports. Smith saw trade as a way for all countries to become better off. This was in contrast to the zero-sum Mercantilist theories popular at the time.

“As a rich man is likely to be a better customer to the industrious people in his neighbourhood than a poor, so is likewise a rich nation. [Trade restrictions,] by aiming at the impoverishment of all our neighbours, tend to render that very commerce insignificant and contemptible.”

The Wealth Of Nations, Book IV, Chapter III, Part II, p.495, para. c11.

“If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” The Wealth Of Nations, Book IV, Chapter II, [ link ]

David Ricardo On the Principles of Political Economy and Taxation. (1817) Ricardo made case for free trade on the basis of comparative advantage. Ricardo tried to show that removal of tariffs would lead to a net welfare gain – the gain of consumers outweighing the loss of producers

“Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole.”

David Ricardo, On the Principles of Political Economy and Taxation ( link )

John Maynard Keynes . Keynes was generally free trade and supported the logic of specialisation

“In a regime of Free Trade and free economic intercourse it would be of little consequence that iron lay on one side of a political frontier, and labor, coal, and blast furnaces on the other. But as it is, men have devised ways to impoverish themselves and one another; and prefer collective animosities to individual happiness.”

John Maynard Keynes The Economic Consequences of the Peace (1920) Though it worth bearing in mind Keynes wavered on free trade in some circumstances

Greg Mankiw argues that free trade is one area where economists are united

“Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards.” – Greg Mankiw [ link ]

Joseph Stiglitz is more circumspect. Stiglitz argues free trade depends on individual circumstances

The Economist

ECONOMISTS are usually accused of three sins: an inability to agree among themselves; stating the obvious; and giving bad advice. In the field of international trade, they would be right to plead not guilty to all three. If there is one proposition with which virtually all economists agree, it is that free trade is almost always better than protection. Yet the underlying theory is not readily understood by non-economists. And the advice that follows from it-protection does not pay-is seldom wrong.

From: Economist 1998

Arguments against free trade
Trade liberalisation
Globalisation
Mercantilism

| International Freedom and Trade International Freedom and Trade
| Policy Briefs Policy Briefs
| May 23, 2018

The Benefits of Free Trade: Addressing Key Myths

Donald J. Boudreaux
Download Publication PDF

Free trade increases prosperity for Americans—and the citizens of all participating nations—by allowing consumers to buy more, better-quality products at lower costs.

The growing rhetoric about imposing tariffs and limiting freedom to trade internationally reflects a resurgence of old arguments that stay alive in large part because the benefits of free international trade are often diffuse and hard to see, while the benefits of shielding specific groups from foreign competition are often immediate and visible. This illusion fuels the common perception that free trade is detrimental to the American economy. It also tips the scales in favor of special interests seeking protection from foreign competition. As a result, the federal government currently imposes thousands of tariffs, quotas, and other barriers to trade.

Restrictions on foreign trade all too often harm the very people they aim to protect: American consumers and producers. Trade restrictions limit the choices of what Americans can buy; they also drive up the prices of everything from clothing and groceries to the materials manufacturers use to make everyday products. Moreover, lower-income Americans generally bear a disproportionate share of these costs. Trade treaties increase freedom to trade and do not result in loss of sovereignty; they are part and parcel of wider international relations and they are not new.

The Truths of Free Trade

Free trade increases prosperity for Americans—and the citizens of all participating nations—by allowing consumers to buy more, better-quality products at lower costs. It drives economic growth, enhanced efficiency, increased innovation, and the greater fairness that accompanies a rules-based system. These benefits increase as overall trade—exports and imports—increases.

Free trade increases access to higher-quality, lower-priced goods. Cheaper imports, particularly from countries such as China and Mexico, have eased inflationary pressure in the United States. Prices are held down by more than 2 percent for every 1 percent share in the market by imports from low-income countries like China, which leaves more income for Americans to spend on other products.
Free trade means more growth. At least half of US imports are not consumer goods; they are inputs for US-based producers, according to economists from the Bureau of Economic Analysis. Freeing trade reduces imported-input costs, thus reducing businesses’ production costs and promoting economic growth.
Free trade improves efficiency and innovation. Over time, free trade works with other market processes to shift workers and resources to more productive uses, allowing more efficient industries to thrive. The results are higher wages, investment in such things as infrastructure, and a more dynamic economy that continues to create new jobs and opportunities.
Free trade drives competitiveness. Free trade does require American businesses and workers to adapt to the shifting demands of the worldwide marketplace. But these adjustments are critical to remaining competitive, and competition is what fuels long-term growth.
Free trade promotes fairness. When everyone follows the same rules-based system, there is less opportunity for cronyism, or the ability of participating nations to skew trade advantages toward favored parties. In the absence of such a system, bigger and better-connected industries can more easily acquire unfair advantages, such as tax and regulatory loopholes, which shield them from competition.

Myth vs. Reality

1. Myth: More exports mean more wealth.

Reality: It is the total level of trade—exports and imports—that most accurately reflects American prosperity. Prosperity is defined by the breadth and variety of what Americans are able to consume. More exports increase wealth only because they allow Americans to buy more imports and give non-Americans greater incentives to invest in America, helping the US economy grow. Restricting imports leaves Americans worse off.

Poorer Americans suffer more from tariffs than higher-income people. Not only do they spend more of their income on consumption goods, many of the goods they consume are subject to higher tariffs than more expensive goods of the same type.
For example, imported cheap sneakers can face a tariff as high as 60 percent, while men’s leather dress shoes are subject to an 8.5 percent tariff. Similarly, plain drinking glasses face a tariff of nearly 30 percent, while expensive crystal glasses are taxed at 3 percent.

2. Myth: Free trade means jobs go overseas.

Reality: Free trade does not create more jobs, but neither does protectionism. Free trade may reduce jobs in inefficient industries, but it frees up resources to create jobs in efficient industries, boosting overall wages and improving living standards. Protectionism, in contrast, attempts to protect jobs that the market will not sustain, at the expense of more innovative industries.

Much of the change in the labor force is not the result of free trade but of innovation. New technology, such as apps on mobile devices, has displaced a staggering variety of products, including radios, cameras, alarm clocks, calculators, compact discs, DVDs, carpenters’ levels, tape measures, tape recorders, blood-pressure monitors, cardiographs, flashlights, and file cabinets.
Using protectionist policies to “save” a job comes at enormous cost, as opportunities shrink and input costs swell for industries downstream.

3. Myth: Restrictions on trade help Americans.

Reality: The only beneficiaries of trade restrictions are the inefficient firms and special interests that lobby for these protections against competition.

Despite receiving protection from foreign competition for many decades, large firms have steadily left the US steel industry because of high fixed costs and competition from smaller firms. Tariffs on steel increase costs in steel-consuming industries, which employ almost 13 million Americans, compared to the 140,000 Americans employed in the steelmaking industry.
Other countries often retaliate against US tariffs. Tariffs on Chinese-made solar panels between 2012 and 2015 resulted in China imposing tariffs on American polysilicon, raising the cost of solar equipment and reducing employment opportunities in both nations.

4. Myth: US trade deficits are bad for Americans.

Reality: US trade deficits generally are good for Americans.

The trade deficit is not debt. A growing trade deficit, despite its misleading name, is good for the economy. It is typically a signal that global investors are confident in America’s economic future. The US trade deficit might be larger than it would otherwise be if a trading partner chooses to keep the price of its currency artificially low, but this practice harms the trading partner, not the United States.

America’s trade deficit increases whenever non-Americans choose to increase the amount they invest in the United States. Dollars that leave the United States as part of the trade deficit must come back as a “capital account surplus”—that is, the net investment funds flowing into the United States. More investment means expansion of existing businesses, more new businesses, higher worker productivity, and more output-enhancing activities, such as research and development, all of which increase prosperity.
So-called “currency manipulation” by a trading partner does not harm the American economy. For example, a lower price of the yuan makes Chinese goods cheaper for American consumers, conferring a real benefit on the United States. Keeping the price of the yuan lower through monetary policy, however, does not lower the real costs of the resources and outputs exported by the Chinese people, who also face higher prices for American imports. An undervalued yuan—assuming this undervaluation to be real rather than fanciful—benefits Americans at the expense of the Chinese.

5. Myth: Trade treaties require a surrender of sovereignty.

Reality: Trade treaties enhance freedom.

Nation-states routinely ratify treaties on a range of issues, including human rights, treatment of prisoners, and territorial waters, as well as international trade and financial transactions. Such cooperation is the basis of public international law. Trade treaties are particularly valuable because they contain provisions that help governments avoid the worst damage that protectionism could inflict on their people.
The “most-favored nation” and “national treatment” clauses of the General Agreement on Tariffs and Trade require that nations treat all trading partners alike and do not discriminate between domestic and imported goods. This requirement of reciprocity helps assure governments that gains from trade will be available for everyone.

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Free Trade and Global Economy Essay

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Introduction

Controversial phenomenon of free trade, unemployment as the consequence of the economy quality.

The opportunities of the world trade market are great. In particular, when it is about free trade, people get quite many prospects for the development of their business. Nevertheless, the principle of the unhindered exchange of goods is often called controversial. It is due to several reasons, and there are both advantages and some disadvantages in this system of doing business.

Due to the fact that free trade is openly presented in the modern world, certain conclusions can be drawn regarding its effectiveness and usefulness. For example, according to Cacciatore (2014), unemployment can significantly increase in some industries if certain companies cannot compete with the representatives of other countries. It is quite logical since the world market is known to be a platform where competition plays one of the key roles, and the struggle for leading positions is sometimes tough. Also, if it is about free trade, one of the conditions for such a concept is the mandatory strengthening of control over the release and import of licensed products (Fairbrother, 2014).

The fight against illegal content is quite serious in the face of this type of trade, and it can be a plus. Also, a positive feature is a fact that any economy is sure to strengthen due to the influx of investment.

The example of competition in the country of Bangladesh. It experienced some difficulties after the United States, one of its main partners, signed a free trade agreement with the countries of Central America and the Dominican Republic. The fact is that this eastern state had a rather stable business partner, but after America began to work closely with other countries, the economy of Bangladesh began to weaken (Brown, 2016). It is one of the examples of competition in the world market.

There is an assumption that in the case of a company’s disability to compete with other enterprises, employees of this firm will inevitably have to leave. As a consequence, it leads to the formation of a hypothesis about the destructive effect of free trade on the economy. However, this phenomenon cannot be considered so categorically as the goal of a mutually beneficial partnership is not only the provision of jobs but also the establishment of business ties.

As Brown (2016) claims, foreign partners can contribute to the strengthening of economic power in a particular country if the interaction is strong enough and successful. Nevertheless, even if active work is conducted in conditions of excessively tough competition, this or that enterprise is likely to experience significant difficulties and, accordingly, will not be able to provide the corresponding number of jobs.

Based on the material studied, it can be noted that the opinion on free trade has changed significantly. Quite a lot of nuances and subtleties of this sphere were opened, and the possibilities became clearer than before. Also, different pros and cons of this principle of economic cooperation have become obvious, and the knowledge that has been gained can be used to work with other sectors of the economy.

Thus, there are both advantages and some disadvantages in the system of free trade, and the modern global economy is largely built on this principle of doing business. This concept is sometimes considered rather controversial, and there are both advantages and disadvantages. The connection between free trade and unemployment is quite evident; however, certain conclusions should be made only according to additional facts and conditions.

Brown, R. C. (2016). Promoting labour rights in the global economy: Could the United States’ new model trade and investment frameworks advance international labour standards in Bangladesh? International Labour Review , 155 (3), 383-406.

Cacciatore, M. (2014). International trade and macroeconomic dynamics with labor market frictions. Journal of International Economics , 93 (1), 17-30.

Fairbrother, M. (2014). Economists, capitalists, and the making of globalization: North American free trade in comparative-historical perspective. American Journal of Sociology , 119 (5), 1324-1379.

Free-Trade Policies and Poverty Level in Bangladesh
Bangladesh Police Institution
EnGlobal Logistics Expanding into Bangladesh
Factors Explaining Exports and Imports
International Trade: Import and Export
Balance of Payments and Petrodollar Recycling
International Business in the World
International Trade Concepts and Definitions
Chicago (A-D)
Chicago (N-B)

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IvyPanda . (2020) 'Free Trade and Global Economy'. 28 October.

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Essay on Free Trade

Students are often asked to write an essay on Free Trade in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

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100 Words Essay on Free Trade

Introduction to free trade.

Free trade is an economic concept that involves the selling of goods and services between countries with no barriers like tariffs, duties, or quotas. It promotes global economy growth, efficiency, and fairness.

Benefits of Free Trade

Free trade allows countries to focus on their strengths, leading to efficient production and lower prices. Consumers benefit from a wider variety of goods at affordable rates.

Drawbacks of Free Trade

Despite its benefits, free trade can lead to job losses in certain sectors. It may also encourage poor working conditions in developing nations.

Free trade has both advantages and disadvantages. It’s important for countries to balance these to ensure fair and beneficial trade.

250 Words Essay on Free Trade

Economic implications of free trade.

Free trade is often linked to economic liberalization and globalization. It encourages nations to specialize in producing goods where they have a comparative advantage, leading to efficient allocation of resources. This efficiency can lead to lower prices, greater choice for consumers, and potential economic growth.

Free Trade and Developing Nations

For developing nations, free trade can provide access to larger markets and advanced technologies, fostering industrial growth. However, it can also expose them to fierce competition, potentially threatening domestic industries.

Controversies Surrounding Free Trade

Despite its potential benefits, free trade has sparked controversies. Critics argue it can lead to job losses in sectors exposed to foreign competition, exacerbating income inequality. Moreover, it may encourage ‘race to the bottom’ in environmental and labor standards.

While free trade can bring significant benefits, it also presents challenges. Therefore, it is crucial to adopt complementary policies that mitigate potential negative impacts and ensure that the benefits of free trade are shared widely. In essence, free trade is not an end in itself, but a means to achieve broader economic and social goals.

500 Words Essay on Free Trade

Introduction.

Free trade is a fundamental economic concept that advocates for unrestricted buying and selling of goods and services between countries without the imposition of constraints such as tariffs, quotas, or subsidies. The principle of free trade is based on the theory of comparative advantage, which asserts that countries should specialize in producing goods and services they can produce most efficiently.

The Rationale of Free Trade

Free trade offers multiple benefits. Firstly, it allows countries to benefit from the specialization of labor, thereby increasing productivity and efficiency. Secondly, it enhances competition, which can lead to innovation and improved quality of goods and services. Thirdly, consumers enjoy a wider variety of products at lower prices, which can increase their standard of living. Lastly, free trade can foster international cooperation and peace as nations become economically interdependent.

Criticisms of Free Trade

Despite its advantages, free trade also has its critics. Detractors argue that free trade can lead to job losses in industries that cannot compete with foreign competitors. They also contend that it can exacerbate income inequalities, as benefits may disproportionately accrue to the wealthy. Environmentalists express concerns that free trade can lead to a ‘race to the bottom’ in environmental standards, as countries may lower regulations to attract businesses.

Free Trade and Developing Countries

In conclusion, free trade is a complex and multifaceted issue. While it offers numerous benefits such as increased productivity, lower prices, and enhanced international cooperation, it also carries potential downsides, including job losses, income inequality, and environmental degradation. Therefore, it is crucial to approach free trade with a balanced perspective, taking into account its potential benefits and drawbacks. Policymakers should strive to implement measures that maximize the benefits of free trade while mitigating its potential harm, ensuring that the gains from trade are equitably distributed.

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Arguments for and Against Free Trade | Trade Policy

Let us learn about Arguments for and Against Free Trade.

Arguments for Free Trade :

I. advantages of specialization:.

Firstly, free trade secures all the advantages of international division of labour. Each country will specialize in the production of those goods in which it has a comparative advantage over its trading partners. This will lead to an optimum and efficient utilization of resources and, hence, economy in production.

ii. All-Round Prosperity:

Secondly, because of unrestricted trade, global output increases since specialization, efficiency, etc., make production large scale. Free trade enables countries to obtain goods at a cheaper price. This leads to a rise in the standard of living of people of the world. Thus, free trade leads to higher production, higher consumption and higher all-round international prosperity.

iii. Competitive Spirit:

Thirdly, free trade keeps the spirit of competition of the economy. As there exists the possibility of intense foreign competition under free trade, domestic producers do not want to lose their grounds. Competition enhances efficiency. Moreover, it tends to prevent domestic monopolies and free the consumers from exploitation.

iv. Accessibility of Domestically Produced Goods and Services:

ADVERTISEMENTS:

Fourthly, free trade enables each country to get commodities which it cannot produce at all or can only produce inefficiently. Commodities and raw materials unavailable domestically can be procured through free movement even at a low price.

v. Greater International Cooperation:

Fifthly, free trade safeguards against discrimination. Under free trade, there- is no scope for cornering raw materials or commodities by any country. Free trade can thus promote international peace and stability through economic and political cooperation.

vi. Free from Interference:

Finally, free trade is free from bureaucratic interferences. Bureaucracy and corruption are very much associated with unrestricted trade.

In brief, restricted trade prevents a nation from reaping the benefits of specialization, forces it to adopt less efficient production techniques and forces consumes to pay higher prices for the production of protected industries.

Arguments against Free Trade :

Despite these virtues, several people justify trade restrictions.

Following arguments are often cited against free trade:

i. Advantageous not for LDCs:

Firstly, free trade may be advantageous to the advanced countries but not to the backward economies. Free trade has brought enough misery to the poor, less developed countries, if past experience is any guide. India was a classic example of colonial dependence of UK’s imperialistic power prior to 1947. Free trade principles have brought colonial imperialism in its wake.

ii. Destruction of Home Industries/Products:

Secondly, it may ruin domestic industries. Because of free trade, imported goods become available at a cheaper price. Thus, an unfair and cut-throat competition develops between domestic and foreign industries. In the process, domestic industries are wiped out. Indian handicrafts industries suffered tremendously dining the British regime.

iii. Inefficiency becomes Perpetual:

Free trade cannot bring all-round development of industries. Comparative cost principle states that a country specializes in the production of a few commodities. On the other hand, inefficient industries remain neglected. Thus, under free trade, an all-round development is ruled out.

iv. Danger of Overdependence:

Fourthly, free trade brings in the danger of dependence. A country may face economic depression if its international trading partner suffers from it.

The Great Depression that arose in 1929-30 in the US economy swept all over the world and all countries suffered badly even if their economies were not caught in the grip of the then Depression. Such overdependence following free trade also becomes catastrophic during war.

v. Penetration of Harmful Foreign Goods:

Finally, a country may have to change its consumption habits. Because of free trade, even harmful commodities (drugs, etc.,) enter the domestic market. To prevent such, restrictions on trade are required to be imposed.

In view of all these arguments against free trade, governments of less developed countries in the post-Second World War period were encouraged to resort to some kind of trade restrictions to safeguard national interest.

Arguments in Favour of Free International Trade | Economics
Free Trade: Advantages and Disadvantages | Economics
Arguments for and Against Protection | Trade Policy
Advantages of Free Trade between Two Countries

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Pros and Cons of Free Trade Agreements

Advantages of Free Trade Agreements

Disadvantages of free trade agreements, how to create effective trade agreements, frequently asked questions (faqs).

The Balance

Free trade agreements are treaties that regulate the tariffs, taxes, and duties that countries impose on their imports and exports. The most well-known U.S. regional trade agreement is the United States-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) on July 1, 2020.

The advantages and disadvantages of free trade agreements affect jobs, business growth, and living standards. For example, they can lead to increased job opportunities and business expansion but may also result in job displacement and economic inequalities.

Key Takeaways

Free trade agreements are contracts between countries to allow access to their markets.
FTAs can force local industries to become more competitive and rely less on government subsidies.
They can open new markets, increase gross domestic product (GDP), and invite new investments.
FTAs can open up a country to degradation of natural resources, loss of traditional livelihoods, and local employment issues.
Countries must balance the domestic benefits of free trade agreements with their consequences.

Free trade agreements are designed to increase trade between two or more countries. Increased international trade has the following main advantages.

Increased Economic Growth

In 2003, the U.S. International Trade Commission estimated that NAFTA could increase U.S. economic growth by 0.1% to 0.5% per year. The USMCA is a modern trade agreement that recognizes the influence of technology on economies. It changed many original NAFTA rules and processes but also kept others intact.

According to the Brookings Institution, increased trade between the U.S., Canada, and Mexico since the USMCA took effect has helped the three countries account for almost a third of global GDP.

More Dynamic Business Climate

Before free trade agreements, countries often protected their domestic industries and businesses. This protection often made them stagnant and non-competitive in the global market. With the protection removed, they became motivated to become true global competitors.

Free trade agreements also contribute to foreign investment. This adds capital to expand local industries and boost domestic businesses. It also brings in U.S. dollars to many formerly isolated countries.

Lower Government Spending

Many governments subsidize local industries. After the trade agreement removes subsidies, those funds can be put to use elsewhere.

Industry Expertise

Global companies have more expertise than domestic companies to develop local resources. That's especially true in mining, oil drilling, and manufacturing. Free trade agreements allow global firms access to these business opportunities. When the multinationals partner with local firms to develop the resources, they train them in the best practices. That gives local firms access to these new methods.

Technology Transfer

Local companies also receive access to the latest technologies from their multinational partners. As local economies grow, so do job opportunities. Multinational companies provide job training to local employees.

The biggest criticism of free trade agreements is that they are responsible for job outsourcing. Here are some of the primary disadvantages.

Increased Job Outsourcing

Why does this happen? Reducing tariffs on imports allows companies to expand to other countries. Without tariffs, imports from countries with a low cost of living cost less. It makes it difficult for U.S. companies in those same industries to compete, so they may reduce their workforce. Many U.S. manufacturing industries laid off workers as a result of NAFTA. One of the biggest criticisms of NAFTA is that it sent jobs to Mexico.

The USMCA sought to address and correct these criticisms, requiring—for the first time in a trade agreement—that 40% to 45% of North American auto content be made by workers earning at least $16 per hour.

Theft of Intellectual Property

Many developing countries don't have laws to protect patents, inventions, and new processes. The laws they do have aren't always strictly enforced. As a result, corporations often have their ideas stolen. They must then compete with lower-priced domestic knock-offs.

Crowding Out Domestic Industries

Many emerging markets are traditional economies that rely on farming for most employment. These small family farms can't compete with subsidized agri-businesses in developed countries. As a result, they lose their farms and must look for work in the cities. This aggravates unemployment, crime, and poverty.

Poor Working Conditions

Multinational companies may outsource jobs to emerging market countries without adequate labor protections. As a result, women and children are often subjected to grueling factory jobs in sub-standard conditions.

Reduced Tax Revenue

Many smaller countries struggle to replace revenue lost from import tariffs and fees.

Degradation of Natural Resources

Emerging market countries often don't have many environmental protections. Free trade leads to the depletion of timber, minerals, and other natural resources. Deforestation and strip mining reduce their jungles and fields to wastelands.

In addition to threatening environmental resources, free trade agreements threaten native populations as well. As development moves into isolated areas, indigenous cultures can be destroyed. Local people are uprooted. Many suffer disease and death when their resources are polluted.

Free trade agreements are designed to combat trade protectionism , which has its own downsides. Trade protectionism produces high tariffs and only protects domestic industries in the short term. In the long term, global corporations will hire the cheapest workers wherever they are in the world to make higher profits.

A better solution than protectionism is the inclusion of regulations within trade agreements that protect against the disadvantages.

Environmental safeguards can prevent the destruction of natural resources and cultures. Labor laws prevent poor working conditions. The World Trade Organization enforces free trade agreement regulations.

Developed economies can reduce their agribusiness subsidies, keeping emerging market farmers in business. They can help local farmers develop sustainable practices and then market them as such to consumers.

Countries can insist that foreign companies build local factories as part of the agreement. They can require these companies to share technology and train local workers.

What was the purpose of NAFTA?

NAFTA was created to promote cross-border trade among the U.S., Mexico, and Canada. The three countries sought to create a free trade agreement that would foster competition, increase investment opportunities, and create procedures for handling trade disputes. Although it had some serious downsides, NAFTA largely succeeded in achieving those goals. The United States-Mexico-Canada Agreement (USMCA) officially replaced NAFTA on July 1, 2020, to achieve the modern trade goals of the digital age.

What is the difference between free trade and fair trade?

Although these terms are often confused, there are significant differences between free trade and fair trade. Free trade agreements are aimed at fostering open trade between nations to improve economic growth among all involved parties. The fair trade movement is focused on fostering economic equity on a global scale so that workers who make goods in other countries receive fair wages and improve their lives and communities.

Office of the United States Trade Representative. " United States-Mexico-Canada Agreement ."

United States International Trade Commission. " The Impact of Trade Agreements: Effect of the Tokyo Round, U.S.-Israel FTA, U.S.-Canada FTA, NAFTA, and the Uruguay Round on the U.S. Economy ," Page 32.

Northwestern Journal of International Law and Business. " Trade and Technology Within the Free Trade Zone: The Impact of the WTO Agreement, NAFTA, and Tax Treaties on the NAFTA Signatories ," Page 84.

Congressional Research Service. " The North American Free Trade Agreement (NAFTA) ," Page 27.

Congressional Research Service. " The United States-Mexico-Canada Agreement (USMCA) ," Page 11.

ADB Institute. " Exploring the Trade-Urbanization Nexus in Developing Economies: Evidence and Implications " Pages 2, 7-13.

Brookings Institution. " Workers' Rights: Labor Standards and Global Trade ."

European Union Directorate-General for External Policies. " Addressing Developing Countries' Challenges in Free Trade Implementation ," Page 8.

World Trade Organization. " World Trade Report 2010: D. Trade Policies and Natural Resources ," Pages 126, 134, 136.

American University International Law Review. " Indigenous Peoples, Indigenous Farmers: NAFTA's Threat to Mexican Teosinte Farmers and What Can Be Done About It ," Page 1393.

Congressional Research Service. " The United States-Mexico-Canada Agreement (USMCA) ," Pages 1, 23-24.

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By Alan S. Blinder

By Alan S. Blinder,

F or more than two centuries economists have steadfastly promoted free trade among nations as the best trade policy. Despite this intellectual barrage, many “practical” men and women continue to view the case for free trade skeptically, as an abstract argument made by ivory tower economists with, at most, one foot on terra firma. These practical people “know” that our vital industries must be protected from foreign competition .

The divergence between economists’ beliefs and those of (even well-educated) men and women on the street seems to arise in making the leap from individuals to nations. In running our personal affairs, virtually all of us exploit the advantages of free trade and comparative advantage without thinking twice. For example, many of us have our shirts laundered at professional cleaners rather than wash and iron them ourselves. Anyone who advised us to “protect” ourselves from the “unfair competition” of low-paid laundry workers by doing our own wash would be thought looney. Common sense tells us to make use of companies that specialize in such work, paying them with money we earn doing something we do better. We understand intuitively that cutting ourselves off from specialists can only lower our standard of living.

Adam Smith ’s insight was that precisely the same logic applies to nations. Here is how he put it in 1776:

It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.. . . If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.

Spain, South Korea, and a variety of other countries manufacture shoes more cheaply than America can. They offer them for sale to us. Shall we buy them, as we buy the services of laundry workers, with money we earn doing things we do well—like writing computer software and growing wheat? Or shall we keep “cheap foreign shoes” out and purchase more expensive American shoes instead? It is pretty clear that the nation as a whole must be worse off if foreign shoes are kept out—even though the American shoe industry will be better off.

Most people accept this argument. But they worry about what happens if another country—say, China—can make everything, or almost everything, cheaper than we can. Will free trade with China then lead to unemployment for American workers, who will find themselves unable to compete with cheaper Chinese labor? The answer (see comparative advantage ), which was provided by david ricardo in 1810, is no. To see why, let us once again appeal to our personal affairs.

Some lawyers are better typists than their secretaries. Should such a lawyer fire his secretary and do his own typing? Not likely. Though the lawyer may be better than the secretary at both arguing cases and typing, he will fare better by concentrating his energies on the practice of law and leaving the typing to a secretary. Such specialization not only makes the economy more efficient but also gives both lawyer and secretary productive work to do.

The same idea applies to nations. Suppose the Chinese could manufacture everything more cheaply than we can—which is certainly not true. Even in this worst-case scenario, there will of necessity be some industries in which China has an overwhelming cost advantage (say, toys) and others in which its cost advantage is slight (say, computers). Under free trade the United States will produce most of the computers, China will produce most of the toys, and the two nations will trade. The two countries, taken together, will get both products cheaper than if each produced them at home to meet all of its domestic needs. And, what is also important, workers in both countries will have jobs.

Many people are skeptical about this argument for the following reason. Suppose the average American worker earns twenty dollars per hour while the average Chinese worker earns just two dollars per hour. Won’t free trade make it impossible to defend the higher American wage? Won’t there instead be a leveling down until, say, both American and Chinese workers earn eleven dollars per hour? The answer, once again, is no. And specialization is part of the reason.

If there were only one industry and occupation in which people could work, then free trade would indeed force American wages close to Chinese levels if Chinese workers were as good as Americans. But modern economies are composed of many industries and occupations. If America concentrates its employment where it does best, there is no reason why American wages cannot remain far above Chinese wages for a long time—even though the two nations trade freely. A country’s wage level depends fundamentally on the productivity of its labor force, not on its trade policy. As long as American workers remain more skilled and better educated, work with more capital, and use superior technology, they will continue to earn higher wages than their Chinese counterparts. If and when these advantages end, the wage gap will disappear. Trade is a mere detail that helps ensure that American labor is employed where, in Adam Smith’s phrase, it has some advantage.

Those who are still not convinced should recall that China’s trade surplus with the United States has been widening precisely as the wage gap between the two countries, while still huge, has been narrowing. If cheap Chinese labor was stealing American jobs, why did the theft intensify as the wage gap fell? The answer, of course, is that Chinese productivity was growing at enormous rates. The remarkable upward march of Chinese productivity both raised Chinese wages relative to American wages and turned China into a world competitor. To think that we can forestall the inevitable by closing our borders is to participate in a cruel self-deception. Nor should there be any worry about failing to forestall the inevitable. The fact that another country becomes wealthier does not mean that Americans must become poorer.

Americans should appreciate the benefits of free trade more than most people, for we inhabit the greatest free-trade zone in the world. Michigan manufactures cars; New York provides banking; Texas pumps oil and gas. The fifty states trade freely with one another, and that helps them all enjoy great prosperity. Indeed, one reason why the United States did so much better economically than Europe for more than two centuries is that America had free movement of goods and services while the European countries “protected” themselves from their neighbors. To appreciate the magnitudes involved, try to imagine how much your personal standard of living would suffer if you were not allowed to buy any goods or services that originated outside your home state.

A slogan occasionally seen on bumper stickers argues, “Buy American, save your job.” This is grossly misleading for two main reasons. First, the costs of saving jobs in this particular way are enormous. Second, it is doubtful that any jobs are actually saved in the long run.

Many estimates have been made of the cost of “saving jobs” by protectionism . While the estimates differ widely across industries, they are almost always much larger than the wages of the protected workers. For example, one study in the early 1990s estimated that U.S. consumers paid $1,285,000 annually for each job in the luggage industry that was preserved by barriers to imports, a sum that greatly exceeded the average earnings of a luggage worker. That same study estimated that restricting foreign imports cost $199,000 annually for each textile worker’s job that was saved, $1,044,000 for each softwood lumber job saved, and $1,376,000 for every job saved in the benzenoid chemical industry. Yes, $1,376,000 a year!

While Americans may be willing to pay a price to save jobs, spending such enormous sums is plainly irrational. If you doubt that, imagine making the following offer to any benzenoid chemical worker who lost his job to foreign competition: we will give you severance pay of $1,376,000—not annually, but just once—in return for a promise never to seek work in the industry again. Can you imagine any worker turning down the offer? Is that not sufficient evidence that our present method of saving jobs is mad?

But the situation is actually worse, for a little deeper thought leads us to question whether any jobs are really saved overall. It is more likely that protectionist policies save some jobs by jeopardizing others. Why? First, protecting one American industry from foreign competition imposes higher costs on others. For example, quotas on imports of semiconductors sent the prices of memory chips skyrocketing in the 1980s, thereby damaging the computer industry. Steel quotas force U.S. automakers to pay more for materials, making them less competitive.

Second, efforts to protect favored industries from foreign competition may induce reciprocal actions in other countries, thereby limiting American access to foreign markets. In that case, export industries pay the price for protecting import-competing industries.

Third, there are the little-understood, but terribly important, effects of trade barriers on the value of the dollar. If we successfully restrict imports, Americans will spend less on foreign goods. With fewer dollars offered for sale on the world’s currency markets, the value of the dollar will rise relative to that of other currencies. At that point unprotected industries will start to suffer because a higher dollar makes U.S. goods less competitive in world markets. Once again, America’s ability to export is harmed.

On balance the conclusion seems clear and compelling: while protectionism is sold as job saving, it probably really amounts to job swapping. It protects jobs in some industries only by destroying jobs in others.

About the Author

Alan S. Blinder is the Gordon S. Rentschler Memorial Professor of Economics at Princeton University. He wrote, from 1985 to 1992, a regular economics column for Business Week and is the coauthor of one of the best-selling textbooks on economics. He has served as vice chairman of the Federal Reserve’s Board of Governors and as a member of President Bill Clinton’s Council of Economic Advisers.

Benefits of Free Trade Agreements

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Free trade and free trade with other nations allow businesses and markets to reach as many customers as possible, thus boosting sales, revenue, and potentially corporate profit. When sales are up it can lead to companies [...]

In the present configuration of an increasingly globalised world, the volume of global trade transaction has been continually increasing. Furthermore, it can be argued that the current international trade regime has its root on [...]

The success of exporting depends heavily on the availability of adequate and functional logistical infrastructure which includes roads, railways and shipping vessels. The natural openness which comes along with an easy access to [...]

The period between 1918 and 1939 is infamous for being a time of economic struggle for Scotland. Victory in the First World War was followed by a great deal of post war economic depression. With a growth in economic nationalism, [...]

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Trade - Essay Examples And Topic Ideas For Free

Trade, the exchange of goods and services between individuals or entities and across borders, is a fundamental economic activity. Essays on trade could explore various trade theories, the history of trade relations, and the development of international trade agreements. They might also delve into the impact of trade on economic growth, poverty reduction, and international relations. Topics could also include discussions on contemporary trade issues such as trade wars, the impact of globalization on trade, and the role of international trade organizations like the World Trade Organization. We have collected a large number of free essay examples about Trade you can find at PapersOwl Website. You can use our samples for inspiration to write your own essay, research paper, or just to explore a new topic for yourself.

The Columbian Exchange and Global Trade

The Columbian Exchange also had negative impacts on Afro-Eurasia. The increase in silver circulation that occured because of Columbian Exchange led to massive inflation, which affected the exchange of all crops as their value was based on silver. For example, the more precious Spanish galleons that flowed into China due to large European demand for Chinese goods, the more its value dropped, which had detrimental impacts on the Chinese regime and the Spanish economy (Grolle). Inflation caused Spain to lose […]

Indian Ocean Trade Network

"There have been many changes and continuities that took place in the Indian Ocean trade network. Some of these changes that occurred were based on technology that was used that time to get to different countries to trade and some changes were regarding the European nation that was in control throughout Asia. Discoveries that were made worldwide eventually affected the trade that took place in Asia, for example, the Columbian Exchange. Before the Columbian Exchange was a thing, the Indian […]

A Brief History of the Age of Exploration

The Age of Discovery(also known as the Age of Exploration) began in the late 14th century to the early 15th century and it lasted clear through the 17th century. It was the time in European history when the overseas exploration began to grow in population. For most Europeans, the Age of Discovery was a time when new lands were discovered. However, for many others, the Age of Discovery is remembered as the time when their lands were invaded and settled […]

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What Drove the Sugar Trade

Sugar is an extremely enticing and magnificent sugar to food varieties utilized each day, everywhere on the world to fulfill our cravings. One year after Christopher Columbus' first journey in 1493, Columbus acquainted pure sweetener with the islands of the Caribbean. During this time sugar was not known to the vast majority in Europe. That changed soon enough and made the creation of sugar become a huge industry. The sugar trade was driven via land and environment, buyer interest, and […]

A “special Trade Relationship” – USA and United Kingdom

Due to the desire for autonomy and sovereignty, the United Kingdom voted to leave the European Union through a referendum. Britain is the EU's largest market and biggest economic contributor and with their 500 million customers, they can separate from the market and start their own trade with other countries while strengthening their self-power. Also as a member state, the UK must obey to the rules and policies surrounding immigrants; that combined with the influx of immigrants they hope to […]

The Impact of Globalization in Italy

Abstract Italy is in the midst of a huge transformation. The country is often associated with having extraordinary food and romantic adventures, but today Italy's image is changing as it is becoming a leader in productions of machinery around the world. This is due to globalization, the process of social, political, economic, cultural, and technological integration among countries around the world. Businesses throughout the world come together to trade goods that are not easily accessible in the country they are […]

China Free Trade Agreement

The article that I deemed fit and choose is a China free trade agreement. The information concerning the trade agreement stroke the globe and the mails on 7th October 2017 barely two years since the ideas crept up. It was all in the media, magazines and the Chinas FTA network. The article from the name articulates all the agreement that the nation have made or are in the process of making with various countries of their interest, to enter with […]

The Fall and Rise of Martha Stewart: a Tale of Insider Trade

Martha Stewart, a name synonymous with domestic perfection and business acumen, found herself in the eye of a legal storm in the early 2000s. The case of Martha Stewart’s insider trading scandal stands as a pivotal moment in American corporate history, highlighting the complexities of insider trading laws and the consequences of corporate misconduct. This essay delves into the details of the insider trading case involving Martha Stewart, examines the legal and ethical dimensions of her actions, and discusses the […]

Economic and Cultural Transformation as a Result of Globalization in the Philippines

Globalization is associated with not only advancements in communication and ever-expanding trade routes but also transformation in political systems and the enhancement or destruction of cultural heritage (Block, 2004; Lieber & Weisberg, 2002). Indeed, it is apparent that globalization in developing countries has a significant impact on political, economic, and cultural aspects. Globalization arises from several factors which may include colonialism (Korobeynikova, 2016). The expansion in power and territory that is characteristic of colonialism may promote communication and technological advancements, […]

The Intricacies of the Triangular Trade: a Historical Exploration

When we think of the vast expanse of the Atlantic Ocean, images of serene beaches, powerful waves, and perhaps maritime adventure come to mind. Yet, beneath this placid surface lies a turbulent history intricately linked with the term "triangular trade." Though it sounds benign, perhaps reminiscent of a geometry lesson, the term denotes a complex and morally fraught economic system that once dominated the Atlantic world. Triangular trade refers to a three-legged trading system that connected Europe, Africa, and the […]

European Imperialism in Africa

During the 1800s, the colonization of Africa was taken over by Europe. The countries gained money, resources, and the power while imperializing the countries of Africa. The Europeans were fascinated by the geography and the resources that Africa had to offer. Although, the imperialism did have an impact on the future of Africa. The European Imperialism in Africa influenced the future of the citizens in Africa and Africa as a whole in three ways, the forced labor or slavery from […]

Exploitation of the Atlantic

Discuss the Exploitation of the Atlantic through a trade system. Who were the major players in terms of an Atlantic trading empire? What at first began with the Portuguese as kings of trade eventually spread to other major nations…WHY and HOW? What types of goods were essential in creating trading empires and producing exploitation of Africans, Native Americans, and colonists (think sugar and fur and more…)? How did trade create and destroy relationships between indigenous cultures and peoples and European […]

Essay about the Crusades: Religious Devotion or Political and Economic Desire?

Because of the abundance of religious expansion, political compromise, prosperous trade, academic exchanges, and more, it is important to recognize the most important factor that resulted in the Crusades. The Crusades were a series of military expeditions made in attempts to gain control of Jerusalem and the Holy Land. Lasting from 1095 to 1291 during the High Middle Ages, the Crusades were mainly in Western Europe, the Seljuk Empire, and Jerusalem and the Holy Land. Historians have argued, based on […]

Globalization in Modern World

After the end of World War II, much of Europe was in ruins. With millions of people dead due to war and starvation and most European economies decimated, the United States decided to jumpstart the process of rebuilding Europe by providing financial aid to the countries of Western Europe. Within a few years, America departed from its isolationist foreign policy and became deeply involved in foreign affairs. Through economic assistance, many European countries were able to recover. The European economy […]

The Positive and Negative Effects of Globalization

An analysis on the effects of the positive and negative effects of globalization within the development of a one world market combination of global economic personality. Globalization is defined as the process by which geographic boundaries have been transcended by increased technical progress. It is the development of a one world market place, or worldwide economic ecosystem governed by the interconnectivity of individual component economic units. Globalization is a set of processes, rather than an end situation representing the unrelenting […]

Democratic Peace Theory

After World War II, a known characteristic of affluent, liberal, democratic states is that they tend to not not engage in war with one another. The democratic peace theory attributes to this tendency to democracy itself, claiming that it is a key peacekeeper due to the obligatory culture of democracy to cooperate with the regime, both leaders and citizens for their own benefit. The capitalist peace theory justifies the maintenance of peace on the incentive of trade to maintain peace […]

Analyze why European Nations Pursued Overseas Exploration and Colonization

Exploration is the act of exploring something to discover some new information on places, people or the resources itself. Exploration can be done in anything to get new information on anything like different spices, different places or the different places. But in simple language exploration means actual purpose for discovery. In history, Europeans pursued overseas exploration to get information or discover new things or new places so that they could colonize. The main purpose of exploration in the history was […]

Advantage of Globalization

Introduction The globalization process and the model of knowledge management are linked in a dynamic environment that constantly competes to invent and develop new complex products and services for worldwide demand. Corporations comprehend that the benefits for improving materials, while lowering risks, and creating strategies to excel in providing customer satisfaction in today’s global market, will lead to success. The strategic use of knowledge management plays a very important role for business success in the increasingly competitive global market. Intellectual […]

Essay on Country Report of Nepal

Nepal is a secular state where majority of them are Hindu population resides. It has the unique landscape and biodiversity. This country is known for multi-cultural and multi-lingual, where there are more than 100 ethnic people live and speak more than 120 language. Nepal is divided into three main geographical regions- Himalayas, the Hills and the Terai (a plain land). In the last three years, Nepal was hit by a 7.8 magnitude earthquake and a 7.3 magnitude aftershock in April […]

The Presidency of Andrew Jackson

Andrew Jackson was a Democratic-Republican who served as the 7th president of the United States. He showed great military strength and leadership skills throughout his lifetime, fighting against the Creeks during the War of 1812 and winning the election of 1828 against John Quincy Adams. Throughout his presidency, Jackson made decisions that had both positive and negative effects on America and its people. Although Jackson’s controversial actions regarding The Bank of the United States, including the passing of the Surplus […]

Heart of Darkness Research Essay

"Colonial Congo was seen from the outside as a place of great economic success in the trade of ivory, rubber, and minerals. At the time of legal and successful ivory trade, King Leopold II was the sole, self-appointed representative of the Congo Free State. In simpler words, he owned Congo and everyone or thing within it. The Congo and Belgian trade was a mighty business but had a negative impact on the country. The ivory trade during Colonial Congo caused […]

Postclassical Period

During the postclassical period, along with other major civilizations including Asia and Africa, two great Christian civilizations emerged in Europe. One Christian civilization that emerged was the Byzantine Empire, which controlled parts of western Asia and southeastern Europe. Since the Romans set up their eastern capital in Constantinople, the Byzantine Empire maintained high levels of political, economic, and cultural life during the period of 500 to 1450 C.E. Imperial decline and collapse, as demonstrated by the Byzantine Empire, was in […]

British Imperialism in India

British imperialism was an event that greatly impacted both India's past and present. British imperialism in India was able to occur because of the country's trading system, and the weakening of the Moghuls, and British wanted to control India because, India was seen as a good source of both labor and raw materials and this was necessary for British industrialization. As stated previously British imperialism had a large, lasting effect on India. It opened India to western ideals, opened them […]

Imperialism in the Eastern Countries

From its origin as a small enterprise, the East India Company emerged in 1600 as a powerful commercial and political organization established by the English businessmen. Its early presence shaped India and its surroundings and officially brought western people into Asia's early modern landscape. During the period of 1700 to 1900, the world was expanding rapidly, and many western countries took on their journey of imperialism to obtain more control over world trade and expand their territories. Certain factors such […]

The Mughal Dynasty and Emperor Akbar

During the years 1500-1750 we learn about many empires that have risen and fall due to many different factors. From the years 1526-1627 the Mughal Dynasty was the dominant power in South Asia. This empire was ruled by Emperor Akbar who in time became one of the most powerful men in the entire world. Some factors that contributed to the prosperity and stability of this empire is military strength, trade, and agriculture. During Akbar’s time as emperor his armies controlled […]

Imperialism and it’s Effect on Many Different Countries and their Conquests

Throughout history, imperialism has had a profound effect on many different countries and their conquests. Imperialism is the process by which a larger and/or more dominant country seeks to extend its jurisdiction beyond its own borders (Citation?, year). Imperialistic countries seek and have this motive to expand their borders into other countries because the expansion of territory allows for the acquisition of more resources and in turn: the gaining of more power. In order to accomplish this expansion, these countries […]

Imperialism Masked by the Gift of Faith

During the 15th and 16th centuries C.E. various maritime expeditions were on the rise. These included but were not limited to voyages conducted by some of the leading powers at the time: the kingdoms of Spain and Portugal and the Ming Empire. Despite Spain and Portugal being on the Western part of Europe and the Ming Empire being located in the Eastern part of Asia, they all shared the same ultimate motive, imperialism. Due to the shared motive behind these […]

Imperialism – 1850 to about 1910

During the period of 1850 to about 1910, American imperialism was motivated by four main factors: economic, political, geographic, and cultural. The economic factors were desires to find new markets for trade. By extending colonial power throughout the world, the United States would have new trading partners and markets. In addition, the U.S. would be closer to new markets; when the U.S. became a colonial power in the Philippines, it opened up trade with East Asia. In the political world, […]

Colonialism and Imperialism in North America

In 1492, Columbus’ main motivation for exploration was wealth and he, including most of Europe, have been doing lots of trading with Asia. He was trying to find a faster route to Asia, specifically India, so he can find and sell raw resources and gold. Instead, he ended up in North America. When Spain found the New World, they eventually named it “North America”, and from there, they discovered gold and other valuable raw resources. Europe soon began to trade […]

About Europe and the Age of Exploration

Beginning in the early fifteenth century and motivated by God (religion) Glory (power), and Profit (gold); Europeans began to embark on the exploration of new worlds that expanded their empire, increased their riches, and spread Christianity to the New World. European nations thought that trade was the way they could increase their wealth and sought land access to vast luxuries from Asia such as silk and spices that were profitable, but was controlled by the Turks, Ottoman and Italian Venetians, […]

Free Trade - Free Essay Examples and Topic Ideas

Free trade refers to the practice of removing trade barriers or restrictions between countries, allowing for the exchange of goods and services to flow freely between them. It is based on the belief that this will increase competition, lower prices, boost innovation, and lead to greater economic benefits for all parties involved. Free trade promotes specialization according to a country’s comparative advantage, and encourages economies to become more efficient and productive. While there may be some negative impacts, such as job displacement or environmental concerns, proponents of free trade argue that the overall benefits outweigh these downsides.

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Is “Free Trade” Fair Trade? Yes or No?
The Advantages and Disadvantages of Free Trade in the Global Economy
Global Finance and Free Trade Limits and Possibilities
The North American Free Trade Agreement
Pros Cons of Free Trade
The Impact of Free-Trade Policies on Job Growth and Prosperity
International Trade Theory
“The Imperialism of Free Trade” by John Gallagher and Ronald Robinson
Who Wins And Loses From International Trade?
International Trade and Global Marketing
International Trade and Economic Bloc
Aid versus Trade
Inter-Temporal Production Possibilities and Trade
A Project on the World Trade Organization
International Trade And Comparative Advantage Economics Essay
NAFTA Pros and Cons
The economic diversity
The history and advantages of Trade Blocs
Advantages of trade liberalization
Review of Theories of International Trade
Foreign Trade – Its Changing Composition
Indian Ocean Trade
International Economics Gerber Study Questions
Advantages of Regional Integration – Summary
China-US Trade War and Global Economy
International Trade and Starbucks
Advantages and Disadvantages of International Trade
Manufacturing Jobs Are Not Coming Back
chapter 2- eco 2023
Import Substitution Industrialization (ISI)
The Atlantic Slave Trade
China-U.S. Trade Wars

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Free Trade
Free trade is a trade where countries carries out economic activities 'without restrictions or barrier such as import and export tariffs', barrier to market entry and policies (Johnston, Gregory, & Smith, 2011, free trade). Many countries have reaped benefits from free trade and especially developing countries. Some benefits include improvement in infrastructures, expanded markets, access ...
Essay on Free Trade
Here is an essay on 'Free Trade' for class 9, 10, 11 and 12. Find paragraphs, long and short essays on 'Free Trade' especially written for school and college students.
What Is Free Trade? Definition, Theories, Pros, and Cons
Free trade is the absence of government policies restricting the import/export of goods and services, but few efforts to implement such policies have worked.
Benefits of free trade
Explaining how free trade can benefit consumers, firms and the whole global economy. Benefits include competition, greater choice, lower prices, economies of scale and law of comparative advantage.
The hidden cost of free trade
Questions about who benefits from free trade - and at what cost - have resurfaced as part of the backlash against globalisation. This column uses data from 54 low- and middle-income countries to show that in a majority of cases, trade liberalisation increases both incomes and inequality. Most of these trade-offs resolve in favour of ...
The Benefits of Free Trade: Addressing Key Myths
Free trade increases prosperity for Americans—and the citizens of all participating nations—by allowing consumers to buy more, better-quality products at lower costs.
Full article: The Evidence for Free Trade and Its Background
In this article, I offer a methodological analysis of the empirical research on the causal effects of trade liberalisation, and assess whether such studies can be of any use for guiding policy pres...
Free Trade and Global Economy Essay
There are both advantages and some disadvantages in the system of free trade, and the modern global economy is largely built on this principle of doing business.
100 Words Essay on Free Trade
High-quality essay on the topic of "Free Trade" for students in schools and colleges.
Arguments for and Against Free Trade
Let us learn about Arguments for and Against Free Trade. Arguments for Free Trade: i. Advantages of Specialization: Firstly, free trade secures all the advantages of international division of labour. Each country will specialize in the production of those goods in which it has a comparative advantage over its trading partners. This will lead to an optimum and efficient utilization of resources ...
Free Trade vs Protectionism: Understanding the Concepts
Free trade and protectionism represent two opposing approaches to international trade. Free trade emphasizes the removal of trade barriers, promoting economic efficiency and market access. Protectionism aims to protect domestic industries but can lead to higher prices and reduced consumer choice. The balance between free trade and protectionism ...
Free Trade in The New World Order: an Essay
Free Trade. Free trade not only betters the world through increased. prosperity, it makes the world a more stable place as well. By. encouraging intense commercial activity irrespective of the. participants' nationality, free trade increases the probability of finding profitable markets.
Argumentative Essay On Free Trade
By definition, free trade is the "economic policy of not discriminating against imports from and exports to foreign jurisdictions. As such, buyers and sellers from separate economies may voluntarily trade without the domestic government applying tariffs, quotas, subsidies or prohibitions on their goods and services".
Pros and cons of free trade: [Essay Example], 426 words
Pros and Cons of Free Trade. Free trade and free trade with other nations allow businesses and markets to reach as many customers as possible, thus boosting sales, revenue, and potentially corporate profit. When sales are up it can lead to companies hiring which leads to lower unemployment which is good for the economy.
Pros and Cons of Free Trade Agreements
Free trade agreements are designed to increase trade between two countries. However, here are the pros and cons that may impact the economy.
Essays on Free Trade
Absolutely FREE essays on Free Trade. All examples of topics, summaries were provided by straight-A students. Get an idea for your paper
Free Trade
For more than two centuries economists have steadfastly promoted free trade among nations as the best trade policy. Despite this intellectual barrage, many "practical" men and women continue to view the case for free trade skeptically, as an abstract argument made by ivory tower economists with, at most, one foot on terra firma. These practical […]
Benefits of Free Trade Agreements: [Essay Example], 919 words
Benefits of Free Trade Agreements. The United States is a land of free trade in itself. As Americans, we take pride in our nation's capitalist ways. Free trade is a fundamental element of a peaceful and efficient society. As such, I believe that that international free trade agreements are not only in the best interest of the US, but in the ...
The Pros and Cons of Free Trade Essay
The Pros and Cons of Free Trade Essay. Free Trade is the ability to trade goods and services without barriers, and for prices to rise naturally through supply and demand. In theory, Free Trade was a way to break down the barriers between countries, banishing taxes and allowing prices to be naturally set through supply and demand.
Free Trade Essays: Examples, Topics, & Outlines
View our collection of free trade essays. Find inspiration for topics, titles, outlines, & craft impactful free trade papers. Read our free trade papers today!
Trade Free Essay Examples And Topic Ideas
Trade, the exchange of goods and services between individuals or entities and across borders, is a fundamental economic activity. Essays on trade could explore various trade theories, the history of trade relations, and the development of international trade agreements. They might also delve into the impact of trade on economic growth, poverty ...
Free Trade
Discover FREE essays on Free Trade to understand writing styles, structures, and find new ideas. Explore the largest database of free samples on StudyMoose.
Free Trade Essay
Free Trade Essay. Trade blocks remove certain restrictions to trade. Economic blocs help promote free trade. Discrimination against imports nor interference with exports describes free trade policy and the government's role in free trade. The role of the government includes not applying subsidies to exports or tariffs to imports nor quotas.