The Free trade movement can be described as a free market policy which is generally followed by the international markets in certain countries. In this free trade movement, the government of the particular country does not restrict the imports or exports being made or received to other countries (Barry & Goodin, 2015). A large majority of countries are a part of the World Trade Organization however, only a certain follow the free trade practice. The given report followed a structured format whereby different components related to the free trade conducted by different markets and related concepts will be discussed and examined.
The politics of Free Trade
Although considered to be a fairly beneficial movement, the different costs, benefits and the parties who benefit from the free trade have been a crucial topic of discussion and greatly discussed by various academics, governments and the related interest groups (Cooper, 2014). The concept and related argument for the protectionism often falls into the economic category and the moral category is often taken into consideration as well. This means that free trade often given rise to colonialism and destroys the infant industries and gives rise to income inequality, environmental degradation, race to the bottom, cultural change and a barrier for the national defense.
The views of the economists on this particular movement presents that the different assumptions and the conclusions which have been made in this regard do not take into consideration to socio political factors. The social political factors are important to consider and these include factors like the political stability, human rights and the environmental protection aspects.
The free trade is often criticized by the domestic industries as well as they believe that their profits and market share tends to drop considerably in lieu of the imported goods. However, as stated by the theory of David Ricardo, the theory believes that the consumers tend to gain much from this although the producers tend to lose (Bolle, 2016). Even the producers like to use raw materials from the domestic industries as they often tend to avail subsidies and reduced tariffs in their home countries when compared to the regulations in the international market.
Free Trade is often opposed by groups who are anti-globalization in nature. According to these groups, the assertion is based on the fact that the agreements on free trade reduce the economic freedom of the poor or the related working population (Aggarwal, 2013). These theories are assumed to be harmful in nature and therefore, it is often believed that they tend to serve as a threat to the common people.
Benefits of the Free Trade movement
The advantages of the free trade are given as follows:
- It assists international specialization. Using the free trade movement an organization can easily specialize and be able to ensure that they gain in trade with respect to the goods in which they have a competitive advantage in (Anderson & Yotov, 2016).In cases where there would have been no free trade many countries would have found it difficult to survive.
- It also contributes towards increasing the world production and the world consumption. As the economies of scale can be harnessed, it becomes possible for the company to take the advantage of the large scale production.
- It helps countries and the consumer market against the monopolies of trade. Many countries or companies tend to foster or succumb to monopolies and related concepts. Hence, for this purpose, the different companies would be required to maintain the trade balance.
- Helps to maintain links with other countries (Irwin, 2015). The international trade helps to foster relations which help in interchanging of culture as well as knowledge between varied nations.
- It leads to higher utilization of resources which helps to stimulate home production in lieu of working the best against the foreign competition hence, customers gain in this procedure.
According to me, although various researchers and economists have often stated that the free trade movement and related policies are not sustainable, it cannot be denied, that the free trade has bought about various advantages and has supported the business to prosper in future and benefit the customers as well.
Hence, from the given analysis it could be stated that although free trade has been deemed to beneficial in the short run, the movement will have harmful impacts for different countries in the long run. The report summarized different concepts related to the free trade movement with examples.
Aggarwal, V. K. (2013). Bilateral trade agreements in the Asia-Pacific. In Bilateral trade agreements in the Asia-Pacific (pp. 19-42). Routledge.
Anderson, J.E. & Yotov, Y.V. (2016). Terms of trade and global efficiency effects of free trade agreements, 1990–2002. Journal of International Economics, 99, pp.279-298.
Barry, B., & Goodin, R. E. (Eds.). (2015). Free movement. Routledge.
Bolle, M. J. (2016). Overview of labor enforcement issues in free trade agreements.
Cooper, W. H. (2014). Free trade agreements: Impact on US trade and implications for US trade policy. Current Politics and Economics of the United States, Canada and Mexico, 16(3), 425.
Irwin, D. A. (2015). Free trade under fire. Princeton University Press.