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Free trade is beneficial and should be promoted - Essay Example

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International trade defines exchange of goods and services across international and regional boarders. Traders operate under different domestic laws and regulations that involve trade agreements. …
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Free trade is beneficial and should be promoted
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"Free trade is beneficial and should be promoted"

Download file to see previous pages Like in capitalistic national economies, rules and regulation restrict operations in international businesses and this forms the basis of defining different types of international trade environments. Free trade is one of the types and defines an international trade in which no regulations exists. Buying and selling of commodities are only subject to laws of demand and supply and not domestic laws or international barriers. This is contrary to the current international trade environment in which laws restrict trade and treaties exist to facilitate trade with specific partners. This paper argues that free trade is a better option for the contemporary global economy. Diversified views exist against free trade. One of such arguments is the risk of structural unemployment that a domestic economy may experience when it opens up its borders to free trade. According to the perspective, free trade may make some industries more competitive than others may and therefore shifts investments and demand for labor to the more competitive industries and ventures. The consequence is dissertation of some industries that may render experts in those industries jobless. Finding jobs with redundant skills, especially at old age may be a challenge and a threat to people’s welfare and economic growth. It is also argued that free trade exposes an economy to trends in other economies and to global economic trends. Inflation in one country may induce inflation in another country because traded goods from the affected country transfers the inflation effect into the recipient economy. Similarly, recession in one economy may reduce its potentials to import commodities and reduce demand for another country’s export. Cases of perishable commodities would result into economic loss in the exporting countries. Opponents of free trade also claim that the international market favors some economies than others. Countries that are more efficient are able to trade at competitive advantages and this hinders development of emerging economies that lack such advantages. This basis limits benefits of free trade to developed countries that continues to expand their economies while economies of developing countries stagnate. Regulations are also necessary for environmental conservation and free trade is a threat to this because it eliminates or weakens environmental laws. Organizations that produce commodities in less regulated environments also have advantage over those that operate in strictly regulated environments and this may facilitate the urge to eliminate all environmental regulations. Doing so, based on the opponents’ perspectives, is a key to global environmental concerns such as the contemporary global warming. There are also circumstances in which natural justice requires regulations. Examples are in cases of economic downturns such as the recent global recession that called for regulations to prevent unemployment rates (Edge 1). Moral and rational analysis of the opposing arguments identifies weaknesses in their validity. Threats of structural unemployment are for example not real, because people can operate in different industries and organizations’ compositions identify diversity. Transition that focuses interest from one industry to another will therefore only shift employment in that direction. Limiting free trade in order to protect domestic industries and domestic economies is also not rational because such industries failed to thrive in previous restricted market environment and all economies suffered from previous recessions under regulated trade. A moral perspective, rather that rule based approach can also help in resolving issues such as environmental protection and protection of employments during economic crisis (Edge 1). A review of arguments for free ...Download file to see next pagesRead More
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