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Worldwide trade.The advantages and disadvantages of free trade and the relative comparisons to fair trade - Research Paper Example

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Free trade is an economic concept in which trade between nations is opened up so that regulatory issues are minimized and equal opportunities for imports and exports can be experienced. The concept of free trade is dependent upon the idea that fairness will be established for those involved…
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Worldwide trade.The advantages and disadvantages of free trade and the relative comparisons to fair trade
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Worldwide trade.The advantages and disadvantages of free trade and the relative comparisons to fair trade

Download file to see previous pages... Free trade is an economic concept in which trade between nations is opened up so that regulatory issues are minimized and equal opportunities for imports and exports can be experienced. The concept of free trade is dependent upon the idea that fairness will be established for those involved. However, there is a difference between free and fair, corporations finding ways to best exploit the lack of regulation in order to achieve the highest level of profit from the exploitation of resources. Free trade opens up the borders so that the movement of goods can flow back and forth so that maximum growth of a nations industry can be achieved. Free trade is established with the idea that fair competition exists, a mythological economic model in which all parties act in the best interests of all the stakeholders. However, free trade does have genuine benefits in creating an increase in industry in nations that are struggling to establish growth. When trade exists in a state where resources are more well utilized and allocated for the exchange on a global level, a healthier overall economy can be achieved. There are controversies, however, that come from the realities of free trade. People in the United States who are not in support of free trade fear it because they believe it represents losses in jobs and in industry through competition with nations who do not hold the same wage and environmental standards that are expected within the U.S. Defining Free Trade Free trade exists when respective governments allow trade across borders with very limited governmental interference. In a mutually beneficial agreement, the traders will find that they have comparative advantage and will achieve gains from the trade that have benefit for both parties. Supply and demand are the barometers from which the measurements of the amount of trade is divined. Free trade is a reflection of a global economy, each of the regions of the world benefiting from open borders where the exports and imports create better pricing. While this is the hope of free trade, this is not always the result. According to Irwin (2009), “Growing world trade has helped lift standards of living around the world, and yet today…free trade does not win many popularity contests” (p. 1). Free trade creates fears and insecurities about the availability of jobs and the sale of goods. When Japan rose in prominence as a dominating force in manufacturing during the 1980’s, there was a fear that the competition would wipe out a consecutive stream of businesses within the United States. Japan was competing successfully in the sale of everything from automobiles to super computers, diminishing the power that the United States had gained over innovation and industry in the previous decades. In the 21st century, that worry has been shifted to India and China. India is dealing in labor as industry is taking white collar jobs into that country due to the lower wages while China is excelling at manufacturing, creating product that is far cheaper than can be created in the United States. One of the primary agreements that frames free trade in association with the United States is NAFTA, the North American Free Trade Agreement. This agreement allows for free trade among Mexico, Canada, and the United States. The fears that were most associated with the agreement when it was signed in 1993 was that jobs would flow south into Mexico. However, the advantage to NAFTA was in abolishing the high tariffs that Mexico had imposed on exports, while the low import tariffs that the United States had maintained were insignificant (Irwin 2). This allowed for products to be exported from the United States into Mexico and increase trade flow southward. NAFTA According to Hufbauer and Schott (2005), NAFTA has been a tremendous success, trade ...Download file to see next pagesRead More
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