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Free Trade Is Beneficial and Should Be Promoted - Essay Example

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International trade defines the exchange of goods and services across international and regional borders. Traders operate under different domestic laws and regulations that involve trade agreements. This paper argues that free trade is a better option for the contemporary global economy…
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Free Trade Is Beneficial and Should Be Promoted
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Download file to see previous pages 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 the 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 transfer 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 in 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 the development of emerging economies that lack such advantages. This basis limits the benefits of free trade to developing countries that continue 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 an 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 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). A 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. The transition that focuses on 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 the previously restricted market environment and all economies suffered from previous recessions under-regulated trade. A moral perspective, rather than rule-based approach can also help in resolving issues such as environmental protection and protection of employment during the economic crisis (Edge 1). A review of arguments for free trade, however, establishes social and economic benefits to all stakeholders. Free trade promotes productivity that benefits all economies through the exchange. Induced level of efficiency towards lower prices and diversified products also increases cumulative profits of producing economies and improves the utility of consumers in all economies. This is because commodities are produced at low costs that retain desirable profit margins at lower prices and this together with product diversification expands consumers’ choices and improves derived satisfaction. ...Download file to see next pages Read More
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