Is Free Trade Fair - Term Paper Example

a). Is Free Trade Fair? Discuss To start with, it is important to understand what free trade is. Free trade is defined as a system of trade policy which allows the traders to spread their trade across national frontiers without any intervention from the government of the land. Under free trade, prices are a true indicator of supply and demand and thus the sole determinants of resource allocation (Sirota, 2008). The interventions are in the form of taxes, tariffs, non-tariff barriers, and subsidies, and the inter-government managed trade pacts like the North American Free Trade Agreement (NAFTA) and Central America Free Trade Agreement (CAFTA) to name a few. Whether or not free trade is fair is a concept that demands a great deal of attention and concentration, and especially by the people who are directly involved under such aegis. The question that arises here is that whether or not free trade assists in the developing countries or it just brings about success touch points for the world’s biggest superpowers (Johnson, 2009). Free trade theory was devised by several economists for the sake of economic growth. Proponents of free trade regularly cite the theories of eighteenth century Scottish economist Adam Smith and David Ricardo, a nineteenth century British economist. They argued that if government stays out of trade, then wealth created by private businesses and trade will benefit the public at large. The gentlemen also asserted that countries need to specialize in the goods that they can produce most efficiently and cheaply. Also when countries trade their specialties, nearly all the stakeholders receive the benefits undoubtedly (Condon, 2002). Free trade theory claims that economic competition with minimal government intervention will lead to greater efficiency, productivity, and innovation; will reduce costs for consumers; and will free up more capital for further investment. First of all, the role of free trade is removal of trade barriers such as tariffs which should promote economic growth, foster a cooperative spirit among nations, help developing nations into becoming independent economies, and end poverty around the world. Free trade benefits developing countries because it provides economic opportunities, improves working conditions, and advances their technology, becoming more globally conscious. As far as the undertakings of the developing countries are concerned, free trade provides them different opportunities for economic growth. If free trade becomes a universally acceptable economic system, provisionally wealthy countries and developing countries both gain a number of benefits to grow the worldwide economy. Quite rightly so, trade is the greatest factor that leads to economic growth across all segments within the society that one can speak of. When trade occurs as a result of true demand and supply, the economic growth that occurs also truly reflects the increase in economic welfare. Thus, free trade brings about increased economic growth, which means better and more jobs; advanced standards of living and so on. Free trade is not only beneficial for wealthy countries, but also developing ones. The growth is the solution to world poverty. Additionally, free trade improves working conditions for workers in the developing nations. Free trade can help global workers who are working under torrid conditions. In a hypothetical situation, if a person came up with an explanation that free trade was bad as the workers are laboring under life-threatening conditions to produce the goods that normal people buy, then there could be a number of reasons to suggest in the wake of such a discussion. Perhaps the consumer habits need to be changed or something that is totally new and comprehensive in its own right. Even though people realize a large number of workers are laboring under bad conditions, everybody wants to buy cheaper priced goods. I think it is essentially one unchangeable habit on the part of the global consumers. And there are a number of reasons to draw up such a conclusion in the first place (Hufbauer, 2008). The criticisms and controversies in the wake of the free trade discussions have provided more drawbacks to the cause of this topic than it could offer as compared to the benefits that are drawn up from time to time. The Canadian disputes, the US deindustrialization debates, the Chapters 11, 14, 19 and 20 issues respectively have all come under the criticisms that have been raised ever since the NAFTA was launched in the year 1994. The same have remained attached to this even today as well. The manner in which public responds to the basis of NAFTA as well as its work is one of a mixed one. They have both the positive and negative feelings related with NAFTA and this indeed is a healthy feeling to have; more so in the midst of a democratic discussion (Seglem, 1993). Moving on with the debate of the free trade, it is correct to pinpoint the role of NAFTA here. Americans, Mexicans and Canadians have had their share of mixed feelings when it comes to the working basis of NAFTA (Randall, 1995). Some are of the view that NAFTA as an organization which is good for their respective nations whilst others think that the same is just a waste of time, money and resources on the part of their countries. Thus, the role of NAFTA is looked upon with an eye of skepticism time and time again (Bhagwati, 2002). This is because there are concerns within the related ranks and more so within the people, for whom the policies are enacted, suspended, revised and implemented yet again. It is for these people that NAFTA is in institution even to this day and had the confidence of people shaken in the past, NAFTA would have ceased to exist much before one could have anticipated. Thus, in all essence, NAFTA has been playing its vital role since it came into its own. It has touched quite a number of nerves as well as provided happiness amongst different quarters. The future could be a little bit difficult in the path of achieving success for NAFTA (Kingsolver, 2001). Coming back to finding out whether free trade is fair or not, one can decipher that it enables developing countries to be more advanced in terms of technology. The world has grown flatter so that all countries can share the technological benefits. Especially, it will be an important opportunity for the developing countries. For example, China was not a wealthy and prosperous country in the world. Most major industries’ factories moved to China for lower labor and lesser regulations on workers in the free trade competition. Now, China is rapidly becoming the center of global economy and this has been a trend. Are sweatshops harmful and dangerous to poor countries? Some analysts and journalists argue that sweatshops greatly benefit workers in developing countries. However, sweatshops have essentially bad working conditions for their workers, which is not something that goes down well with the proponents of the free trade discussions (Conti, 1998). On the flip side of the discussion, many argue that free trade harms developing countries. The author of article “My Six-Year-Old Son Should Get a Job: Is Free Trade Always the Answer?”, Ha-Joon Chang, argued that free trade is not working in essence for the developing countries, because some wealthy nations have captured larger market shares in these developing countries and preempt competition rather than to nurture these countries’ economic development. He also asserted “Industries in developing countries will not survive if they are exposed to international competition too early (Magnusson, 2004). They need time to improve their capabilities by mastering advanced technologies and building effective organizations”. Additionally, he wrote a strong example about his six year old son that “he is over-protected and needs to be exposed to competition, so that he can become a more productive person.” One should think that he gives his son an example for developing countries. If truth be told, free trade helps developing countries in becoming more globally conscious. The governments need to support protection policy for their native workers. Free trade prevents the need for protectionist government policies. These are such policies that lead to corruption amongst the government officials. Thus, a free trade economy promotes healthier governance. A healthy government also works towards a healthier economy. This ensures smoother and healthier trade, and political relationships to develop amongst nations (Anderson, 1998). Thus, free trade leads to healthier domestic governance and peaceful international ties. In the end, it would be sound to state here that free trade induces productivity and efficiency to come within the ranks of the countries which are in their developing stages. It would be premature to suggest here the exact benefits of the free trade within the already developed and self-sustained countries but proper knowledge and research has proven this fact for the sake of the underdeveloped ones. It is for this reason that the developing nations are usually being seen as the ones that will be listed when the talk goes out loud regarding the free trade realms and hence success could be envisioned within the same ranks (Taylor, 2004). Free trade is fair because it helps produce creativity and effectiveness to be shared amongst the world’s masses, however the manner under which these measures are done, remain pivotal nonetheless. Bibliography Anderson, L., 1998. The Future of Hemispheric Free Trade: Towards a Unified Hemisphere? Houston Journal of International Law, 20 Bhagwati, J., 2002. Free Trade Today. New Jersey: Princeton University Press Condon, B. J., 2002. NAFTA, WTO, and Global Business Strategy: How Aids, Trade, and Terrorism Affect Our Economic Future. Quorum Books Conti, D. B., 1998. Reconciling Free Trade, Fair Trade, and Interdependence: The Rhetoric of Presidential Economic Leadership. London: Praeger Hufbauer, G., 2008. Free Trade, The National Interest, May-June Johnson, J. C., 2009. Global Issues, Local Arguments. Second Edition, LongMan Kingsolver, A. E., 2001. NAFTA Stories: Fears and Hopes in Mexico and the United States. Lynne Rienner Magnusson, L., 2004. The Tradition of Free Trade. New York: Routledge Randall, S. J., 1995. NAFTA in Transition. University of Calgary Press Seglem, L., 1993. NAFTA - Boon or Boondoggle? State Legislatures, Vol. 19 Sirota, D., 2008. The Free Trade Heretic, In These Times, 32, July Taylor, L. D., 2004. NAFTA in the New Millennium. American Review of Canadian Studies, Vol. 34 Read More