Can the case for free trade always be justified? Illustrate your answer with reference to recent trade disputes.
Definitions and arguments for and against;
In the following lines we will analyze the arguments for free trade and arguments against for free trade and explain recent cases in which we can observe both stances and if it justified or no.
Free trade is the ability of people to dotransactions with people in other countries, free from any restraints imposed by governments or other regulators, in these transactions both parts achieve a benefits, if they do not have a benefit they would not the exchange. Both parts can choose if they want to repeat the exchange. The free trade is too an economic concept relating to the sale of products between countries without tariffs andwithout trade barrier. In a free trade area, the countries that form this union agree to cancel each other tariffs. Free trade is opposite to the trade restriction. The free trade is measured by the volume of imports and exports over the world. The free trade has become increasingly in the years since the Second World War.
The opinions about the free trade are varied we have a lot of argument for andagainst. The people and economist who are in favor thinks that the benefits of free trade is explain with the theory of comparative advantage, this meaning that the countries should to produce the product in which is more efficient. As long as each country specializes in products in which it has a comparative advantage, trade will be mutually beneficial, because no competition with each other. Ifthe countries or areas will be specializes in products not will necessary trade blocs that have a lot of benefits for the countries that part in them but for the other countries is harmful so the international trade increases world efficiency by specialization in production so the countries which engages an international trade enjoys the benefits in terms of both immediate improvements instandards of living and economic growth.
Other arguments are that the free trade increases the products with more quality because the elimination of tariff barriers eliminates many costs which affect the final product in the market price. If we decrease the prices people can access and choose higher quality products with lower prices and do not replace these with others of lower quality and cheaper, wecan see these in a lot of products produced by China.
Other reason, it has also demonstrated the symmetry between tariffs imports’ and tariffs export’s so a country that choose for the protectionism at the end harmful their own exports. Indeed, in cases where the country can alter the terms of trade is more efficient to put a tax on exports that give a subsidy to the exports, but it is not verycommon and is constitutionally prohibited in some countries like the U.S.A, although South Africa has tried to impose tariffs exports on products such as diamonds to increase the terms of trade.
The free trade has fringe benefit, the economies of scale. The protected market fragmented international production. The competition has reduced so this increased the profits. The increased of profitsattract firms into the protected industry. The increase of the companies in national protected markets, the scale of production of each firm becomes inefficient.
Free trade provides an incentive to find new ways to export or compete with the imports of the products of other countries and therefore offers more opportunities for learning and innovation for the people than a trading system controllerby the government that largely dictates the pattern of imports and exports. The liberalization is the best in a small economy. Indeed, while the big country could extract additional rents from foreign producers, the small country has no impact on international prices and therefore can not achieve any profit with the tariff. One of most obvious argument for the free trade is that more the...
Leer documento completo
Regístrate para leer el documento completo.