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What Are the Pros and Cons of Free Trade?
Free trade can provide consumers with access to goods at lower prices. It can provide domestic employment opportunities that may not otherwise be available, resulting in higher levels of illegal immigration. In some cases, however, it results in competition that destroys industries in one nation. There are also risks that free trade may lead to developed nations supporting work conditions in a developing nation that it would not allow in its own.
One of the benefits of free trade is that tariffs are often reduced or eliminated. This means that a producer's goods are often more attractive to foreign consumers and that those consumers can acquire those goods at lower prices. Free trade can also result in low prices because goods can often be produced in the nation that possesses the raw materials to make them. If businesses in one country first buy raw materials from a foreign source and then pay laborers to create the end product, the retail prices for those items can be substantially higher. In some cases, quality is also jeopardized when raw materials are imported because individuals in the country where those raw materials are located may be more skilled at working with them.
Competition in business is generally considered to be a positive element. One of the drawbacks of free trade, however, is that it can subject markets to an overwhelming amount of competition. In some cases, after a nation enters such an agreement, it may witness the destruction of an industry or massive job losses because it becomes advantageous to obtain products or services that are available domestically from a foreign source at a cheaper price.
When properly implemented, free trade agreements can be used to address illegal immigration. Landlocked nations commonly experience such problems. When one country is richer than its neighbor, people attempt to cross the borders in search of a better life. If nations with strong economies allow poorer nations easy access to their markets, however, it can provide employment opportunities that will encourage individuals to remain in their home countries.
Another drawback of free trade is that it can result in a developed nation directly or inadvertently supporting behavior that it would not allow in its own country. In some developing nations, production workers are paid extremely low wages, child labor is exploited, and working conditions may be substandard. When these countries have access to the large markets of developed nations, the citizens of the developed nations become supporters of those circumstances and those injustices may occur on a larger scale.
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![Free trade may lead to the inadvertent supporting of child labor.]()
By: poco_bwFree trade may lead to the inadvertent supporting of child labor. -
![Free trade is the free flow of goods, capital, and labor between nations.]()
By: Gerard KoudenburgFree trade is the free flow of goods, capital, and labor between nations. -
![Globalization means that countries can engage in free trade with one another.]()
By: michaeljungGlobalization means that countries can engage in free trade with one another.
Discussion Comments
We are considering forming a non-profit to not only import goods from a third world country, but also to provide jobs for single mothers and the under-employed that will enable to break out of the poverty mindset.
In that sense, free trade would be a good thing. However, it must be short term, changing to "fair trade" at the earliest possible time.
Free trade can help get the industry initiated. As a non-profit, we are not interested in making millions, for our salaries will remain small. Under fair trade, the products imported will already be imported, and the routes and provisions set up, and the change will be that much easier.
That is our hope.
What we fail to do is determine how much the corporation is profiting from free trade and relocating to another country where it's operating costs are substantially less. Is it corporate greed again?
@alisha-- I don't agree. Not only are workers in those countries being exploited, Americans are also suffering because they are losing their jobs to them. Every time that a company moves its production overseas, hundreds and thousands of Americans lose their jobs.
@ysmina-- I understand what you mean but I also want to point out that if workers in those countries were paid as much as workers are paid in this country, importing those goods would no longer be advantageous for us because it would cost the same as making it here.
People always make this argument about exploited third-world country workers when they argue against free trade. But I don't think that free trade barriers is a solution to this problem. I think it is possible to maintain the low cost of these products while getting these countries to treat their workers more humanely.
And let's not forget that if these workers didn't have these jobs, they would be jobless and in a much worse position they are in now. They really are benefiting from free trade as much as we are.
Free trade is a double edged sword. Thanks to free get products that are much cheaper than they would be if we tried to make them ourselves. So we end up getting more for our money. But from an ethical point of view, it's horrible because those products were probably made by exploited little children in some far away land.
In a way, I feel that in order for us to experience the advantages of free trade, people in poorer countries have to pay a bigger price with their lives. So there is still a price being paid, just not in currency.
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