Question

Everybody gains from free trade

Articulate an argument for and against five of the following statements. Answers must be typed with 1.5 spacing.

please make as per Canadian Standards. 10 marks.

Answer 1

Free trade means that countries can import and export goods without any tariff barriers or other non-tariff barriers to trade.

Essentially, free trade enables lower prices for consumers, increased exports, benefits from economies of scale and a greater choice of goods.

1) Free trade enables countries to specialise in those goods where they have a comparative advantage.

2) If countries can specialise in certain goods they can benefit from economies of scale and lower average costs.

3) It may prevent domestic monopolies from charging too high prices.

Free trade may benefit individual businesses and industries that have the strength to compete without protective tariffs, and it might allow consumers to buy more goods at lower prices. But for some individuals, free trade can mean lost jobs, and for some countries, it can cause critical industries to vanish.

From a strategic perspective, free trade can leave a country vulnerable if it causes the demise of critical industries.

Free trade can hinder the ability of a nation to collect taxes from domestic corporations.

Global trade is not a free market system and probably can never hope to be so. This is because free markets cannot exist in a stable equilibrium unless they are also fair markets. Global trade is influenced by a number of factors, such as economic conditions, regulations, resource availability, geopolitical stability, currency valuations and treaty obligations.