Question

What are the arguments for and against free trade?

Answer 1

Free trade basically means trade which has been carried out internationally in the absence of any kind of quotas, tariffs etc. This is an agreement which will be made between countries for preventing trade barriers and reducing product exchange issues. Free trade have certain arguments for and against free trade. They are mentioned below:-

Arguments for free trade

1. Benefits of specialization

It means labor has been segregated in all the participating countries and each of them have certain specialized products manufactured. Hence, resources can be utilized effectively and make an economy in manufacturing.   

2. Competitiveness

Competition is the booster of every trade. Free trade ensures competitiveness. This give support and survival to the domestic manufacturers also. Thus, efficiency will be increased by avoiding monopoly and thus saves the customers.

3. Interference restriction

Corruption and interference will not affect the free trade as these are tax restricted trades. Thus, advantages of specialization can be used for better economical development rather than personal gains of anyone.

4. Cooperation between countries

Free trade enhances the harmony between nations. Discrimination of any country ad their products will not be there in free trade. Thus, a stable economic environment will be created and thus results in international peace.

Arguments against free trade

1. Harmful for local products and local industry

Free trade may spoil the local industries as it focus on international exports and exports. As people can buy imported goods at a low price than the domestic one, they will focus the imported ones only.

2. Ever-lasting interdependence

Free trade focus on depending on other countries. A global development cannot be made out through free trade.

3. Will not be beneficial to backward nations

Only developed or developing countries can be benefited from free trade process. Poor or under-developed countries will only suffer due to their trading internationally.