Question

One form of political argument concerning free trade is based on protecting consumers. Provide examples of real-world situations that demonstrate this argument! Explain in detailed.(Min 400 words)

Answer 1

Free trade increases prosperity of residents of a country — and that for other countries too. Free trade enable and empowers the consumers to buy more, buy better, buy cheaper and thus help the economies grow. It doubtlessly drives economic growth, enhance the efficiency of global resources, motivates increasing the innovation, and brings greater fairness amongst the participant countries. Few ways in which free trade proves beneficial are as following:

• Greater opportunities to capitalize on comparative advantages: if China can produce inexpensive but good quality mobile phones, we already see it supplying phones to every nook and corner of the world.
• Consistent economic growth: Free trade really makes it easier to buy and sell commodities and services amongst the nations. This often leads to increased economic growth, marginally or substantially. For instance, U.S. Trade Representative Office reported that United States' economic growth has been increased by an extra 0.5 % per annum over the past several years alone because of NAFTA.
• Higher trade volumes: The fewer tariffs, taxes and restrictions on goods coming in and out of countries, the easier it becomes to conduct trade. Not just that. the easier it becomes to conduct trade, the higher trade volumes are naturally expected.
• More efficient use of raw materials: Crude petroleum oil is present in the bowel of earth in every country, but certainly the middle east countries have really the ample of it and also cheapest of it. No wonder they have developed themselves literally as OIL ECONOMIES.
• Promotes peace and cooperation between nations: We already see this nowadays. Even after bickering almost every day in front of camera, why the respective governments of US and China really decide to start off a full fledged war against each other. They do not, because of the heavy economic interdependence on each other. Free trades has resulted in to increase in this economic interdependence; and therefore it has silently worked in favor of peace and not war.

Let us see, how in past several economies have benefited from free trade.

Who benefits the most from free trade:

Basically it's the consumers benefiting the most from the system of free trade amidst the modern globalization wave across the world. However, if we think country-wise, the following points are noteworthy:

1. US, China and Germany have benefited the most from membership of the World Trade Organization, and thus carrying on the free trade economics. This is reported in a new report to mark WTO's 25th anniversary. Today we witness the consumers of these leading countries prospering the most.
2. Three biggest exporters of the world which are Germany, China and United States, have proven to be the biggest beneficiaries free trade practices. This benefit doesn't remain restricted only to tax-collecting government or profit-earning businesses. UItimately it passes on to the consumers.
3. According to the economists from the Bureau of Economic Analysis (BEA), more than half of US imports are not consumer goods; those are just inputs for US-based production of consumer goods. Freeing trade has really reduced the cost of inputs for US and thus has reduced businesses’ production costs and also promoted the economic growth. Free trade promotes the idea of consumerism.
4. Free trade agreement between the European Union (EU) and South Korea is quite a phenomenal example. In first half of year 2015, the German goods exported to South Korea went up by more than 50% compared to the level before the said free trade agreement came into force in July 2011. Before FTA, total German exports to South Korea had increased by merely 13% in the same period. Backed by imports from Germany, South Korea has been able to provide more reliable and efficient goods (electronics goods for example) to the consumers of the world.
5. We all know about China. On the back of its dominance over WTO, several free trade agreements with other countries, China has today become the production hub for the world. China is today world's 2nd largest economy in terms of GDP. Even during Covid 19 pandemic, when all major and minor countries are suffering from economic slump or setbacks, China has reported healthy quarterly GDP growth of 4.9%. Today, China is not only a dominant producer in the world; habitating the largest population, it's a dominant consumer as well.