Question

Theorists use a variety of arguments to justify perspectives regarding international free trade. Locate an online article or news story that demonstrates an example of a negative impact of international free trade.

Answer 1

There will be negative impact for the domestic industries. By reduction of trade restrictions, the domestic industry`s producers have to face low profits as there is availability of goods at cheaper rates. Thus domestic producers withdraw from business with little profits.

A big flaw that is in free trade policy is that the nations do not get equal benefits as the developed countries have more capacity to fulfill the demands while underdeveloped have less thus they get the benefits accordingly. Sometimes, "free trade" is not just a tool, it can also be a weapon. When countries put restrictions, such as tariffs, on goods from other countries, imported goods become more expensive and less competitive than goods from their own country. Another thing that can be done is subsidizing domestic businesses, which governments give money or other forms of support to local or domestic businesses, to make sure that they are cheaper over imported products and services. This can allow unsuccessful and inefficient businesses to do well, since they receive all kinds of government support. And while these businesses continue to grow, smaller or local producers, especially in many poorer countries, those that need support the most are being destroyed.

As underdeveloped countries attempt to cut costs to gain a price advantage, many workers in these countries face low pay, substandard working conditions and even forced labor and abusive child labor. This “race to the bottom,” as critics call this drive to cut costs at the expense of human rights, is a key target of protests aimed at the WTO. Yet the WTO states it does not consider a manufacturer’s treatment of workers reason for countries to bar importation of that manufacturer's products. The WTO notes developing countries insist any attempt to include working conditions in trade agreements is meant to end their cost advantage in the world market.

Free trade deals can cause immense environmental damage by allowing companies to shift their manufacturing facilities to nations with few or no environmental regulations and by increasing access to natural resources in those nations. Before the North American Free Trade Agreement became law in 1993, there was little demand for timber or metal ores from Mexico. In a 2014 report, the Sierra Club asserts that NAFTA stimulated the creation of poorly regulated, highly destructive mining operations in Mexico that would not have existed without the trade agreement.

Free trade agreements draw protests from the U.S. public due to feared job loss to foreign countries with cheaper labor. Yet proponents of free trade say new agreements improve the economy on all sides. There is no clear picture of whether free trade significantly affects U.S. employment levels, given all the economic forces that affect job rates. New York Times columnist Paul Krugman argues free trade deals with countries like Korea and Colombia aren’t “job creation measures.” Proponents of free trade contend that even if the economies of developing nations improve under free trade, those economies are still too small to have any real effect on the U.S. economy and job market.

The Council on Foreign Relations (CFR), an independent, nonpartisan think tank based in New York, reports that many economists agree NAFTA has caused some overall improvement in U.S. jobs, but with painful side effects. Free trade can cause turbulence in sectors of a domestic economy, such as long-established manufacturing segments already vulnerable to global competition. According to Edward Alden, a senior fellow at CFR, wages have not kept pace with productivity of labor, and income inequality has increased--trends hastened to some extent by free trade.