Question

Give the arguments for and against free-trade agreements.

How might the signing of a free-trade agreement between United States, Central America, and the Dominican Republic harmed Bangladesh?

Answer 1

Trade between two or, more countries are known as international trade. There are two types of international trade pattern namely free trade and protectionism.

Free trade refers to a situation where goods and service of the countries freely moving between countries all the trade barrier tariffs, quotas, are eliminated. free trade

Arguments in favor of Free Trade

• Better allocation of resources between countries, countries will specialize in producing those goods which enjoy low comparative cost deffrence.
• Consumers are benefited due to the low price of the goods, resulted from the comparative advantage.
• Consumers are benefited due to a variety of the goods available in their consumption, for example, Fiza is North America and European food now available in Asian countries
• Free trade promotes division of the labors

Argument against Free Trade

• Destruction of the domestic industries because unable compete with gain corporation
• labors are exploited by the corporation by paying low wages employees. corporations seek to employee labors from developing countries where wage rate are very low.
• The emergence of Monopoly market due to free trade, for example, soft drinking manufacturing industries Coca-Cola and Pepsi have monopoly power.

3) Free trade is benefits for similar national income group countries. Above case trade between developing and developed countries harmful to the developing countries because it results in trade imbalance and BOP deficit problems.

Because generally developing countries exports labors intensive goods and imports capital-intensive goods.