Question

“Trade is only good for big multinational companies who gain from trade by exploiting the workers of low-wage countries.” Sounds like a comment made by opposers of free trade during the Seattle WTO ministerial conference. Comment on this

Answer 1

A single country can't produce all the things it needs because sometimes it may not have comparative advantage at producing all their commodities, there may be lack of skilled laborers or lack of resources may restrict a country from producing all the required things. So the necessity of trade arises here, a country has to trade with other country to fulfill all its requirements. Every country is trading, but it is not good to pay laborers a low salary for their hard work. There are low wage countries where people are living with a small income, have an aspiration to work with multinational companies to increase their earning. They have skills and talents but are low paid by the companies of advanced countries. The advanced countries those have a comparative advantage at producing something, that means it has the capacity to produce a product at a lower cost than anyone else. Lower cost means low labor cost, cheaper resources; the country will hire labor at low wage and can managed to get resources at a low price. This does not mean that the country will pay low salary to workers, there are certain countries paying good salary along with other benefits, but the question is whether all the countries are getting skilled laborers with a comparatively low cost ? The answer is no, because some workers do not prefer to get a job in certain countries, it may be be due their personal preferences or may be the said country's climate is not suitable for them. So those countries which have a better comparative advantage should not take unfair advantages of low paid countries.

Trade enables both countries to be in a better position, their economic and social conditions are better off than before and because of this all countries should help each other in achieving self-sufficiency. Exploiting workers of low-wage countries is not good from ethical point of view, the countries which are exploiting may suffer sometimes, because some other countries may take advantages of this situation by hiring the same laborers with a relatively higher wage.