Question

Trade usually makes its participants better off.

a) Identify a local/global problem that might be caused by an economic policy that is based on the belief that free trade usually makes its participants better off.

Your answer needs to provide at least two paragraphs.
The first paragraph discusses the local/global problem.
The second paragraph explains how unregulated/free trade is causing the problem.

Answer all the questions in well developed paragraphs. The paragraphs should be at least five or six sentences long, and they should clearly include a topic sentence.

Answer 1

Free Trade: Free trad refers to the trade that is free from all artificial barriers. It signifies a non discriminatry trade policy that places no artificial barreirs upon te free international movement f gds and services. It is a policy which does not impose any tariff or non tariff restrictins upon the free exchange of goods and services between the trading countries. Free Trade causes global inequalities, poor working conditins in many develping nations, job loss, and economic imbalances. But, free trade also leads to a net transfers of labour time and natural resources between richer and poorer parts of the world. Free trade is driving the growing Global problem of greenhouse  gases.because workers in developing nations end up prducing goods at a far lower cost and in inferior working conditions, generally using older , and dirtier   energy sources such as oil and coal. This occures while economeis globally consume more of the diminishing natural resources on the planet, and fail to develop clean fuel technlogy,such as solar and wind power. Opponents of free trade ask for tariffs to protect local business, jobs, wages and environment from being undermined by low cost goods from countries where people or the environment are exploited.

A number of theoretical and practical objections are raised against the policy of free trade. The less developed countries have been viewing it as an instrument of colonial exploitation and even the advanced countries have been taking resource to restrictions upon international trade for the realisation of their economic and trade interests. The main arguments against free trade are as follows:

1. The essential pre requisites for the successful implementatin of free trade - that is, perfect competition , perfect factor mobility, free working of the price system and laissez-faire - are absent in the real world.
2. Free trade results in cu-thraot competition which has serious destabilising effects upon the less developed countries.
3. Free trade leads to chaotic trade conditins because the advanced countries try to capture more and more forien markes for their products dumping their prodcts at very low prics other countries.
4. Free trade underlines the specialisation in prduction and export in those industries in case of which a given country has comparative cost advantage over others. The adoption of this principle means that the other sectors should remain undeveloped.
5. Free trade leads to lopsided and unbalanced growth which has serious ecnomic and social consequences on the economy.
6. Free trade promotes excessive foreign dependence which is detrimental to the interest of the country.
7. Free trade results in the internatinal transmission of fluctuations from one country to another and hence to economic crisis of global propotions.
8. Free trade necessitates the emergence of local monopolies and international cartels and their manipulation of supply and prices to maximise the profits resuls in the exploitation of people and hinders the free working of the price system.
9. The international exploitation of raw materials and markets of poor countries by the advanced countries through free trade for the last two centuaries is ample evidence of the fact that it has serious adverse effect upon the grwth process of the poor countries.
10. The development of infant industries and subsequent industrial diversification are unlikely to take place unless effective restraints upon foreign imports are enforced by the less developed countries.