Question

In: Economics

What are global and domestic problems with international trade agreements from the economic point of view?

What are global and domestic problems with international trade agreements from the economic point of view?

Solutions

Expert Solution

Problems associated with free trade agreements are:

Increased Job Outsourcing

With the reduction in tariffs on imports countries expand. to other countries. Without tariffs, imports from countries with a low cost of living cost less. Example If new companies come to US as a result of free trade agreements it will become difficult fir US companies to compete with them and thus US companies will have to lay off workers. Many U.S. manufacturing industries did, in fact, lay off workers as a result of NAFTA. ​​One of the biggest criticisms of NAFTA is that it sent jobs to Mexico.

Theft of Intellectual Property

Some of the developing countries do not have proper laws to protect patents, inventions and new processes. Even if laws are there , they are not strictly enforced .This result in theft if ideas. The corporation's then have to compete with low priced domestic knock offs.

Poor Working Conditions

MNC's outsource jobs to countries where labor protection laws are not properly enforced. This result in women , men and children working in factories in pathetic conditions like no toilets, no proper ventilation, long working hours etc.

Crowd out Domestic Industries

Many emerging markets are traditional economies that rely on farming for most employment. These small family farms can't compete with subsidized agri-businesses in the developed countries. As a result, they lose their farms and must look for work in the cities. This aggravates unemployment, crime, and poverty.

Degradation of Natural Resources

In the countries where markets are emerging environment protection laws are not properly followed. Due to deforestation forests are adversely affected. Natural resources, timber and other important minerals are depleted.

Destruction of local Culture

With the expansion of the companies to isolated areas local culture is destroyed. Local people are uprooted. With the coming of call centres in conservative place like India many youngsters are able to earn huge. Due to this huge earning they are indulging into drugs, sex etc. Western culture is speedily destroying traditional Indian culture.

Reduction in Tax Revenue

Many smaller countries struggle to replace revenue lost from import tariffs and fees.


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