Question

Consider trade barriers. "The elimination of trade barriers is sometimes seen as essential to the world's economic well being," according to your textbook. Why do you think this is? What criticisms of free trade are there? What is your opinion on free trade?

Answer 1

Free trade means elimination of trade barriers and not discriminating between exports and imports. The concept of free trade helps to promoted unlimited growth for both the countries. Free trade helps promote manufacturing of goods in which a country enjoys comparative advantage. Consumers are benefited as they get a wide array of goods to choose from at lower prices.The concept of free trade helps promote specialization and division of labor as production activities are now carried out on a large scale due to the opening up of the economies to the world economies.

Some people argue that free trade makes manufactures suffer as they have to compete with foreign products. They lose market share as competitors products are sometimes favored among local people.

Yes, free trade should be allowed, as it generates a sense of competition among the manufacturers of goods. It helps keep the prices of goods low and helps consumers choose from a wide variety of goods. It does not distinguish between and exports and encourage a environment in which goods and services are freely exchanges between economies which leads to unlimited growth potential.