List of Pros and Cons of Free Trade
Free trade involves trading that takes place across national borders. Throughout history, governments have imposed taxes, tariffs, and other regulations on international trading in order to promote business within their own borders. Over the past several centuries, however, more and more of these regulations have been lifted, creating what we call free trade. Some people support lifting these regulations while others oppose it. Here are some of the pros and cons of free trade:
1. Lower Prices
Most people argue that free trade is in the long run good for the economy. The cost of goods and services decrease as businesses no longer have to pay taxes and tariffs in order to import or export their products. People also believe that this leads to more efficient production methods, which in turn lead to an increase in technology.
2. National Security
Many people believe that free trade makes the world a safer place. The less obstacles there are to international business dealings, the more economically dependent companies become on one another. This makes med conflict less and less likely as it becomes in everybody’s best interest to make sure that other countries’ economies remain strong.
3. Capital Inflow
Free trade brings more money into the local economy. Entrepreneurs who sell their products to other countries are bringing their money back to the local market. As they become successful business owners, they can use that money to subsidize the arts and culture within their own community.
Cons of Free Trade
1. Mom and Pop Shops
Small family businesses cannot compete on the global scale. Free trade promotes the growth of multinational corporations who can farm their labor out to the cheapest source. This leads to cheaper prices in their stores that eventually drive their smaller competitors out of business. In the same vein, free trade allows foreign industries to do business cheaply, making it much harder for developing countries to promote their own industries.
2. Economic Dependence
On the other hand, there are some people who see economic dependence as a bad thing. Free trade encourages countries to rely on their imports instead of developing their own independent economy. If they are exporting a specific natural resource, such as a desirable mineral, to pay for these imports, then they are entirely reliant on the market not changing. If the mineral source runs out or demand drops, their economy collapses.
Some people fear that free trade will lead to inequality in some states with a history of ineffective governance. Particularly if one region of a country is rich in natural resources that they are exporting rather than sharing with the rest of the country, unrest and instability could break out.
The debate over free trade is not one that is going to be settled soon. While there are many benefits to promoting international trade agreements, there are some consequences that need to be carefully weighed. It remains to be seen whether the benefits are worth risking the consequences or whether the regulations stopping free trade really are protecting us all.