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What is Free Trade?

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Free trade is an issue of great importance for those in business and consumers around the world. It refers to the right to sell goods and services around the world without any hindrance. With free trade the only thing determining the price of things will be supply and demand factors. As well as goods and services, free trade can also refer to the ability of labor to move freely around the world. The issue of free trade is a highly contentious one, and both sides of the debate can provide persuasive arguments for their position.

The existence of free trade around the world is hindered in many different ways. Most countries will have tariffs on at least some imports, and this tax can make these good less competitive. The usual reason why a government will impose this type of tax is that they want to protect local industry or dissuade people from purchasing certain products – the governments also use tariffs to raise funds. Of course there are also a lot of limitations on the free movement of labor.

The Argument for Free Trade

The argument for free trade goes something like this; it makes industries more competitive and it is a better deal for the consumer. If country A is able to produce a product cheaper than country B then the citizens in the latter will get a better deal by importing it from the former. The fact that similar industries in country B now have a fierce competitor will force them to work harder to please the consumer and become more productive. The argument for free trade is based on the idea that market forces are self regulating and that any attempt at interference will just damage the economy.

There is also the argument that free trade leads to improved relations between different countries. They will develop common interests and it will encourage joint projects and cooperation. If labor is allowed to flow between different countries then the argument is that this will further improve international relationships. It can also mean that each nation can provide training to the workforce of their trading partners in an area where they excel.

The Argument against Free Trade

Those who are against free trade don’t tend to be so trusting of market forces to create the best deals for people. If a foreign entity can come in and undercut local businesses then this could easily destroy these businesses. It could also suck a lot of money out of a country as imports start to rise higher than exports. There is also the persuasive argument that the reason why some countries are able to produce things more cheaply is that they have unfair labor laws or may rely on child labor. By opening up the doors to free international trade then this will only increase the exploitation of workers in foreign countries, and make things harder for workers at home. If unemployment goes up because of industries going under due to unfair competition then this will mean that consumers won’t have money to buy even the cheaper products.

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Meet the Author

Anthony Carter currently resides in Fife, Scotland with his wife Lisa, and their three wonderful children. As a senior editor for various publications, if he's not reading and writing, you would find him photographing and traveling to some of the most far-flung locations around the world.


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