Premium Essay

Free Trade

In:

Submitted By gqlwf828
Words 1136
Pages 5
U.S. free trade agreements with other countries have a negative impact on U.S. job opportunities. Free trade is a form of business cooperation in which different countries share their resources and trade with each other with free or lower tariffs (Eiras, n.d.). Free trade can be presented in the forms of importing products such as coffee and vegetables directly from other countries and outsourcing process to other countries. Although it is possible for one country to produce all goods efficiently, it will be more productive for this country to trade with other country. Both countries can benefit from trade because each country specializes in what they have a comparative advantage. Free trade offers more advantages to each country since there are no trade barriers between countries. Nowadays, with the trends of globalization, free trade is becoming more and more commonplace. Some people argue that free trade creates job opportunities while increasing the growth of economy. Riley (2012) states that total U.S. employment significantly increased after the U.S. signed the North American Free Trade Agreement (NAFTA) and joined the World Trade Organization (WTO). However, opponents focus on the negative impact which is job losses inside the country. Column (2011) points out that it cost 2.8 million jobs for trade between the U.S. and China. Trade deficit between countries and outsourcing during free trade lead to job losses eventually. Therefore, with the integration of global economy, the impact of free trade on job opportunities has become increasingly severe for countries to consider.
Signing free trade agreements between the United States and other countries have cost considerable U.S. job opportunities. The loss is mainly due to outsourcing. Outsourcing means that more and more companies prefer distribute their work to developing countries such as Mexico and China.

Similar Documents

Premium Essay

Free Trade Agreement

...Free Trade Agreements in Australia’s economy Name: Institution: School: Date: Free Trade Agreement (FTA) Free trade agreement (FTA) is described as a treaty between two or more countries so as to create a free trade area. The free trade involves commerce in goods and services being carried out across the borders without any hindrances. The FTA always involve around the playing around with the tariffs. In an FTA agreement between two countries or more the tariffs are made common, that is, uniform tariffs among them and with other non-member countries. In FTA, the labor and capital may not move freely. Baykitch and Sladojevic (2015) explains that when an FTA agreement is made the countries or the companies involved the deal may not be welcomed by either the parties involved but when they both work towards it the realization of the agreement it becomes easy. It is also beneficial to both the countries because it enables the citizens to move freely for the betterment of the economy (Baykitch and Sladojevic 2015). China – Australia Free Trade Agreement An example of FTA agreement is the recent china-Australian agreement. The FTA agreement is considered to be beneficial to Australia in very many ways. Ball says that given that China has a population of above 13 million it opens the market for the Australian products. China is also the second-largest economy in the world's considering that is also an important manufacturing hub for the world products. It was important...

Words: 2097 - Pages: 9

Free Essay

Free Trade

...Hagai M. Segal September 29, 2015 Why Free Trade is Superior to Mercantilism The Industrial Revolution brought great success to the British Empire. It helped establish the Empire as one of the leaders (if not the strongest) of the European powers that would colonize lands all over the globe. By the end of the 18th century, Britain had amassed global economic power, and needed to regulate it somehow. The British government's plan of action was to enforce regulations on trade in order to keep control of what was produced, and what would benefit the motherland most. Adam Smith, arguably the most influential economic theorist in modern history, coined this system as 'Mercantilism,' and felt it was not optimal. Economic development and growth is inhibited by the mercantile system because resources are not allocated for maximum efficiency. For Smith, natural tendencies for exchange rooted in the self-interest of individuals would lead to an improved standard of living. Mercantilism was situational. As described by the Library of Economics and Liberty, it is a "system of political economy that sought to enrich the country by restraining imports and encouraging exports." Economic nationalism is another way to perceive it. The system originated in the 16th century when European powers began fighting over resources, often leading to armed conflict between each other (LaHaye, 2004). The objective of the mercantile system was to sustain a trade surplus, while maintaining high employment...

Words: 1226 - Pages: 5

Premium Essay

Free Trade

...Advantages and disadvantages of free trade In international trade theory, globalization and free trade results over the long term in "commodity price equalization" across countries; or if capital, labor and technology are highly mobile, free trade and globalization is only for rich countries. “Free trade” means freedom to trade. Freedom is a concept and principle that everyone holds dearly, except dictators and bullies [1]. We are going to analyze the advantages and disadvantages of free trade in both cases: the poor and rich countries. The aim of this work is to look into the particularities of free trade. In order to achieve this aim we shall present tasks as following: * Define the concept of free trade; * Explore advantages of free trade; * Find out of disadvantages of free trade. Free trade occurs when there are no artificial barriers put in place by governments to restrict the flow of goods and services between trading nations. When trade barriers, such as tariffs and subsidies are put in place, they protect domestic producers from international competition and redirect, rather than create trade flows. It is in the case of poor countries due to we can’t be competitive with development countries such as Germany, Europe. Some groups, however, have a double standard. They want all their consumption needs and production inputs to be liberalized and to be available at bargains, but want their own products and services to be protected from competition. It doesn't...

Words: 910 - Pages: 4

Free Essay

Free Trade

...Free trade and employment has a connection that has become one of the world’s most significant concerns because of how the markets interact with one another. Both are able to affect millions of lives around the world. Free trade plays a critical part to boosting the global welfare and employment sectors of the world. Some economists have finally realized that free trade leads to numerous advantages in the labor sector for everyone involved. Unfortunately, free trade can impact the domestic job market; first of all, production on the domestic market will be replaced by imports; second, economic activity restructuring, and third, loss of revenue from tariffs in place (Jansen, & Lee, 2007). For example, trading can trigger several business closures and job losses; simply put, free trade can have significant impact on job creation and job destruction and can be positive or negative on the labor market and policy creation for employment in the domestic environment. The overall point is to have a positive impact on the employment in terms of the number of jobs created, the salary or wages paid to workers, and it can also be a combination of both (Jansen, et al., 2007). Two other impacts that free trade has on job creation policy is the changes in the distribution, and efficiency of the nation (McConnell, Brue, & Flynn, 2015). To some extent the labor market will shrink while the skill and/or capital industries will increase to a larger size; but all in the countries that have...

Words: 694 - Pages: 3

Free Essay

Free Trade

...Free trade is a concept that implies the action of exchange goods or services between countries and that commerce is done without barriers such as taxes, tariffs, quotas, among others. Free trade has some good implications for the countries that practice it, some of that implications are: 1. It allows the access to economic agents into the commercial activity such as freedom of prices, freedom of opening facilities, etc). With free trade there is an increase of the welfare of the population and promote the creation of new companies. 2. It allows the flow of goods or services without tariffs and other trade barriers (quotas, government regulations, health requirements, among others). The absence of those barriers facilitates the exchange of products between countries. 3. Free commerce improves the quality of life of all people and the countries involved in general, since they have more variety of products and services, more accessible prices and more quality. 4. Free trade makes countries economically dependent on each other, so there would be less chance to go to some war. 5. Free trade promotes the conditions of fair competition. Some organizations such as the WTO works to maintain and to regulate a fair trade between countries. Annexes (negative aspects) 1. Free trade is a state protection of the interests of multinational corporations 2. Free trade support corporatism and not free trade, so it allows to developed countries to exploit third world countries, destroying...

Words: 311 - Pages: 2

Premium Essay

Free Trade

...Free Trade Free trade agreements or FTAs are arrangements between two or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and non-tariff barriers on substantial trade between them (Economics Online, 2015). Supporters of free trade agreements do argue that free trade is good for nations because FTAs have proved to be one of the best ways to open up foreign markets (International Trade Administration, 2014). Countries seek many benefits by joining an economic bloc. Some of these benefits include an expanded market, enhanced productivity, innovation and competition, greater bargaining power in world affair, economic growth and direct investments from members outside the bloc (Froning, 2000). Foreign companies prefer to invest in countries that are part of a trade agreement because it usually gives them access to other member countries within the block (Reuss, 2001). The main economic bloc for my country is the North American Free Trade Agreement or NAFTA (North American Free Trade Agreement, 2012). Bloc membership has brought many advantages to the US. Bloc memberships have reduce barriers to U.S. exports, and protected U.S. interests and enhanced the rule of law in the FTA partner country (International Trade Administration, 2014). Bloc memberships have created a more stable and transparent trading and investment environment and made it easier and cheaper for U.S. companies to export their products and services to trading partner markets...

Words: 461 - Pages: 2

Premium Essay

Free Trade

... Executive summary Free trade refers to trade between countries without tariff and non-tariff barriers on exports and imports. In another word, free trade refers to trade without government interference. Classical economists such as Adam Smith and David Ricardo have advocated that free trade improves the economic well being of a country by increasing the production of a country and allowing efficient allocation of resources, thus increasing global production and promoting peaceful and prosperous global environment. In the global basis, World Trade Organization formed after GATT in 1995 promotes trade liberalization through multilateral negotiation. On the other hand, in the regional basis, countries are forming regional economic integration to promote free trade stage by stage. The initial stage is known as Free trade areas (FTAs) under which they agree to remove tariffs and non-tariff limitations on trade in products between themselves. Despite all these initiates, governments around the world are still imposing various restriction on trade between countries to protect its own industries such as agriculture which is considered as the backbone of a country. Therefore, this report will discuss the concept of free trade, trade theories and the advantages and disadvantages of Free Trade for consumer, business, environment and politics. Also analyze why a region need Free Trade Area, benefit for developing countries. Summarize advantages and disadvantages of Free Trade for consumer, business...

Words: 4391 - Pages: 18

Premium Essay

Free Trade

...1.0 Introduction Free trade is the unrestricted purchase or exchange of good and services between countries without imposition of constraints such as quotas, tariffs and duties (Kent, 2004). It is a win-win situation as free trade enables a country to emphasis on their core competitive advantages which can boost up income growth, at the same time maximizing economic output. In other words, free trade allows a country to specialize on certain product that they has the distinctive comparative advantage (Herrmann, 2000). On the other hand, it usually benefits the developed countries whose most of the big firms are looking to sell and expand their goods or services abroad due to it is a great opportunity for them to open up an international market. In fact, Malaysia is an actively pursuing free trade agreements with numerous countries, therefore, free trade might bring some positive and negative impact for Malaysia (Esther, 2014). Free trade benefits Malaysia such as enhance product quality and production efficiency, wider consumer choice lead to increases in standard of living and also reduction in unemployed resources. However, free trade will also cause some issues for Malaysia involved local firms unable to compete with foreign market, reduction job opportunity, environmental damaged and free trade may encourage dumping (Edge, 2010). 2.0 Advantages of Free Trade 2.1 Raise Competition and Lead to Improve in Product Quality Nowadays, many people are willing to purchase...

Words: 2218 - Pages: 9

Premium Essay

Free Trade

...xBrittney Johnson 5/2/12 Economics Free Trade Free trade is a system in which goods, capital, and labor flow freely between nations, without barriers which could delay the trade process. There are many nations that have free trade agreements, and several global organizations promote free trade between their members. There are a few arguments both for and against this practice, ranging from economists, politicians, industries, and social scientists. A few barriers to trade are struck down in a free trade agreement. Taxes, tariffs, and import quotas are all eliminated, as are subsidies, tax breaks, and other forms of support to local producers. Restrictions on the flow of money are also lifted, and regulations, which could be considered a barrier to free trade. Free trade enables overseas companies to trade just as efficiently, easily, and effectively as local producers. The idea behind free trade is that it will lower prices for goods and services by encouraging competition. Local producers would no longer be able to count on government subsidies and other forms of assistance, including quotas which force citizens to buy from local producers, while overseas companies move in on new markets when barriers to trade are lifted. In addition, free trade is also supposed to encourage improvement, since competition between companies triggers a need to come up with original products and solutions to capture market share. Free trade can also substitute global cooperation, by encouraging...

Words: 1450 - Pages: 6

Premium Essay

Free Trade

...Free Trade: Free trade is a system in which goods, capital, and labor flow freely between nations, without barriers which could hinder the trade process. Many nations have free trade agreements, and several international organizations promote free trade between their members. There are a number of arguments both for and against this practice, from a range of economists, politicians, industries, and social scientists. A number of barriers to trade are struck down in a free trade agreement. Taxes, tariffs, and import quotas are all eliminated, as are subsidies, tax breaks, and other forms of support to domestic producers. Restrictions on the flow of currency are also lifted, as are regulations which could be considered a barrier to free trade. Put simply, free trade enables foreign companies to trade just as efficiently, easily, and effectively as domestic producers. World Trade Organization The World Trade Organization (WTO) is the most powerful legislative and judicial body in the world. By promoting the free trade agenda of multinational corporations above the interests of local communities, working families, and the environment, the WTO has systematically undermined democracy around the world. Unlike United Nations treaties, the International Labor Organization conventions, or multilateral environmental agreements, WTO rules can be enforced through sanctions. This gives the WTO more power than any other international body. The WTO's authority even eclipses national governments...

Words: 402 - Pages: 2

Premium Essay

Free Trade

...Fair Trade and its impact on impoverished nations. By Edwin C. Mercurio “When I give food to the poor, they call me a saint.When I ask why the poor have no food, they call me a communist.” Dom Helder Camara Fair trade advocates told a European Union Conference that fair trade works. “It works for the poor people; it works for consumers. It works as a business model; it works as sustainable development; it works to protect the environment; it works as an idea." reports the Fair Trade Advocacy Newsletter. But there is growing concern about the theory and practice of the Fair Trade movement. Despite its anti-capitalist rhetoric, it is seen as a revised form of free trade controlled by the G8 and economically dominant countries,which are continually held responsible for global trade injustices. Fair trade is often presented as a fair way to help banana growers. However, the dominance of corporate power - Del Monte, Chiquita and Dole - leaves poorer farmers and nations with an uncertain future and destroyed ecosystems. Their dominance is built on the exploitation of lands and workers from developing countries. There are indications that fair trade is used as a cover by transnational corporations to expand their corporate interest. Even more disturbing, according to Matthias Schmeizer of Institute Fusoziale Dreigliederung, is how Nestle (known as 2005’s “least responsible company” worldwide and one of the four big coffee roasters responsible for the coffee crisis...

Words: 591 - Pages: 3

Premium Essay

Free Trade Agreement

...doesn´t speeds up the free trade agreement between China and Australia. By the increasing globalisation which results from the „merging of historically distinct and separate national markets into one huge global market", the significance of free trade agreements is getting more and more important between the countries to remain competitive and to participate in the progress. (textbook S.12). Given that China is Australia´s most important trading partner, this assignment picks out as a central theme “The economic impacts of an Free Trade Agreement between Australia and China and shows in particular the effects for the domestic industry and for the international industry. What is a Free Trade Agreement (FTA)? Free Trade means „the absence of barriers to the free flow of goods and services between countries“. (Textbook S.76). Another definition says that “Free Trade refers to a situation in which a government does not attempt to restrict what its firms and citizens can buy from or sell to another country”. (Textbook S.119). A Free Trade Agreement is consequently a contract which is concluded between two or several countries to establish a free trade area in which trade in goods and services can be conducted across their borders, without tariffs or obstacles (e.g. ban on imports/exports). Previous bilateral economic relationship and agreements between Australia and China: The basis for the bilateral trade and economic relationship was the signing of the “1973 Trade Agreement between...

Words: 467 - Pages: 2

Premium Essay

Free Trade

...Free trade means eliminating all restrictions in trading between two countries. Some of those restrictions are tariffs or quotas. Imagine that you have a country A and a country B who wish to trade with each other. Country A has plenty of coal and has mastered efficient ways how to produce coal thus making coal price very cheap. Country B only has little coal reserves, and it's extraction method are not as efficient as in country A. Consequently, the price of coal is lower in country A other than country B If country A wants to export coal to country B it has to pay tariff. Tariffs are kind of a tax. Tariff is calculated on the price or amount of coal. It must be paid by either exporter from country A or importer from country B. Like every tax, tariffs increases the price of product. Therefore, consumers in country A will pay lower price of coal than country B. Also country B can impose quotas, a restriction on quantity allowed to be imported. For example country A is allowed only to export 10 tones of coal per year, not more. Even if it has plenty coal to export it is not allowed to do it. Low supply of coal in country B rises the price of coal for them. On the other side, country B produces great and quality wine, which residents of country A absolutely love. They have tried to make exactly same wine, but it's quality simply couldn't match that of country B. But they also have to pay tariffs if they want to export it. At the end price of the same wine...

Words: 528 - Pages: 3

Premium Essay

Free Trade

...Free Trade A brief definition of free trade is: Free trade refers to a general openness to exchange goods and information between and among nations with few-to-no barriers-to-trade. Some people argue that free trade is no good to society and is only bad for Americans. But I would have to disagree with these people because there are a lot of reasons that free trade can be good to society. For the argument that it is important to keep jobs in the United States, this is true that people would rather have jobs in the United States and that the U.S auto industry loses 5,000 jobs to foreign competitors, which those households are worse off. On the other hand, the millions of other Americans that can purchase less expensive, more efficient cars, from wider range of car manufacturers, they are better off. If another nation is more efficient and has a comparative advantage in producing a product, then it is in our best interest to buy from that nation. Sure it would be nice to keep the jobs in the United States, but at the same time one has to think that free trade is a good idea because the economy is saving money. People say that we are exporting jobs when auto manufactures set up plants in Mexico, but a counterargument would be that if Mexico is the least expensive place to assemble the vehicles, from the economic standpoint, that is where it should be done, as long as it can be done with the same level of quality. Another reason why free trade is a good idea is because it makes...

Words: 754 - Pages: 4

Premium Essay

Free Trade

...Charles W. L. International Business: Competing in the Global Marketplace. 9th ed. New York:           McGraw-Hill Irwin, 2013. Print. Free trade is referred to as no attempt by the government to influence citizens on whether or not to impose restrictions on what they can purchase from another country, as well as what the citizen can produce and sell to another country. The benefits of Trade Country’s economy may gain if its citizens buy certain products from other nations by a rise in living standards and income. Gains arise due in nature that international trade allows a country to specialize in the manufacture and export of products that they can produce efficiently as known as Absolute Advantage. “Consumers benefit in the domestic economy as they can now obtain a greater variety of goods and services. The increased competition ensures goods and services, as well as inputs, are supplied at the lowest prices” (NSW HSC online). Disadvantages of free trade * With the removal of trade barriers, structural unemployment may occur in the short term. This can impact upon large numbers of workers, their families and local economies. Often it can be difficult for these workers to find employment in growth industries and government assistance is necessary.
 * Increased domestic economic instability from international trade cycles, as economies become dependent on global markets. This means that businesses, employees and consumers are more vulnerable to downturns...

Words: 488 - Pages: 2