Tai Huynh
Professor Myers
Computer Skills for Economics Analysis 001
13 October 2013
Free Trade Agreements
Free trade is one of the top economic issues countries always consider about. There are lots of ideas about free trade- negative and positive thoughts. Indeed, everything has two sides- advantage and disadvantage. The World Economyis in a slowly recovery. We are doing our best to recover the economy. Perhaps free trade is the solution.
The four bar charts above are the result of a survey on campus of the University of Akron. There are fifty student were asked to present their opinions about free trade agreements. In the general question, over half (60%) believe that free trade agreements are bad for the country, while the rest say that free trade is good. Now let see the advantages and disadvantages of the free trade.
Firstly, free trade can increase production. As we known, free trade enables countries to specialize in the production of those commodities in which they have a comparative advantage. With specialization countries are able to take advantage of efficiencies from economies of scale and increase output.
Secondly, consumers have more benefits from free trade. There is a greater variety of goods and services with free trade policies. The increased competition ensures the quality of goods and services as well as supplying at the lowest prices.
Thirdly, free trade reduces the cost of production. To have lower costs, most of products are produced in foreign countries, especially in China. Apple electronic devices are good example.
Finally, the countries involved in free trade experience rising living standards, increased real incomes and higher rates of economic growth. This is created by more competitive industries, increased productivity, and efficiency.
Of course, everything has two side- advantage and disadvantage, and free trade is not an exception. Now let see the disadvantage of free trade.
Firstly, increasing competition is also a disadvantage. When countries open their international borders to member nations in the same free trade zone, they also open themselves up to the possibility of fierce competition which may come from other nations in the same free trade zone. All countries within the zone would be competing with one another for the same consumers.
Secondly, free trade may lead to increase unemployment. Because of the increased competition, many firms appear to have gained some degree of competitive advantage against others. One way of attaining such advantage could be related to advanced technology.
Thirdly, free trade may lead to dumping. Under dumping, goods are sold at very cheap prices and even below their cost of production in order to capture the markets. Furthermore, free trade may cause pollution and spread of diseases. Injurious and harmful products may be produced and trade.
Finally, free trade may lead to international monopolies. It encourages the establishment of corporations between countries. These corporations tend to acquire monopoly position and thus harm the interest of the local people.
As mention above, everything has two sides, and free trade is not an exception. All we have to do is keeping the balance between two sides. This means creating a fair trade for every country. The world just went through a great recession and it’s recovering slowly. It’s time for all of us considering carefully about the economic policies of our country.
References
United States. Helping U.S. companies export. U.S. Free Trade Agreements. 2013. Web. <
"Benefits of Trade." Office of the United States Trade Representative.Executive Office of The President. Web. 13 Oct 2013. <
Richards, Jay. "The Economy Hits Home: International Trade." Heritage Foundation. n. page. Web. 13 Oct. 2013. <