Free Trade: More Than Economics

July 15th, 2018 | by Jelena D
Free Trade: More Than Economics

Free trade is the practice of eliminating all barriers and tariffs that a country might set to gain or protect a certain market of industry, commerce, or technology. It is theorized that the elimination of such barriers would result in a world wide increase in efficiency and productivity. However, this theory has been a highly debatable topic in recent years, receiving much criticism on a few well found points.

Trading between nations can be a very serious matter, as tariffs and taxes can ultimately render any nation’s products useless. If a nation depends on only a few products that in may produce, this can have disastrous effects on the nation. The nation who imposes the taxes benefits by allowing businesses and entrepreneurs flourish in a closed market- as consumers will most likely not buy higher priced items- especially if they are foreign made.

Proponents of free trade argue that it is valuable to the economy of participating nations. Without government regulation, investors and businesses tend to see an increase in income. Others who favor free trade claim it is a moral practice that is a right, not a privilege. Not only does free trade benefit business, it also helps keep national relations intact. Essentially, two nations will very likely not war with each other if they both benefiting from an excellent trade agreement. Quite the contrary, in fact- as the nations are much more likely to form a bond and become allies, should there ever be an actual war.

Adam Smith was a supporter of free trade, and claimed that protectionism against free trade was merely a scam on consumers. He argued that businesses will exploit nationalism and patriotism to sell products to an easier market of consumers. This has been seen all over the United States among computer manufacturers or software companies such as Microsoft or Sun Microsystems- not to mention countless other industries such automobiles or telecommunications. The United States population has come to know this process as outsourcing- and has been the driving force behind many lost jobs that have been relocated as a result of free trade. Clearly, the majority of business supports tariffs and taxes- and uses monopolies or propaganda to fight opposition.

The World Trade Organization, or WTO, was established to help regulate free trade practices. For instance, unlimited free trade is seen as a violation in the guidelines of WTO. Instead, each country follows a loose free trade paradigm that the WTO deems fair in relation to other countries and their well-being. This, proponents of free trade say, reduces trade disputes or trade wars. The WTO is a global organization that encompasses most of the developed world- with Russia and parts of Africa excluded. The WTO itself has undergone a great deal of criticism since its creation in 1995, which has mainly been a result of free trade and globalization critics.

Critics of free trade claim that much of the dispute over the subject is due mainly to semantics. For instance- Vietnam interpretation of free trade versus the United States interpretation are vastly different. Others say that free trade even seems to retrograde developments of certain nations. For instance, it is well known that many coffee manufacturers use Africa as a source of coffee beans. A common precedent is to claim the coffee bean crop from African farmers- and making a much bigger profit from reselling it different countries. Common companies such as Folgers have been known to practice this- and it is both legal and normal thanks to free trade. It is a fact that nations with the most resources develop much slower. For instance, diamond or oil rich nations will be exploited as a direct result of foreign autocrats. The large amount of civil wars over these raw materials results in blood diamonds- which is a term given to valuable materials sold at low prices to finance a war- most usually in an African or Arabian country.

Critics also point out that free trade leads to benefits among the wealthy, but no one else. The companies who benefit from the decreased production expenses tend to replace workers of their home country with foreign employees. This leads to a decrease in jobs, and often leads to hording of profits. A majority of businesses who benefit from outsourcing do not put the money back into the economy of their own nation- and instead continue to invest in foreign nations and products. For this reason, many economists and union workers reject free trade as a viable solution for businesses. Anti-globalization efforts also take part in the criticism of free trade- as it generally supports a standardization of the globe.

Cultural diversity is even at stake, from what the French report. Apparently, Hollywood movies have made a huge impact on the French culture and directly compete with the French film industry. In terms such as these, it is even possible to undermine a culture as a result of free trade. Restrictions on trade could keep cultures such as the French intact- but also others. For instance, the Canadian culture is subject to many magazines, television channels, and radio stations from the United States. All of this content has challenged many Canadian content laws- which are effectively changing the Canadian way of life.

Lastly, it has been reported that free trade is a threat to national security. Not all of a nation’s imports can be inspected on average. This leaves room for error with certain attacks- including biological attacks. With the help of a little taxation, a country can help support local farmers instead of foreign agriculture sources. Technology outsourcing has been posed as a threat as well. If the majority of the computer servers that route information to a country are disabled intentionally, then the country that outsourced the technology is at an incredible disadvantage in communications. Interestingly, free trade has also been reported as a competitive threat. If China was to use free trade to exploit certain markets, and gain more means of production- they could rival even the strongest nations, in theory.

In the end, it is hard to determine who is right. Like most controversy or highly debatable subjects, the matter of free trade is very perplexing. Many controversies and debates come to a standstill when they have been tested with experience, or sturdy theories. Free trade as it has come to be known in today’s culture has been relatively new. Ultimately, it depends on one’s culture and social status when determining a proper argument. The son of a successful businessman and the son of an exploited African coffee bean farmer will give two very different opinions. The real task is to find a median in which to please both sides- such as the World Trade Organization or the World Bank.

Most of free trade is subject to theory only- which makes the debate that much harder. It is said that if every country eliminated tariffs and taxes from imports or exports- that the world would benefit as a whole. Like most points in free trade- this remains to be untested. As globalization and trade continues, these theories will be continually put to the test- and in time, an answer will ultimately be found.