What Are the Arguments for and Against Open Markets and Free-Trade Policies?

Free trade is a built constructive thing which allows trade to be easily transportable between nations and states. Due to this there has been many unfair calls but also beneficial to some. Also it brings about tension as everyone would like to input an agreement based on what suits them. This evaluation is divided into four main sections. It will first consider what free trade is and how is operates in order for the reader to understand the actual concept of free trade. It will then go on to describe the arguments for and against free trade. The third part compares the two arguments and comes up with an evaluation on the two. Finally, some conclusions will be drawn as to which evaluation has a stronger point. Free trade is built on the principle that if more people are freely available to engage in mutually beneficial exchange, that this will mean the world resources are used more efficiently, more people will become wealthy as a result.

Antidumping policies protect domestic market prices by ensuring that imports do not have ‘too low’ prices below the cost of production or have fair market prices. The US has used antidumping policies to protect domestic markets from cheap imports from China. Free trade could facilitate dumping, particularly in non-industrialised countries. Third, in some instances, governments have introduced protectionist laws because of national security issues. Such governments aim to reduce reliance on other countries to supply critical resources and services, which may not be available in periods of dispute. Although it is difficult to identify all industries that are vital for national security of a country, some governments aim to protect their IT and energy firms from foreign ownership. Fourth, some countries have relative cheap labour. Consequently, they produce goods at low costs, which result in lower prices in the international market. Such countries may create unfair competition in the market. However, countries with cheap labour like China have attracted investments than those with high costs of labour. Consumers want cheap products. Thus, if a country has expensive products because of labour cost, the domestic firms will lose market share to foreign firms. Fifth, some governments argue that protectionist laws enhance equality in income through protection of local jobs

These are the essence of high tariffs and subsidies for the domestic firms. From this argument, one can deduce that the US, which has an expensive steel industry, may not compete against the steel industry of Brazil, which is relative cheap. In such situations, the US steel industry may lay off workers in order to cut costs and remain competitive. Consequently, workers who depend on the industry will slip into poverty. From such competition, the steel industry in the US may collapse altogether after several years. Consequently, the US will rely on foreign suppliers of steel. If the US engages in diplomatic disputes or wars with Brazil or other countries with steel firms, it may not be able to get that vital resource for its domestic operation. Thus, the result could be devastating to the US economy.

Again, by opening their market for products from poor countries, industrialized countries would encourage more industries and firms to venture into their market. Most of the developing countries produce agricultural and labour intensive products such as textiles. Since the developed countries have closed their markets for these products, the industries in the developing countries cannot export (Maclean, 2006, p.234). Export provides industries with more market for their products. More market further provides the industries with opportunities to grow. As a result, more industries in the production of these products would rise. This in turn would result into industrialization of the developing countries. Economists impute development in the first world countries to the industrialization and true to these ascriptions, industrialization results into growth in infrastructure and increase in production. Growth in infrastructure enhances the chain of distribution such as transport, distribution and sales. Consequently, more industries would grow and expand. Since the removal of barriers to trade promotes export, the poorest countries would therefore upgrade to the level of the developed economies. Removal of trade barriers enhances competitiveness among the local industries. As aforementioned, trade liberalization promotes export in the local industries; therefore, export enables these industries to penetrate the international market

However, to compete successfully in the international market, these industries should provide high quality products and services (Blaine, 2007, p.78).

In a word, we don't yet know how he will address those issues when he takes his place in the White House. Perhaps his threats to introduce new tariffs are just that - threats. But the post-war trend towards more liberalised international trade looks more uncertain than it has for many years.

Blaine, R. V. (2007). Trade barriers in Africa and the Middle East. US: Nova Science Publishers.

MacLean, M. R. (2006). EU trade barrier regulation: tackling unfair foreign trade Practices. UK: Sweet & Maxwell.

Mitchell, A. (1995). Trade barriers: protestations and performance. UK: Land & Liberty Press.

Yeats, A. J. (1997). Did domestic policies marginalize Africa in international trade? Directions in development. World Bank Publications.