Question

Why do some people argue against free trade? Please illustrate your answer with relevant examples from both economic and political perspectives.

I need help on structuring the assignment and also ideas that will allow me to expand on as this question requires 2000 words, help will be much appreciated. Thanks

Identify the requirements of the question

Identify what the question wants by breaking it down into parts

Use your analysis to give you focus – will help you avoid

large chunks of irrelevant material.

The wording of the question is deliberate . All aspects of the question are important

Include the question at the beginning of the essay

Thanks

Answer 1

Why do some people argue against free trade? Please illustrate your answer with relevant examples from both economic and political perspectives.

Ans:

Introduction

Free trade is an economic situation under which governments do not levy tariffs, taxes or duties on imports or export quotas at all. In this context, free trade is the opposite of protectionism, a protective economic strategy aimed at removing the opportunity for international competition.

Benefits of Free trade

A free trade agreement is made between two or more nations in order to reduce barriers between them on imports and exports. Goods and services can be dealt in across the globe under a free trade regime, with little to no government tariffs, restrictions, incentives to prohibitions to impede their exchange.

Other economic benefits (write down pointwise) -

Economic Arguments against Free trade

In spite of huge economic benefits, many people from different backgrounds forward arguments against Free trade concept. The main basis of the arguments of these people are-

Domestic Market Failure: They express the likelihood that the labor working in a sector will otherwise be unemployed or underemployed, the presence of flaws in the capital or labor markets that impede the transition of resources as rapidly as they should be to high-return sectors and the likelihood of technical spillovers from new or especially creative industries. All these factors are heading to domestic market failures. That is, each of these factors is one in which some markets within the country is not performing well, the labor market is not clearing up, the capital market is also inefficiently allocating the resources , and so on.

Protection of Infant industry: The protectionists argue that newly born industries or firms in a particular potential industry set up in a developing country should be provided protection so that once they evolve and mature can become able to compete with giant rivals in the global market. Moreover, the infant Industries in emerging economic sectors in the domestic economy must be protected so that foreign competitors fail to harm or disrupt them. Infant industries normally don't enjoy any economies of scale which the older rivals in other countries do and so these domestic infant Industries or the firms under the infant industry should be covered under protection until they enjoy a similar size of economies of scale as foreign rivals. The explanation basically means that free trade allows killing infant industries until protectionism is practiced.

Agrarian products: Many people also argue that free trade is enabling the rich and developed countries to ruin the economic strength of the poor and developing countries. This is how the rich or developed countries sell maximum manufactured goods and latest technologies and related services in global market. These are expensive highly demanding by all countries. The poor and developing countries have only to sell agrarian goods which earn very little money. But nowadays developed countries are also starting to sell agrarian goods at a cheaper rate than what poor countries have been charging. This is becoming possible as farmers of the rich countries are getting huge funds or subsidies from their government and so able to export their products at an unbelievably low price.

Death of ethnic industries: Due to free trade people of a home economy are purchasing some imported products substitutable to expensive ethnic products at so cheaper rate. For example, plastic kitchen stuffs are replacing Indian original metal stuffs; synthetic cloths are replacing Indian original silk dresses, etc.

Political Arguments against Free trade

People forwarding arguments against Free trade consider political background also. This is a fact that one main economic benefit of practicing free trade along with globalization is transferring capital from capital abundant countries i.e. rich countries to the capital from capital deficient countries i.e. poor countries. This is happening in the form of direct investment and portfolio investment. History proves that over opening of a country’s resources including human capital and handing over economic ownership to foreign force leading to a threat to political sovereignty. For example, in the 17th century, the East India Company of Britain came to India for business purposes. Later attracting abundant resources and taking advantage of simple-minded Indian people, Britishers trickily took political ownership of the Indian sub-continent and looted the country so badly. So, from the political aspect, over volume of free trade would have increased imperialism again.

Conclusions

(Leave your own comment on whatever analyzed above. It may be suggestions to handle the arguments, validity of the arguments, the superiority of arguments in favor of free trade)