Disadvantages Of Free Trade

Advantages and Disadvantages of Free Trade

Any chat about the economy of the world will bring to light both advantages and disadvantages of free trade. As with most political topics, free trade is highly subjective and discussions can become heated. That is because opinions on the advantages and disadvantages of free trade depend largely on personal beliefs, experience and opinion.

Some of the negative feelings about free trade stem from a general misunderstanding of the subject of world trade. The term free trade may be bantered about, but the average person probably does not have a clear understanding of exactly what free trade really is. The problem here is a basic lack of knowledge about worldwide economic issues, and that includes awareness of the real advantages and disadvantages of free trade.

Misunderstanding of this sort is more than likely the reason why political and economic discussions can easily erupt into arguments. Also contributing to the volatility of the topic is the fact that a person’s opinion on free trade is frequently colored by their most personal and closely held views of the world and their place in it. This makes topics such as the world economy more sensitive because they are viewed through a lens of personal beliefs and experience.

One of the biggest arguments against free trade is that it favors established nations while ignoring developing countries. Since free trade promotes open competition, those against it say that countries with a solid economy will have an unfair advantage of the nations that are struggling to enter the business world. Backers of free trade will argue that the whole purpose of free trade is to help developing nations to get a foot hold in the world trade markets. Although it may be rough going in the beginning, this camp says that free trade markets will adjust and grow as time goes on to make room for the younger nations to prosper and begin to compete with larger countries and markets.

Another disadvantage of free trade is that it can pose a threat to the domestic economy because major companies will begin to trade overseas, where they may be able to get goods and services cheaper than they can at home. This would result in a loss of jobs. Friends of free trade say that over the long run, free trade will benefit everyone and that any jobs lost will be replaced in time with others as progress is made in the market.

And let’s not forget about the environment. Many of those against free trade fear that enabling new and undeveloped countries to participate in the world trade market can cause serious damage to the world’s already endangered environment.

It is thought that new nations tend to have fewer regulations than developed countries when it comes to dumping chemicals and other environmental threats associated with manufacturing. Because of this lack of regulatory control, there is some fear that these countries may not consider the adverse affects on the environment. This is exacerbated even further when taking into account the desire of these new nations to find their place a valid presence in the world market.

Free trade is a complex issue, and there are legitimate arguments both for and against. The good that can be done for developing nations may be outweighed by any negative impact that free trade may have on the environment or on the developed countries of the world. This is an argument that will likely continue for years to come, and the answers can only be determined by time.