THE GLOBAL FREE TRADE HAS DONE MORE HARM THAN GOOD

Free trade increases the prosperity for the citizens of all the participating nations, by allowing
consumers to buy more, better quality products at lower cost which lead to economic growth,
enhanced efficiency, increased innovation.

Progress has been very impressive for a number of developing countries in asia.
Trade opening has been an important element in the economic success of east asia
Countries that have opened their economies in recent years including India, Vietnam and
Uganda have experienced faster growth and more poverty reduction. On average, those
developing countries that lowered tariffs sharply in the 1980’s grew more quickly in the 1990’s
than those who did not.
-Global Trade Liberalization and the Developing Countries (IMF Staff) November 2001

A large part of the world has eliminated all barriers to trade or is in the process of doing so.
Several large groupings are en route to a similar outcome. The North American Free Trade
Agreement, Mercosur for South America and the Free Trade Agreement (FTA) for the ASEAN
countries that includes Philippines.
-Competitive Liberalization and Global Free Trade: A Vision for the early 21 st Century (C. Fred
Bergsten (PIIE) January 1996)

Free trade, a policy by which a government does not discriminate against imports or interfere
with exports by applying tariffs to imports and subsidiaries to exports. It does not however imply
that the control and taxation of imports and exports is abandoned.
-Britanica

Advantages:
Increased Efficiency and better quality to cost ratio – The good thing about free trade is that it
encourages competition, which consequently increases a country’s efficiency, in order to be par
with its competitors. Products and services then become of better quality at a lower cost.
More innovation, production and variety – Where there is intense competition, countries will tend
to produce their products or goods that they are most efficient at. Efficient use of resources
means maximizing profit.
Disadvantages:
Threat to intellectual property – When imports are freely traded, domestic producers are often
able to copy the products and sell them as knock-offs without fear of any legal repercussions.
Therefore, unless the FTA includes provisions for intellectual property laws and enforcement,
there are no protections for exporting companies.
Less tax revenue: Since member countries are no longer subject to import taxes, they need to
think of ways to compensate for the reduced tax revenue.
-corporatefinanceinstitute.com

Advantages:
Stimulates economic growth
Helps consumers
Increases foreign investment – When not faced with trade restrictions, foreign investors tend to
pour money into local businesses helping them expand and compete
Reduced government spending – Governments often subsidize local industries, like agriculture
for their loss of income due to export quotas. Once quotas are lifted, the government’s tax
revenue can be used for other purposes.
Encourages technology transfer – In addition to human expertise, domestic business gain
access to the latest technologies developed by their multinational partners.

Disadvantages:
Job loss through outsourcing – Tariffs tend to prevent job outsourcing by keeping product
pricing at competitive levels.
Allows for poor working conditions – Because free trade is partially dependent on a lack of
government restrictions, women and children are often forced to work in factories doing heavy
labor under grueling working conditions.
Can harm the environment – Since many free trade opportunities involve the exporting of
natural resources such as lumber and iron ore, clear-cutting of forests and un-reclaimed strip
mining often decimate local environments.
-What is Free Trade? Definition, Theories, Pros and Cons (Robert Longley 2018)