Pros and Cons of Free Trade


A lot of people nowadays dream of a world where free trade is the norm, a world where economic barriers like taxes and tariffs are broken down to facilitate smooth trading across borders. However, many point out that this situation is far from ideal since it comes with a lot of disadvantages. To know which stand you should take, here’s a list of the pros and cons of free trade:

List of Pros of Free Trade

1. It paves the way to lower product prices.
In many countries, imported products almost always cost more since high taxes and tariffs are imposed on them. However, when fair trade agreements are put into place, these sky-high fees are removed and the prices of imported products become lower. As a result, many people can now afford to purchase these items and, over time, this can lead to a better and stronger economy.

2. It provides consumers with more buying options.
As mentioned above, free trade policies can cause imported products to be offered at a lower price. When this happens, consumers can have more options to choose from since they’ll no longer be limited by exorbitant price tags. They also no longer have to worry about certain companies having a monopoly on the market and jacking up the costs of products.

3. It can create more jobs.
Through free trade policies, a country can expand its market globally and offer its products to a larger audience. This more or less results to an increased demand for its products, which means that it will need to hire more workers to increase its production and keep up with the demand.

List of Cons of Free Trade

1. It can promote economic dependence.
Those who oppose free trade point out that it prevents economic diversification. Since countries can easily get the products and services that they need from overseas suppliers, they no longer have the incentive to create their own versions of these goods and solutions and develop an independent economy. They also become focused on producing and exporting certain types of products so, when the time comes when they can no longer supply these items or when the demand for them drops, their economy can suffer and may even collapse.

2. It can discourage small businesses.
Free trade is advantageous for multinational corporations that have the money and manpower to expand to other countries. It’s not really supportive of local mom-and-pop businesses, who need to compete with larger companies that have more resources. These small ventures usually fail in free trade markets, effectively killing entrepreneurship and discouraging would-be startup owners from achieving their dreams.

3. It can lead to the lack of employment opportunities.
Through free trade agreements, it becomes less expensive for corporations to manufacture their products in overseas nations with cheap labor then import the goods to their home country. In the U.S., for example, many companies have decided to outsource to and even relocate their factories in Asia, where minimum wages are low. As a result, Americans end up with fewer job opportunities and have to deal with unemployment.

Free trade has several pros and cons, and it’s up to the people to understand these effects and decide if free trade agreements are ideal for them or not.