Essay, Research Paper: Free Trade

FREE TRADE: No restrictions on trade. Free Traders say that unrestricted market
forces will create the most good for the most people by directing resources to the most
efficient countries. To achieve worldwide efficiency, trade must be conducted without
regard to national concerns; therefore any temporary imbalance in a country's foreign
exchange settlements or domestic living standards is without consequence. Free
Traders also believe that any action to interfere with free trade will result in a "trade
war", wherein a country's trading partners will enact retaliatory laws to eliminate any
benfefit the initiating country receives from a protectionist policy.
Free Trade benefits multi-national corporations by opening markets to their products
which might otherwise be restricted in some fashion. It also benefits consumers by
making the manufacture of goods become as cheap as possible since manufacturers
seek out countries with the lowest cost production. Many countries which have
adopted this policy have seen their economy grow as a result. The question is whether
the benefits to individual citizens from imports which cost less than goods made in the
home country are more than offset by the resulting loss in jobs and wages to local
citizens. Some observers fear that a "race to the bottom" resulting from the mobility of
capital in seeking low cost production will lower everyone's wages to the lowest
wages in the world.
The United States of America is the prime mover behind this policy because it sees
the opening of foreign markets as the best way to address its long standing trade
imbalance of imports over exports. This is a new development since this policy began
as industrialized countries opening their markets to poor, developing countries while
ignoring them as export markets. Unfortunately, many international lending agencies
have adopted this policy as a requirement for borrowers, although the effect of
adopting this policy is frequently to eliminate any possibility of a favorable trade
balance in the borrowing country.



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Word Count: 321