Arguments for free trade?

What are the pros and cons of free trade?

Asked on June 27, 2017 in Finance.
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8 Answer(s)

Reduced tax revenue. Tariffs and fees being removed will mean less revenue and the government will either have to cut spending or increase taxes elsewhere to recoup the lost revenue.

con

Answered on August 11, 2017.
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Knowledge sharing. Big multinational corporations have expertise in fields that local firms lack. When these global concerns have access to smaller businesses partnerships are formed and the local businesses benefit from the training they provide. These new methods encourage the local smaller businesses to grow.

pro

Answered on August 11, 2017.
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Foreign investment. When it becomes cheaper Investors will pump more money into the local industries and domestic businesses. Because of this the local economy grows, jobs are created and new foreign currencies are brought into the local area.

pro

Answered on August 11, 2017.
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Intellectual property theft. Inconsistencies in patent protection and laws governing technological innovation often occur when free trade is established. A more fertile environment for IP theft occurs especially when the agreement is formed with developing nations.

con

Answered on August 11, 2017.
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Lowers government spending. Without free trade there is government spending required in the form of subsidies and administration. Free trade eliminates these costs and the funds can be put to better use such as security and social services.

pro

Answered on August 11, 2017.
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Outsourcing. Imports become cheaper once tariffs and duties are lifted. Once areas start importing goods local businesses cannot compete and are forced to move jobs with a lower cost of living in order to reduce manufacturing costs. This creates unemployment in the local business’ area.

con

Answered on August 11, 2017.
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Labour practices. The global conglomerates can save money by shifting jobs to nations with lax labour laws. Labour exploitation especially among women and children becomes commonplace.

con

Answered on August 11, 2017.
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Beneficial to the business environment. When local business are at risk of becoming stagnant lifting protections and regulations aid and motivate them into pushing to become global competitors.

pro

Answered on August 11, 2017.
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