What is FREE TRADE?
Free trade is liberalization of trade with no government interference in the form of regulations, tariffs, quotas or taxes, which allows producers to yield, manufacture or sell their products within as well as outside domestic frontiers. This helped producers to price their products at lower rates which further stimulated competition. On the downside, benefits like tax holidays and subsidies to domestic producers were also withdrawn. Unrestricted flow of labor, materials, goods and funds prompted several countries to enter free trade agreements.
Free trade is advantageous for consumers because increased competitiveness due to the presence of international producers compels domestic producers to deliver high quality products at reasonable prices that are at par with the competition. The consumer is empowered with the ability to choose from a wide variety of the same product. In the absence of the free trade act, consumers had limited choices in the market. Free trade came under fire because it led to monopoly in the international markets by corporations originating in developed countries that took advantage of the ‘no government intervention’ policy. A grave matter of concern is the cost of damage to the environment that will accumulate overtime and the consumer will ultimately pay a heavy price for it in the long run which far outweighs the benefits of low-cost wide-variety products.
The main objective of adopting free trade markets was to bridge the gap between the poor and the rich, stimulate economic growth and raise the quality of life. Corporations engaging in free trade have been accused of exploitation of farmers, especially those belonging to poorer countries, by coercing them to cultivate only profitable crops and paying them meagerly. If produce does not conform to the company’s desired standards, it is rejected and farmers are not even partially paid for growing the crop on demand. The concept of free trade may sound very lucrative and it may come across as a viable trade mechanism that brings all the market forces to perfect balance. However, this very idea is contradicted by the fact that not everyone involved in this process is given equal opportunity by means of fair access to resources.
•Prompts relocation of businesses.
•Exploitation by MNCs and international organizations.
•Given rise to sweatshops.
•Payments are made after approval of goods.
•MAY lead to labor exploitation, meager wage rates, inhospitable and hazardous work conditions, compromised product quality, poor safety measures, income inequality, degradation of the environment, and wastage of resources.
