A Discussion for Free Trade
Title: A Discussion for Free Trade
Introduction: Free trade is a policy that refers to a government does not interfere with international trade by applying tariffs, subsidies, quotas or other ways. It is a system that capital, labor and other resources flow freely between nations without barriers which could hinder the trade process, and also do goods, services. For a long time, free trade plays an important role during the process of the development of world economy, especially along with the rapid development of globalization and marketization (Winters, 2004). However, free trade does not mean that countries completely give up management of import and export trade and tariff system, but according to the foreign trade agreements, make the products in the market at home and abroad in equal status and have the same competitive chances. In tariff system, countries don't use protective duties, but still can collect revenue tariff in order to increase financial income. However, theorists and practitioners such as economists, politicians, industries, and social scientists hold divergent opinions about free trade. Proponents believe that free trade optimizes the efficiency of resource allocation, and then promotes national interest, increases social welfare. Opponents think free trade impairs domestic competition structure, and then reduces national interest, increases economic risk. So, the choices between free trade and protectionism are exist all the time during international trade. Now, a series of economic recession problems triggered by the 2008 finance crisis aggravate the debates. Free trade, good or bad, who are the winners and who are losers? In this essay, we will talk about the advantages and disadvantages of free trade, analyze the benefits and balance during the process of free trade.
1. The advantages of free trade
The development of free trade theory was on the basis of theory of comparative advantage (Costinot, 2009). Because of resources endowment,
Introduction: Free trade is a policy that refers to a government does not interfere with international trade by applying tariffs, subsidies, quotas or other ways. It is a system that capital, labor and other resources flow freely between nations without barriers which could hinder the trade process, and also do goods, services. For a long time, free trade plays an important role during the process of the development of world economy, especially along with the rapid development of globalization and marketization (Winters, 2004). However, free trade does not mean that countries completely give up management of import and export trade and tariff system, but according to the foreign trade agreements, make the products in the market at home and abroad in equal status and have the same competitive chances. In tariff system, countries don't use protective duties, but still can collect revenue tariff in order to increase financial income. However, theorists and practitioners such as economists, politicians, industries, and social scientists hold divergent opinions about free trade. Proponents believe that free trade optimizes the efficiency of resource allocation, and then promotes national interest, increases social welfare. Opponents think free trade impairs domestic competition structure, and then reduces national interest, increases economic risk. So, the choices between free trade and protectionism are exist all the time during international trade. Now, a series of economic recession problems triggered by the 2008 finance crisis aggravate the debates. Free trade, good or bad, who are the winners and who are losers? In this essay, we will talk about the advantages and disadvantages of free trade, analyze the benefits and balance during the process of free trade.
1. The advantages of free trade
The development of free trade theory was on the basis of theory of comparative advantage (Costinot, 2009). Because of resources endowment,