BUSINESS

Free Trade

Free Trade

Introduction

Free trade is an un-restricted sale and purchase of services and goods among the countries or states with no trade constraints such as duties, quotas and tariffs. It encourages win-win situation, as it enforces the nations to focus on their competitive advantages, which have an ability to foster income growth and maximize economic output for their natives.

A policy through which a government of the country or state is prohibited from making any discrimination against imports or imposing tariffs on exports is commonly known as Free Trade. The trade of goods is made free from taxes and any other possible trade obstacle such as quotas on imports etc.

Discussion

Free trade helps in improving well-being of the economy that is important for economic success. Huge markets are opened through the use of free trade and the resources are allocated to areas that are highly productive. Free trade policy also helps in improving the employment level of the country.

Objectives of Free Trade

The main objective of free trade is integration of world economies, as it encourages international trade and reduces the relevance of national borders. With the help of free trade policy healthy competition is encouraged among all the producers of the world with no interference of the government. Free trade policy gives edge to producers and consumers more than the states and governments (Anderson, 2011). The free trade agreements are used in creation of global marketplace that ignores the state boundaries or borders and where labor, capital and goods are moved from one end to another without any obstruction.

Benefits of Free Trade

Consumer Satisfaction

Employment and Economic Growth

Encourages Healthy Trade Relationships

Foreign Exchange Gains and Decreased Poverty

Improved Exports

Increased Production and Efficiency

Disadvantages of Free Trade

Economic Dependence

Harmful Products

Harmful to Less Developed Countries

International Monopolies

Non-Cooperation of Countries

Political Slavery

Reduction in Welfare of Certain Groups

Unbalanced Development

Unrealistic Policy

Distribution of ...