Free Trade
Free Trade
Svante Lietzke – 2001585009
Trade between nations plays an important role in economies all over the world. By trading countries can specialize on the production of specific goods and services. But to secure the domestic economy countries came up with tariffs and taxes for important goods. Free Trade has been implemented to reduce trade barriers and made the trade volumes in the world increase significantly. Free Trade is promoted by the WTO (World Trade Organization) and it is based on Free Trade Agreements signed by two or more countries. In the following I want to point out the benefits but also the downsides of Free Trade.
Relating to work or working conditions it is possible that Free Trade causes loss of jobs in the domestic market when a company offshores or outsources it’s production or business to a country with lower wages. Another employment issue could be the promoting of poor working conditions that include child labour and/or low wages for employees in lesser developed countries. Free Trade also can lead to more dependence on other countries because the goods or services are mainly imported and not produced in the domestic market anymore. Therefore the country is highly depended on the goods prices and availability in other countries.
The obvious advantages of Free Trade are lower prices of goods and services for the customer as well as broaden possibility to choose goods or services. Without tariffs, taxes or other trade barriers for import goods, there will be an expanded competition because competitors are not limited to the domestic market but can be originally from all over the world. Higher competition mostly leads to innovation and makes the companies in this field of business more efficient in order to compete on the world market. Another benefit from Free Trade can be explained with the comparative advantage. This means that by specialising in the production of specific good where countries have lower opportunity costs an
Svante Lietzke – 2001585009
Trade between nations plays an important role in economies all over the world. By trading countries can specialize on the production of specific goods and services. But to secure the domestic economy countries came up with tariffs and taxes for important goods. Free Trade has been implemented to reduce trade barriers and made the trade volumes in the world increase significantly. Free Trade is promoted by the WTO (World Trade Organization) and it is based on Free Trade Agreements signed by two or more countries. In the following I want to point out the benefits but also the downsides of Free Trade.
Relating to work or working conditions it is possible that Free Trade causes loss of jobs in the domestic market when a company offshores or outsources it’s production or business to a country with lower wages. Another employment issue could be the promoting of poor working conditions that include child labour and/or low wages for employees in lesser developed countries. Free Trade also can lead to more dependence on other countries because the goods or services are mainly imported and not produced in the domestic market anymore. Therefore the country is highly depended on the goods prices and availability in other countries.
The obvious advantages of Free Trade are lower prices of goods and services for the customer as well as broaden possibility to choose goods or services. Without tariffs, taxes or other trade barriers for import goods, there will be an expanded competition because competitors are not limited to the domestic market but can be originally from all over the world. Higher competition mostly leads to innovation and makes the companies in this field of business more efficient in order to compete on the world market. Another benefit from Free Trade can be explained with the comparative advantage. This means that by specialising in the production of specific good where countries have lower opportunity costs an