Free trade is an economic practice.
Well, to be precise, it is a set of international trading principles in which countries can import and export goods without government getting all caught up in trying to control it all with their pesky tariffs, import/export bans and limitations on what can and cannot be done. Of course, there are many pros and cons to the idea, particularly given the tendency for multinational corporations to err on the unethical side of things when it comes to turning a profit. Then there’s the question of unsafe and even downright illegal working conditions being imposed on hapless workers in developing countries who are creating the value that the fat cats of global trade live off here in the West.
So where’s the good in free trade, and why did we ever want to do this in the first place?? Great question! Well, at least until you consider the other side of the argument. And no, I don’t mean the capitalist viewpoint that making business and making money is best form of development, because that’s simply not true if just a small club of elite executives are hogging all the profit for themselves. No no, what I mean are the social benefits of fair trade –yes, they do exist! In fact, it’s what this blog is dedicated to.
Developing countries for example, can benefit from free trade by increasing their amount of or access to economic resources. See, while protectionist policies in the Western world are designed to hold back the rising tide of globalisation by preventing the outsourcing of homegrown industries, the other side of that coin is that developing countries never get a chance to participate in trading practices that could grow their own economies. By attracting those jobs with the promise of lower production costs, developing countries are in fact increasing foreign investment in the form of new factories, training opportunities and ultimately, jobs. In short, free trade agreements ensure small nations can obtain the economic resources needed to produce consumer goods or services.
The flow-on effect of this foreign investment leads to improved quality of life when foreign goods come onto the market at reduced prices, putting them in reach of the lower earners so that they can gradually shift on up to middle class. Of course, that’s not to say there won’t ever be predators in this global market, and local market segments have been totally wiped out by price dumping tactics. And so we’re met once again with the devilish duality of economics, where everyone’s a winner and everyone’s also a loser –it just depends on who you ask…
Image courtesy of: merinews.com