Free Trade is the act of eliminating the barriers between countries such as tariffs, quotas and subsidies so that prices would naturally rise through supply and demand. In theory Free Trade is a wonderful idea for developed countries to better access economic markets, move labor and workers, and capitol all for free without the burden of taxes. Free trade is a very hot topic among many people around the world. In theory Free Trade sounds great. As it turns out though it has done a lot of harm. If all countries who participated in free Trade went by the rules and there was no corruption then there would be no problem.
One of the biggest issues with Free Trade among many in the United States is the fact that so much of our manufacturing has left our country for developing countries. These companies do this for the cheaper workforce found in these countries. Also manufacturing in the western world are not able to compete with the wages and prices of goods from these third world markets. Those markets will constantly cut their prices again and again to continue to stay competitive. Western manufacturing cannot keep pace with this as wages in the west are much higher and cost of goods reflects that.
The World Trade Organization plays a very big role in setting the rules for Free Trade. The way Free Trade has been played out is that the global elite control most of the wealth. They stand to benefit the most from free trade. Developing countries that are rich in natural resources that, under free trade, should be thriving are actually still very second or third world. All the wealth generated from it stays with the wealthiest. Keeping the workforce poor, when they should also be benefiting from it.
An example of a developing country out competing the United States is China. Many U.S. manufacturing plants have moved to China to stay competitive. This has cost many Americans their jobs, and there way of life. It’s left many to have to start over from scratch late in their life. There are many reasons why these companies would do this. Free Trade is one major reason. China has an enormous trade surplus. China artificially keeps its currency undervalued so that its goods are cheaper. This enables them to compete with American goods. The United States is swamped with Chinese goods because of this. Americans love to pay less especially during these economic times. Yet if the Chinese Yuan was allowed to appreciate they would no longer be able to compete with American goods. That would start to reverse the trade surplus and American goods would start to sell more. There are some who wish to penalize the Chinese for their trade practices, but the question is whether the government has the authority to do so. Others say the answer is tariffs. We could build a so called tariff wall and stop the unfair practice that way. One thing is clear though. It hurts U.S. goods.
All in all Free Trade by theory might have been a good idea, but with most good ideas there are always ways to corrupt it. The true answer is proper regulations. The need to pinpoint exactly what’s hurting our own economy and start thinking about our own wellbeing before we sell out completely.
- www.onemint.com/2009/01/26/how-does-china-manipulate-its-currency/
- www.stopftaa.org
- www.greenpeace.org
