Abstract
Free trade entails the movement of goods and services between nations unconstrained by any charge or non-tariff barriers ( Ehrlich, 2018 ). The question on the fairness of free trade has raised numerous debates related to the impacts on the existing international trade. In relation to the trade theory, free trade has numerous advantages including the expansion of the world’s output of different commodities. To provide an answer to this question, the solution entails determination of the strengths and limitation of free trade incorporating different trade theories to support both arguments.
Free trade would help in equalizing wage rates between countries ( Trentmann & Smith-Institute, 2009 ). For instance, labor is among the scarce services offered in trade. Consider two nations where one nation has a high supply of labor and the other has a high demand for labor. Free trade would call for the supply of labor to the nation where the demand is high with an equal wage rate between the two nations. Recently, India has recorded a low labor cost that has increased the rate of IT exports to the US, which has a short supply of labor. Free trade between the two nations would raise the demand for labor in India and reduce the demand for labor in the US hence balancing the wage rates between the two nations ( Ehrlich, 2018 ).
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Additionally, free trade would enhance the supply of resources between countries involved and increase the nations’ economic growth ( Trentmann & Smith-Institute, 2009 ). Moreover, free trade reduces the cost of resources hence improving the efficiency of global markets. Removal of boundaries between all parties will increase exports, increase competition and make use of surplus raw materials. Despite numerous strengths supporting free trade, it can cause the degradation of natural resources. This happens in situations where the parties involved rely on each other for natural resources like minerals and timber. Free trade can facilitate poor working conditions characterized by low wages.
Conclusion
Based on consideration of a nation’s economic growth, free trade is recommended. However, fair trade is substantial for empowering marginalized people. Based on the aforementioned arguments, it is evident that free trade is fair by all means since the benefits exceed the limitations.
References
Ehrlich, S. D. (2018). The politics of fair trade: Moving beyond free trade and protection . New York: Oxford University Press
Trentmann, F., & Smith-Institute (London). (2009). Is free trade fair trade? New perspectives on the world trading system . London.
