The Pros And Cons Of Free Trade Agreements

Good Essays
Opinions about free trade pre-date the Civil War. Northern states that did not rely on slavery generally supported high tariffs to protect their manufacturing businesses. Southern states, on the other hand supported free trade agreements. This is because free trade made it easier for the states to export cotton and other produce without tariffs or strict regulations (Destler). Today, free trade agreements, or FTAs, are facing a similar predicament. While free trade allows for products to be exported cheaply to foreign markets, it also displaces jobs and has lead to trade deficits. Today, free trade is being analyzed to determine whether if it positively or negatively impacts the overall economy, and whether FTAs need to be revised or repealed. Those who support free trade argue that more products will be imported without tariffs or restrictions, so in the end they will cost the consumer less. Those who wish to eliminate free trade agreements argue that they cause increased unemployment due to competition and cheap foreign labor. They argue that companies from developing countries should pay America to conduct business. Free trade …show more content…
Consumers may reap the benefits of the cheap products, but the American companies suffer. Likewise, the opening of borders has improved the economy of developing countries; however, the economy of the United States has not improved. “The U.S. goods trade deficit with Mexico was $58 billion in 2015, a 8.4% increase ($4.5 billion) over 2014” (“Mexico”). Many large companies in the United States have gone multinational and offshored production to developing countries. According to a study by Robert E. Scott, the Senior Economist and Director of Trade and Manufacturing Policy Research of Economic Policy Institute, the United States lost 3.2 million jobs to China between 2001 and 2013

Related Documents

  • Decent Essays

    From the business point of view it is important to understand that outsourcing is part of globalization, and it benefits the company’s efficiency and it saves money in labor. Many Americans believe that outsourcings hurt Americans economy and are against the idea of taking Americans jobs to other countries. Bryson, a global economist for Wells Fargo said: “When jobs move from a factory in the South to one in Guatemala or China, it certainly has a negative impact on that community in the short run…But in the long run it makes things more efficient." (Hargreaves, 2012) And in fact it might make things more efficient for the company because it is relatively easier to establish a business in China than in the United States, however it is inedible to ignore the impact in American workers. “Over the past decade data from the United States Department of Commerce show that U.S biggest companies that employ a fifth of American workers reduced their work forces by approximately 3 million jobs while increasing employment overseas.…

    • 1324 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    Arguments Of Free Trade

    • 1583 Words
    • 7 Pages

    The end of Soviet Unions was due to its collapse to access to new technology. It is obvious that not only free trade is responsible for growth. Many things such as political stability, macroeconomics and many other policies are also important and needed. On the other hand,if more nations trade with each other,the more advantages they can get from each other and help to grow.It leads to cooperation and peace among countries and it causes economical growth.”In fact ,one fascinating study from Stanford University proved that the more trading partners a nation has ,the less likely it is to go to war. (B.O`Brien)w.tradeready.ca Free trade is the way to limit aggression in international policy.…

    • 1583 Words
    • 7 Pages
    Decent Essays
  • Decent Essays

    1: What is Trickle-down economics Trickle- down economics is the idea that the money that the “Super Rich” spend circulates and promotes growth in the economy and benefits others. It is the theory that the drivers of economic growth are people that are successful in the economy and that from the tax cuts they receive they will spend more of their money in the economy and invest in business’s which will supposedly generate more jobs. Yet if this is in fact true then why is it that the living conditions are still bad and jobs are at an all-time low. It is promoting inequality and creating a bigger divide between the working class citizen and the super-rich. According to research done by (YouTube video) Britain is the only economy that has grown…

    • 851 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    That’s a more than 30-fold increase, during a period in which global population grew less than three-fold. Free trade aids places that lack certain resources that another countries can help provide. Globalization makes the process of free trade less tense because once world leaders realize how much a country is hurting; they can then extend their helping hand to those countries. Free Trade also assists more established country with receiving goods and services for a reasonable prices to sell to consumers. Globalization promotes economic growth which mean the world leaders want to create more jobs, and lower prices for consumers.…

    • 1091 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    Corporations outsource jobs because it is cheaper, but the cost of cheaper labor comes from the low-wage workers in developing countries. Developing countries are put into a troublesome position where they have to juggle with the economic benefits of free trade and the abuse of their people. Joel Paul, a professor from the University of California, stated that under free trade, “[d]eveloping countries must compete for capital investment and jobs, and this competition leads countries to lower their labor standards in a self-destructive “race to the bottom” (Paul 200). The countries that benefits off of free trade the most are the countries where the corporations belong to and the countries that the corporations decide they want to do business with. Developing countries end up competing with each other to provide cheaper labor in order to attract and keep foreign investments.…

    • 1036 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    A tariff like the one spoken of will only help domestic producers as they will now be willing to increase production as the tariff makes it profitable even if the world price does not. The government also wins as they now can gain money they previously weren’t able to. On the other hand, consumers lose out as they must now pay more money. Meaning tariffs aren’t a good thing and instead affect the economic well-being of the country. His reasoning for a tariff in order to stop unemployment is also flawed because unemployment does not rise when imports…

    • 960 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    This makes it harder to compete when selling goods abroad. At the same time and in the opposite way, if a currency goes down in value, industries which export a lot of goods get cheaper which makes them richer (Kouparitsas, 1998). When currencies get weaker or stronger, if it is as a result of what is happening to other countries or because they have found a way to become more efficient, then this might not be a problem. On the other hand, if the exchange rates that float can go up and down because of investors who want to make money due to interest rates in the short term, this may cause problems for the country as the currency could become too weak or too strong compared to the way the economy is. If a country has a fixed exchange rate, this wouldn’t happen because it’s not possible to move the exchange rate because of the central bank taking action if the rate moves.…

    • 1997 Words
    • 8 Pages
    Decent Essays
  • Decent Essays

    Though since opening their market places such as China have raised their GDP 23 to 46 percent and with India 19 to 30 percent (Bardhan, Pranab, Scientific America) while it has created problems for the developing countries; they since have made it so where they depend on their own economic institutions instead of the outside forces. From the 1993 prices located from the World Bank, it is shown that the extreme poverty in less developed countries have declined dramatically. It really shows in the East, South and Southeast…

    • 1220 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    This subclaim was chosen because the fear of job and benefit loss is at the center of the immigration debate while America also ignores the economic benefits of undocumented immigrants. The first reason discussed is that undocumented immigration is a cheap labor problem (4). This reason was chosen because cheap labor affects the economy. Evidence used to support this reason include specific companies use of undocumented immigrants for their low wages (4). Furthermore, the authors also use the evidence about supply and demand — specifically how increase supply of workers drive down wages (9).…

    • 1135 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    On the contrary, skilled labor has the opposite effect because they are working for bigger corporations so they have more impact on the market. If the market is saturated with skilled labor, employers can lower wages and cut prices making the consumers happy but overall welfare of natives lower. This simulation done by Michael shows that, with monitoring, immigration can have positive impact on the…

    • 1672 Words
    • 7 Pages
    Decent Essays