There should be free trade between countries – discuss
Economic trade theory suggests that countries can be presumed to have a comparative advantage in some of its industries if it competes on the global market, this would seem advantageous for a country to sign free trade agreements with the expected benefits exceeding the costs. In the last two decades there has been a recognition that free trade has the potential to damage a developing country’s economy and its people and standard of living.
“Free trade is considered to be desirable where all nations prosper and develop fairly and equitably” (Shah, 2006). Free trade and free markets are about making trade easier by allowing the market to respond to the needs of supply and demand. Mandela during a lecture at the British Museum said, “We welcome the process of globalisation. It is inescapable and irreversible, if globalisation is to create real peace and stability across the world, it must be a process benefiting all”.
Free trade is defined as the unrestricted purchase and sale of goods and services between countries effectively creating a common market (Relyea, 2011), without the imposition of barriers to entry such as tariffs, duties and quotas, put in place by governments to restrict the flow of goods and services, however artificial barriers do exist,
Economics and politics are intertwined, artificial barriers are normally put in place to protect domestic producers from international competition and redirect, rather than create trade flows (Edge, 2010). The proposition that protection can be beneficial (Krugman, 1987) is nothing new to trade theory. Standard economic theory assumes that consumers and producers have objectives (utility and profits), that they seek to maximise, the same can be said of politicians in maximising their term of government.
There are advantages of free trade some of these are;