FREE TRADE AND GLOBALIZATION Essay Example

  • Category:
    Business
  • Document type:
    Essay
  • Level:
    Undergraduate
  • Page:
    2
  • Words:
    883

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Introduction

Free trade is a very simple concept as it stipulates that individuals should have the liberty to sell and buy to whoever they wish to in relation on their mutually agreed terms irrespective of the distance between the buyer and the seller. This has been made possible by globalization as it now connects people who are miles apart and enable them to communicate more easily and engage in trade. Free trade has numerous benefits and these benefits are achieved globally due to the concept of globalization and the benefits associated with it tend to outweigh the disadvantages. This essay sets out to define the concepts of free trade as well as the benefits and disadvantages associated with Free trade.

Discussion

Free trade is therefore termed as a policy that ensures that the government does not interfere with the exports and at the same time do not discriminate against the imports to the country by applying subsidies to the exports and tariffs to the imports. Based on the comparative advantage law, the policy sets out that all the trade partners should attain mutual gains when trading for their services and goods. The rules set by the WTO (World Trade Organization) takes note of the desire to increase trade freedom through the use of all-inclusive and high quality trade agreements. There are a number of free trade agreement that are in place all over the globe such as the China-Australia Free trade agreements, Australia-Korea Free Trade Agreement and Japan-Australia Free Trade Agreement just to mention a few of them (Healey 9).

Free trade has numerous benefits for both the countries. Some of such benefits are the ones to be gained from the Chinese-Australian trade agreement. Based on Hutchens, when the deal is signed and implemented about 95% of Australian exports to China will be tariff free and a lot of support will be offered to the Australian rebalancing act. By doing so, service providers form Australia, agricultural producers and manufacturers who have their operations in china will have a greater access to the markets in which they are already operating in. due to the free trade Australian consumers will also benefit in that they will have access to cheaper electronics, goods and clothing sourced from Chinese companies, while vehicles and their component parts will also be offered at lower prices (Hutchens 1). These aspects will be essential in the reduction of the people’s cost of living in Australia. There will also be opening up of the Chinese service market to Australians and this will offer potential for growth for a great number of Aussie businesses and this will lead to a boost in the revenues and profits generated from the business ventures.

Based on Greenpeace International free trade tends to be of benefit to the wealthier and larger countries who companies wish to expand their operations and sell their services and goods abroad. The developing countries also benefits in the agricultural sectors but the gain is not much as the wealthier countries tend to maintain a high level of protection on their markets (Greenpeace International 1). When done practically the setting up of trade rules tend to benefit the already reach countries and this in a way increases the barrier between the rich countries and the poor countries since the poor countries are already struggling to compete and with free trade the competition becomes intense (Healey 23).

Free trade agreements at times come along with a number of negative impacts for example the EU/Canada has a negative effects and the impact is being felt by the smaller cheese producers in Canada based on the impending arrival of approximately 17,000 tons of fine cheeses for Europe (Momagri 1). For free trade to be effective the partners need to ensure that they remove all restrictions and the wealthier countries should not take advantage of the developing ones by making use of higher levels of protection on their markets while they have ease of access to the developing countries markets. Free trade agreements should ensure that the parties involved attains mutually benefits from the trade but not just some of the members.

Conclusion

Based on the discussion above, it is clearly evident that with globalization has impacted greatly in free trade and enhanced it in some way. Free trade seems to be of great number the parties involved in the agreements get access to the markets of their partners and are able to conduct business. This is also of great benefits as the consumers in both countries are able to get access to good and services from other countries and at times at lower prices which ultimately leads to an improvement in their living standards. Despite the advantages, free trade also have its negative impacts as in the case of the EU/Canada agreements since the Canadian cheese producers are being impacted negatively to cheese sourced from the European countries.

References

Greenpeace International. What is free trade? 2015? Web. 17 Dec. 2015. <http://www.greenpeace.org/international/en/campaigns/trade-and-the-environment/what-is-free-trade/>.

Healey, Justin. Free Trade and Globalization. Thirroul: The Spinney Press, 2014. Print.

Hutchens, Gareth. “What does the China-Australia free trade agreement mean for you?” The Sydney Morning Herald. 18 November 2014. Web. 17 Dec. 2015. <http://www.smh.com.au/federal-politics/political-news/what-does-the-chinaaustralia-free-trade-agreement-mean-for-you-20141117-11oj7z.html>.

Momagri Organization. Proliferation of free trade agreements: Double standards. 12 March 2014.Web. 17 Dec. 2015. <http://www.momagri.org/UK/a-look-at-the-news/Proliferation-of-free-trade-agreements-Double-standards-_1424.html>.