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What Are the Pros of Free Trade?

1. Economic growth is encouraged.

Even when taxes, tariffs, and other restrictions on trade are highly regulated instead of being fully eliminated, there is an
economic benefit to all parties involved. Because of NAFTA (North American Free Trade Agreement), the US Trade
Representative Office estimates that economic growth has been 0.5% higher annually than it would be if the free trade
agreement was not active.
2. Lower taxes and barriers to entry increases business opportunities.
Protections are put into trade agreements as an effort to protect local businesses. When these protections are removed, the
result tends to favor the consumer because more competition from global entities can occur at the local level. This reduces
stagnation within markets, though at the risk of eliminating smaller businesses from the equation. Lower taxation and
fewer barriers to entry can also reduce pricing for customers.
3. It creates opportunities for foreign direct investment.
When there are fewer barriers to trade agreements in place, foreign businesses form partnerships, make investments, and
even directly enter new markets because there is the chance for higher profits. This helps isolated countries can develop
their economic infrastructure. Nations like the US and Canada use agreements to maintain economic benefits for both
through shared values and vision, promoting a better standard of living for everyone.
4. More expertise is brought into the process.
Global companies generally have more expertise within their field that local companies that operate on a domestically
regional level. This means specialty work can be completed for a lower price, more efficiencies can be built into the
systems of operation, and fewer resources are required to produce goods or services. Local companies can even learn from
global companies to improve their best practices by direct observation.
5. It reduces government expenditures.
Local industry segments, such as agriculture, are often subsidized by local governments. By introducing new best
practices and building new efficiencies into distribution systems, less money needs to be provided by the government to
keep prices affordable at the local level. This means tax revenues can be funneled toward infrastructure, social programs,
defense, or other needs that a society may have.
6. Resources transfer to the best possible people and organizations.
The people who are the best at what they do will have the most opportunities to succeed in an environment of free trade. It
also means anyone can change their stars and achieve their dreams because of the desire to work with those who are the
best. Companies follow this principle by being able to develop or access new technologies or better best practices to help
local economies grow. When that growth occurs, more employment opportunities can be realized as well.
What Are the Cons of Free Trade?
1. It causes employment opportunities to be outsourced.
Global companies may bring more expertise and better practices to a local industry, but who gets those jobs? Free trade
causes jobs to be outsourced because international workers are either more experienced, cheaper to hire, or are willing to
work with fewer safety protections. Tariffs and taxation policies help to reduce labor outsourcing because it keeps product
pricing at competitive levels.
2. There are reduced IP protections.
Intellectual property rights may not be taken as seriously by foreign governments or competitors as they are domestically.
Inventions, patents, and processes may be copied in an environment of free trade and that reduces the potential of a
company being able to create good jobs at fair wages. Even when these protections are in place, there is no guarantee that
a foreign government will enforce the laws with the same rigor as a domestic government.
3. It encourages urbanization.
There are two farms. One is a small family operation, while the other is a factory farm operation. The factory farm
receives the same subsidies as the family operation, but because they produce many more products, they receive much
more help from the government. This allows them to sell products at lower prices, which stores like because it generates
more sales. Eventually, the family farm must either find its own niche to compete or the workers must look for
employment elsewhere. That is why free trade often encourages urbanization.
4. There are often sub-standard working conditions.
Emerging markets and developing countries do not usually have the same laws in place that guard worker salaries and
working conditions. Some markets even allow for children to be hired for heavy labor and factory positions that are sub-
standard at best. Because free trade puts a point of emphasis on the lack of restrictions, it can promote poor working
conditions that people are forced to endure if they wish to earn a living for their family.
5. It does not usually protect the environment.
Many free trade opportunities are based on the availability of natural resources. This causes the fastest harvesting methods
possible to be used, such as clear-cutting or strip mining, and that can create long-term damage for local environments. It
also means that natural resources are quickly depleted for the local population. An economy that is built on this process
will often fail because once the resources are gone, there is nothing left to trade.
6. Free trade reduces revenues.
When free market principles can operate without being checked, revenues typically reduce because of high competition
levels. This helps large countries, organizations, and entities because they are already priced into an economy of scale.
Smaller countries, companies, and entities must find ways to replace the revenues they lose and this is not always
The pros and cons of free trade show that it can be beneficial, but it must be approach by looking at the long-term
consequences will be. The goal for any company is to improve profits. The goal of any government is to provide the best
possible protections for its people. Full trade protectionism will not do this, but neither will free trade. The best solutions
tend to be a mixture of the two so that safeguards can be put into place to protect everyone.
Pros & Cons of Free Trade
Pro: Economic Efficiency
The big argument in favor of free trade is its ability to improve economic efficiency. According to basic economic theory,
free trade policies mean that each country focuses on its comparative advantage, lowering the price of goods and making
everyone better off. If the United States is really good at making cars and China is good at making televisions, free trade
rules should mean that each country plays to its strengths instead of wasting time and effort doing less efficient tasks.
Con: Job Losses
Economic efficiency might be beneficial for the economy as a whole in the long run, but that doesn't much help the
factory worker who loses his job in the short-term. Free trade makes a nation's overall economy more productive, but it
also can force millions to change careers. NAFTA, for example, may have destroyed more than 1 million jobs in the
United States.
Pro: Less Corruption
Barriers to trade create lots of opportunities for political corruption, according to some free trade advocates. Powerful
interest groups can convince governments to give them special protections like tariffs or subsidies, while less powerful
groups have to go it alone. That may give established wealthy businesses huge advantages over rising entrepreneurs. Free
trade proponents say eliminating trade barriers creates a level playing field for everyone.
Con: Free Trade Isn't Fair
Trade barriers might create opportunities for corruption, but so do free trade agreements. Economists may envision a
society where trade barriers vanish entirely, but free trade agreements are negotiated and signed by politicians with their
own interests to worry about. As a result, the agreements usually are immense documents full of loopholes and rules that
create big advantages for established businesses. Elaine Bernard of Harvard Law School noted that while NAFTA
proponents said the agreement would deregulate commerce in North America, in many cases it just replaced existing
regulations with new ones that favored the biggest corporations.
Pro: Reduced Likelihood of War
Free trade encourages countries to rely on each other for foods and services, making them reliant on their trading
partners. Some economists have argued this interdependence makes wars much less likely, since neither side would want
to risk losing access to the others' markets.
Con: Labor and Environmental Abuses
Opponents of free trade often argue that it encourages businesses to move to countries with poor environmental and labor
regulations. These moves lead to systematic labor abuses and destruction of the environment. For example, a coal mining
company in the United States might have to pay workers a high minimum wage, adopt aggressive safety policies and
protect local rivers from pollution. Free trade agreements might allow the mining company to move operations to a
country without any of those rules, allowing it to cut costs by imperiling workers and the environment.


"The Corporation" is not a film my dinner companion would enjoy. It begins with the unsettling information that, under
the law, a corporation is not a thing but a person. The U.S. Supreme Court so ruled, in a decision based, bizarrely, on the
14th Amendment to the Constitution. That was the one that guaranteed former slaves equal rights. The court ruling meant
corporations were given the rights of individuals in our society. They are free at last.
If Monsanto and WorldCom and Enron are indeed people, what kind of people are they? The movie asks Robert Hare, a
consultant who helps the FBI profile its suspects. His diagnosis: Corporations by definition have a personality disorder
and can be categorized as psychopathic. That is because they single-mindedly pursue their own wills and desires without
any consideration for other people (or corporations) and without reference to conventional morality. They don't act that
way to be evil; it's just, as the scorpion explained to the frog, that it's in their nature.
Having more or less avoided the corporate world by living in my little movie critic corner, I've been struck by the way
classmates and friends identify with their corporations. They are loyal to an entity that exists only to perpetuate itself. Any
job that requires you to wear a corporate lapel pin is taking more precious things from you than display space. Although I
was greatly cheered to see Ken Lay in handcuffs, I can believe he thinks he's innocent. In corporate terms, he is: He was
only doing his job in reflecting Enron's psychopathic nature.
The movie assembles a laundry list of corporate sins: Bovine Growth Hormone, Agent Orange, marketing research on
how to inspire children to nag their parents to buy products. It is in the interest of corporations to sell products, and
therefore in their interest to have those products certified as safe, desirable and good for us. No one who knows anything
about the assembly-line production of chickens would eat a non-organic chicken. Cows, which are vegetarians, have been
fed processed animal protein, leading to the charming possibility that they can pass along mad cow disease. Farm-raised
salmon contains mercury. And so on.
If corporations are maximizing profits by feeding strangelovian chemicals to unsuspecting animals, what are we to make
of the U.S. Supreme Court decision that living organisms can be patented? Yes, strains of laboratory mice, cultures of
bacteria, even bits of DNA, can now be privately owned.
Fascinated as I am by the labyrinthine reasoning by which stem cell research somehow violates the Right to Life, I have
been waiting for opponents of stem cell research to attack the private ownership and patenting of actual living organisms,
but I wait in vain. If there is one thing more sacred than the Right to Life, it is the corporation's Right to Patent, Market
and Exploit Life.
If I seem to have strayed from the abstract idea of a corporation, "The Corporation" does some straying itself. It produces
saintly figures like Roy Anderson, CEO of Interface, the largest rug manufacturer in the world, who tells his fellow
executives they are all "plundering" the globe and tries to move his corporation toward sustainable production. All living
organisms on Earth are in decline, the documentary argues, mostly because corporations are stealing from the future to
enrich themselves in the present.
"The Corporation" is an impassioned polemic, filled with information sure to break up any dinner-table conversation. Its
fault is that of the dinner guest who tells you something fascinating, and then tells you again, and then a third time. At 145
minutes, it overstays its welcome. The wise documentarian should treat film stock as a non-renewable commodity.