Well, here are the advantages of global free trade in term of specialization, competition, and economic value/barriers.

Free trade has many advantages. Although there are some disadvantages, this article will focus on the advantages of free trade zones. Liberalization of trading laws among free trade members generally leads to growth in economic activity inside the member states. Such zones also lead to better and more efficient production among the industrial manufacturing companies. Free trade zones also create more job opportunities for member countries. Free trade involves the free movement of goods and services across international boundaries. The concept of free trade recognizes no international boundaries. This means that trade barriers such as subsidies and tariffs are removed. The countries in free trade zones, such as the North American free trade zone, are able to move cargoes and shipments into other territories of the free trade region without problems. When boundaries are liberalized between the nations in the free trade zone, the market reach of the countries in the free trade region is broadened. This means that each nation under the free trade region would strive to increase industrial manufacturing base to meet the increasing demand for their manufactured goods and services. The demand for goods and services in the free trade region also lead to efficiency in the industrial manufacturing process. Since all countries in the free trade region would be competing with one another for the markets, efficiency in the manufacturing process is boosted. Industrial efficiency would in turn reduce costs of labor and raw materials. Competition for the markets in the free trade region would in turn create competition among the industrial manufacturers of the free trade zone. This competition would in turn lead to price reductions, a direct consequence which would benefit the consumers in the region. When companies compete with one another, consumers are the immediate beneficiaries. Free trade regions always stimulate new job opportunities. The new job opportunities come in the industrial manufacturing sector. The jobs created tend to be good paying jobs, on average. Although free trade zones may also come with free movement of persons across international boundaries, such movement may not be permanent. In the case of European Union, some conditions are attached to free movement across the Euro zone countries. Any citizen of any EU country may move across to another EU country and stay for a designated period. Unless they secure employment within the initial authorized period, they are required to go back to the state from where they migrated from.

Benefits of Free Trade

1. The theory of comparative advantage. This explains that by specialising in goods where countries have a lower opportunity cost, there can be an increase in economic welfare for all countries. Free trade enables countries to specialise in those goods where they have a comparative advantage. 2. Reducing Tariff barriers leads to trade creation Trade creation occurs when consumption switches from high cost producers to low cost producers.

The removal of tariffs leads to lower prices for consumers and an increase in consumer surplus of areas 1 + 2 + 3 + 4 Imports will increase from Q3-Q2 to Q4-Q1 The government will lose tax revenue of area 3 Domestic firms producing this good will sell less and lose producer surplus equal to area 1 However overall there will be an increase in economic welfare of 2+4 (1+2+3+4 - (1+3) The magnitude of this increase depends upon the elasticity of supply and demand. If demand elastic consumers will have a big increase in welfare 3. Increased Exports. As well as benefits for consumers importing goods, firms exporting goods where the UK has a comparative advantage will also see a big improvement in economic welfare. Lower tariffs on UK exports will enable a higher quantity of exports boosting UK jobs and economic growth. 4. Economies of Scale: If countries can specialise in certain goods they can benefit from economies of scale and lower average costs, this is especially true in industries with high fixed costs or that require high levels of investment. The benefits of economies of scale will ultimately lead to lower prices for consumers.

5. Increased Competition. With more trade domestic firms will face more competition from abroad therefore there will be more incentives to cut costs and increase efficiency. It may prevent domestic monopolies from charging too high prices. 6. Trade is an engine of growth. World trade has increased by an average of 7% since the 1945, causing this to be one of the big contributors to economic growth. 7. Make use of surplus raw materials Middle Eastern counties such as Qatar are very rich in reserves of oil but without trade there would be not much benefit in having so much oil. Japan on the other hand has very few raw material without trade it would be very poor. 8. Tariffs may encourage inefficiency If an economy protects its domestic industry by increasing tariffs industries may not have any incentives to cut costs.

Free Trade Benefits All by Marian L. Tupy

This article appeared in the Washington Times, January 3, 2006. Trade liberalization talks in Hong Kong ended with a deal to further liberalize access for poor countries' exports to rich countries' markets. Urged on by the misguided nongovernmental organizations, poor countries wasted an excellent opportunity to enhance their own prosperity by opening their markets to foreign competition, however. Therefore, benefits of trade liberalization for many poor countries, especially those in Africa, are likely to be severely limited. So it is worthwhile to again restate the case for free trade and to back it with evidence countries open to trade tend to be more prosperous than protectionist countries. There is ample evidence people have been trading with one another since earliest times. As economists James Gwartney of Florida State University and Richard Stroup of Montana State University put it in their book "What Everyone Should Know about Economics and Prosperity," the motivation for trade can be summed up in the phrase, "If you do something good for me, I will do something good for you." Marian L. Tupy is assistant director of the Project on Global Economic Liberty specializing in the study of Europe and sub-Saharan Africa at the Cato Institute. More by Marian L. Tupy There are three important reasons voluntary exchange is good not only for the contracting parties but the world as a whole: (1) Trade improves global efficiency in resource allocation. A glass of water may be of little value to someone living near the river but is priceless to a person crossing the Sahara. Trade delivers goods and services to those who value them most. (2) Trade allows partners to gain from specializing in the producing those goods and services they do best. Economists call that the law of comparative advantage. When producers create goods they are comparatively skilled at, such as Germans producing beer and the French producing wine, those goods increase in abundance and quality. (3) Trade allows consumers to benefit from more efficient production methods. For example, without large markets for goods and services, large production runs would not be economical. Large production runs, in turn, are instrumental to reducing product costs. Lower production costs lead to cheaper goods and services, which raises real living standards. Evidence supports the idea nations more open to trade tend to be richer than those that are less open. Columbia University economist Arvind Panagariya wrote in a paper "Miracles and Debacles: Do

Free-Trade Skeptics Have a Case?": "On the poverty front, there is overwhelming evidence that trade openness is a more trustworthy friend of the poor than protectionism. Few countries have grown rapidly without a simultaneous rapid expansion of trade. In turn, rapid growth has almost always led to reduction in poverty." According to the Cato Institute's 2004 report on Economic Freedom of the World, which measures economic freedom in 123 countries, the per capita gross domestic product in the quintile of countries with the most restricted trading was only $1,883 in 2002. That year's per capita GDP in the quintile of countries with the freest trading regimes was $23,938. That statistic should be repeated to all those who used the Hong Kong meeting to push for liberalization in rich countries while arguing to protect poor countries' economies. As the example of sub-Saharan Africa demonstrates, protection does not guarantee prosperity -quite the opposite. Under the World Trade Organization's "special and differential treatment" rule, many sub-Saharan African countries have been permitted to retain significantly higher import tariffs than rich countries. Combined with "preferential treatment" of their goods in rich countries' markets, sub-Saharan African producers enjoy a substantial advantage over other foreign competitors. Result? According to the World Bank, Africa's share of world exports declined from 3? percent in 1970 to less than 2 percent in 2003. About 50 percent of sub-Saharan African exports come from a single country, South Africa. (It is worth noting South African import tariffs are substantially lower than those of other sub-Saharan African countries.) Sub-Saharan African share of world exports, in other words, has been declining despite (or I would argue "because of") trade protectionism. Domestic producers, reliant on their captive domestic market to keep them afloat, see no need to make their products better and cheaper. Shoddy goods and services abound throughout the developing world. And the poor suffer the most. Is that the outcome nongovernmental organizations, such as Oxfam, had in mind when they urged poor countries to retain their tariff barriers?

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