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| Summary: Will free trade benefit third world countries? Does it harm developed countries? Could it serve a universal good? Is free trade a realistic goal? |
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Author:Joe Devanny ( United Kingdom )
Joe Devanny reads Politics at Cambridge University. He was President of the Cambridge Union Society [and has reached the semi-finals of the World Universities' Debating Championships]. |
Created: Tuesday, April 02, 2002
Last Modified: Tuesday, June 21, 2005
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Free Trade’s virtues have been praised for three hundred years. By allowing everyone equal access to all markets, the theory goes, you guarantee the most efficient allocation of resources and the cheapest prices for consumers. Can such a theory work in practice? Specifically, could it help the least developed countries of the world provide themselves with a better quality of life? Western rhetoric says it can, and points to international institutions such as the World Trade Organisation to promote free trade of goods, and the World Bank to provide credit for development projects. However, so long as the West continues to protect its own agriculture and industries from the international market – either through the European Union’s Common Agricultural Policy, or the United States of America’s bale out of its steel industries – its position is arguably hypocritical. |
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| Being interlocked through trading relationships decreases the likelihood of war. If you are engaged in a mutually beneficial relationship with other countries then there is no incentive to jeopardise this relationship through aggression. This promotes peace, which is a universal good. |
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Free trade does not promote the universal good of peace. Trading countries have gone to war against each other. If there is anything in that argument at all it holds good for any good natured trading relationship, not necessarily just a tariff free one. |
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| Maximum global efficiency, and the cheapest prices, can only be maintained by a tariff free international economy. The more efficiently allocated are the world’s resources the less waste there is and the more affordable goods will become for consumers. |
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International economics isn’t as simple as increasing the efficiency of global resource allocation above all else. Tariff revenue is a perfectly legitimate and useful source of government income. Second, without tariffs governments cannot protect the job security of their citizens. US steel companies might not be able to provide steel as cheaply as other companies, but the US has a clear interest in protecting its own jobs. |
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| Free trade might lead to domestic redundancies, but the universal good of efficiency out-weights this. We shouldn’t subsidise wastefully uncompetitive industries, we should redeploy those workers in another field. Subsidising inefficiency is not sound economic practice. Moreover, the jobs we subsidise in the West are more needed in the developing world, whence they would inevitably flow if free trade was observed. |
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Job security is a legitimate value to want to protect – the destruction of job security in such a competitive arena would be a clear case against free trade serving a “universal good.” Pro-free trade arguments which condone domestic job losses fail to factor into the equation the very real consideration of political power; a starkly utilitarian conception of the “universal good” may dictate that theoretically the best thing to do is let jobs flock to the developing world, but political action is constrained by domestic opinion and its conception of the “good” will invariably be much more localised. |
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| The growth of the developing world is a universal good, because the improvement in the quality of life of millions of people is clearly a moral imperative. Free trade helps countries by maximising their comparative advantage in free trade circumstances. |
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Defending pure, unadulterated free trade is a pointless exercise. The ideas of the text-books are always mediated by practical constraints. The reality of free trade is that the conditions and criteria developing countries must meet just to join the “not quite free trade” WTO are severe and cost the equivalent of an entire humanitarian budget for a year. There are pressing priorities that must be addressed first. |
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| It is not only free trade in goods that can benefit the developing world. Developing countries gain ready access to capital in liberalised international financial markets. This gives them the opportunity to finance projects for growth and development. |
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If capital were rational in its flows it would be beneficial. In practice liberalised capital flow can destabilise developing countries, which are prone to fickle speculation, based on investor whim rather than economic fundamentals. |
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| | This House Believes Free Trade Serves A Universal Good
This House Believes Free Trade is Good for the Developing World
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Elly
Member
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Posted: Mon Oct 12, 2009 08:41 pm |
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Free trade might help decrease prices but this would not benefit the domestic products. Since imports are leakages, if most products are imported at lower price then the country would suffer from great leakage, causing economic imbalance.
I understand that too much protectionism would hinder economic development and growth, discouraging the long-term economic goals from being attained. But fully free trade would also cause problems as well.
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kurumiwalnut
Member
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Posted: Mon Oct 12, 2009 08:40 pm |
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I agree with Elisha and Scion:
I personally think that too much of either end is a problem. A world with only protectionism will only lead to a non importing goods, which means the consumption of a country could decrease with only limiting products in the market. A world with only free trade could cause many universal peace problems, for all firms can participate in the competition of markets.
Therefore, I think countries should find ways to of both ends to find a balance to be the most efficient in terms of economics.
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kurumiwalnut
Member
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Posted: Mon Oct 12, 2009 08:32 pm |
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I am in favor of free trade. I believe free trade can give all firms a chance to produce and sell their products, disregarding the location of the firms. I understand that protectionism can benefit ones country by protecting the local firms from exported goods, because importing goods are not part of the GDP elements.
But free trade is a right.Any trade restraint is immoral a priori, since restricting the rights of sovereign consumers to purchase foreign goods is outside the scope of legitimate government.
Also, it increases the comparative advantage of the country,which gives countries to have specialization which could lead to increasing in exporting goods.
Another benefit of free trade is that by removing tariffs it could lead to lower prices for consumers and an increase in consumer surplus.
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