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For and Against Free Trade

Page history last edited by Robert W. Maloy 1 year, 1 month ago

Focus Question:  What are the arguments for and against free trade?


Introductory video https://www.youtube.com/watch?v=5ITyd1Pzek0


Video explaining NAFTA https://www.youtube.com/watch?v=371CRxnGkA8


Arguments for Free Trade:




  • Increased exports



  • Increased Competition: more trade results in more competition abroad, which encourages cutting costs and increasing efficiency.


  • Trade increases Economic Growth: trade growth has contributed to global economic growth. 


  • Free trade makes use of surplus raw materials: countries are able to sell and benefit from excess resources.


  • Tariffs may encourage inefficiency:  If an increase in tariffs protect the domestic industry there may be less incentives to cut costs. 
  • Economists who support free trade: 
    • Adam Smith: The Wealth of Nations (1776)  https://www.youtube.com/watch?v=5JMSUzv5Yow
    • David Ricardo: On the Principles of Political Economy and Taxation (1817)
    • John Maynard Keynes: The Economic Consequences of Peace (1920)



Arguments Against Free Trade:



  • Senile Industry Argument: In industries that are declining and inefficient it may take significant investment to modernize.


  • Free Trade discourages Diversification: developing nations in free trade market can rely to heavily on primary products, which can fluctuate or have decrease in demand.


  • Decrease in Import Taxes: import taxes can be used to raise federal money


  • Culture identity: Many nations see Free Trade as Americanization or Commercialization



NAFTA's effects on Mexico https://www.nytimes.com/roomfordebate/2013/11/24/what-weve-learned-from-nafta/under-nafta-mexico-suffered-and-the-united-states-felt-its-pain




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