FREE TRADE

Free Trade and Globalization

Free Trade and Globalization

Introduction

For more than two centuries, economists have persistently encouraged free trade among nations as the best trade policy. The concept of free trade and the substantial boost in global trade following World War II was a chief aspect behind the huge boost in wealth in certain parts of the world. The concept of free trade basically repositions the rules of competition, the rule of law, at all levels which are local, national or regional up to the global level.

In an economic age in which speedy transactions of imports and exports are essential, is free trade a necessity for aiding worldwide economic development? At least John F. Kennedy thought so, he being the initiator of removing tariffs and other limitations on U.S. imports. His hypothesis was that by doing that, other nations would follow America s example and leadership. However, that never happened because the other nations were more concerned with their own problems (Nye, 1997).

Even today, the United States continues to support free trade, an example being NAFTA (North America Free Trade Agreement). The problem is that America s generosity has caused the foreign industry to take over the U.S. marketplace. This unfortunately has resulted in high unemployment rates just because consumers and firms can purchase foreign goods for little less than domestic products. But with this country's abundant resources, is free trade really necessary?

From a conservative viewpoint, the only remedy to decrease unemployment and stimulate our own economic growth is to abandon the free trade policy and raise tariffs. Free trade has only crippled the American work force, increased poverty, and added to our national debt. If the liberals in Washington D.C. need proof, look at the figures: today there are about 10 million unemployed citizens and 35 million Americans are living in poverty because of free trade (Gallagher, 1990).

It's obvious that the foreign industry is taking advantage of us. Just visit any clothing store and you'll find that most of the apparel comes from South Korea, China, Hong Kong, Sri Lanka, and the Philippines. It's simply not feasible for the U.S. apparel industry to compete with the extremely low production costs in Third World countries. Also, another example of an industry hurt by free trade is the lumber industry. Even though our country possesses the largest supply of timber resources, the United States is the largest importer of wood products in the world. The reason: imported wood is less expensive, especially from Canada. Other examples of industries that have responded negatively to free trade are the U.S. textile, petrochemical, fishing, and auto industries. The temptation for consumers to buy cheaper foreign goods has only slowed production in U.S. industries and has caused unemployment levels to skyrocket. America needs to become less generous, more independent, and definitely more self-sufficient. Free trade policies need to be discontinued if that it is to be accomplished.

This Free trade has it's repercussions as well. It is not free for all and not laissez-faire ...