Free Trade

Thoughts on a Free Market Economy…

“Free Trade”

By Phyllis Hunsinger

March 1, 2016

             The presidential primaries are in full swing. Candidates are filling the air waves with ideas to improve the economy, create jobs, and secure safety and prosperity for the citizens. The concept of free trade is often introduced in these discussions. What is the meaning?

Free trade refers to the unrestricted purchase and sale of goods and services between countries without imposition of constraints such as tariffs, duties, fees, and quotas. Imposing tariffs, taxes, and other regulations on international trading has a long history. The purpose of this is to promote business within the borders of each individual country.

An example of free trade is the ability to purchase a hammer made in China for $5, while the same product in the U.S. would sell for $15. The workers in China make a pittance compared to the workers in the U.S., but the consumers in the U.S. continue to clamor for cheaper products, thus the demand for foreign products. It is impossible to have it both ways. The playing field is not level. Tariffs, taxes, regulations, and fees are often introduced to correct the inequity. Historically these methods were frequently used between countries.

Within the last fifty years, there has been a trend toward more free trade. Proponents of international free trade give at least three reasons to support their belief: (1) Free trade increases the flow of money when the numbers of trading partners increase. (2) Free trade produces lower prices because goods can be manufactured more cheaply in less developed countries. (3) Free trade increases national security when countries are more economically dependent on one another and it is in everyone’s best interest to make sure that other countries’ economies stay strong.

Opponents of free trade also identify three reasons to support their opposition:              (1) Free trade destroys small family businesses because they are unable to compete on a global scale. (2) Free trade produces economic dependence on other countries. (3) Free trade results in an inequality of benefits when natural resources are taken from the country with little return in exchange.

Small business owners created approximately 65% of the net new jobs in the country from 1993-2009 according to the Bureau of Labor Statistics. Since small businesses are the driving force of the U.S. economy, getting the right policies in place regarding free trade is imperative. Americans need to understand the implications of free trade between countries., Phyllis Hunsinger © 2013 All Rights Reserved


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