There are many arguments agains free tarde, though mostly they are invalid and the disadvantages or risks cited can be reduced or mitigated by other measures than abandoning free trade. Much of the dispute over free trade is semantic. The official U.S. interpretation of free trade is opposed to the Vietnamese interpretation, but both governments claim to be in favour of free trade. Similarly, advocates of fair trade criticize free trade as unjust, although their criticisms tend to be directed at neomercantile protectionist policies of the First World rather than the theory of free trade itself.
Economic arguments against free trade criticize the assumptions or conclusions of economic theories. Sociopolitical arguments against free trade cite social and political effects that economic arguments do not capture, such as political stability, cultural diversity, and national security. Economic arguments against free trade are:
1. Free trade in raw materials retrogrades development
The argument that a country could get 'locked in' to serving the needs of the world market in raw materials, and therefore not develop industrially
2. International trade requires more resources to distribute
Delivering food produced on the other side of the world to a supermarket has an environmental impact because it requires the use of fossil fuel in delivery from overseas, as compared to local delivery. However, this critique is dependent upon the productivity of local markets relative to that of foreign markets'. A foreign market's greater productivity may offset the fuel expended for delivery. Conversely, local markets may use resources so inefficiently that importing goods constitutes a more energy-efficient per unit alternative. However, the lower prices achieved therein may beget more consumption, a result not necessarily favored by "greens." In a perfectly efficient market, the costs of the fossil fuels would include the externalities associated with their consumption. Thusly the full impact of their transportation costs would be reflected in the market price of the good. Deep Green thinkers strongly oppose Free Trade in the hope of discouraging the immediate depletion of the earth’s resources.
3.Sheltering young industries may pay-off later or Infant industry argument : New Trade theorists challenge the assumption of diminishing returns to scale, and some argue that using protectionist measures to build up a huge industrial base in certain industries will then allow those sectors to dominate the world market. Less quantitative forms of this "infant industry argument" against totally free trade have been advanced by trade theorists since at least 1848.
4. Free trade favors developed nations in certain areas
Some services exported by developed nations are intangibles, such as medicinal formulae, trademarks, software, and entertainment. The value of this intellectual property is derived from legal protection against unauthorized reproduction.
5. Influence of foreign firms
Within developing countries, the local populace often eyes multinational corporations with suspicion. [citation needed] Many feel that once allowed free reign they will use their superior resources and experience to sway the political establishment of a country in favor of excessive concessions (tax holidays, underpaying for property, etc.) and try to influence the political system in their interests, which may or may not be shared by the citizenry.
6. Free trade benefits only the wealthy within countries
The wealthy own more corporate equity, which increases in value as companies are able to produce at the lowest cost in the world. As the world's markets merge into a single global market the number of market-leading companies worldwide drops, with international take-overs of local champions by giant corporations. This process concentrates wealth in fewer corporations. Free trade replaces low-skilled jobs often done by the poor easier than high-skilled jobs. This implication of the Stolper-Samuelson theorem is challenged on the basis that technology makes offshoring high value-added work feasible and more profitable than moving low-skilled jobs.
7. Free trade increases offshoring:Free trade allows companies the possibility of outsourcing the production of goods for domestic sale. Environmental and labor standards imposed upon these companies can be less in foreign production. Labor and environmental advocates argue that free trade thereby creates conditions that allow companies to circumvent domestic regulations, by producing elsewhere. As free trade increases, the balance of power shifts in favour of companies and away from governments. This is considered to pose a threat to democratic self-determination by anti-globalizers and authoritarian control by totalitarian states. Free trade supporters argue that all countries have the right to opt out of the world market through isolationism and that companies are fictional persons who are taxed without representation and that the balance of power should shift away from the governments that exploit them. It has also been argued that free trade hurts developed nations because it causes jobs from those nations to move to other countries, and accelerates the "race to the bottom".
7. Free trade causes excess dislocation and pain
Free trade may change careers too fast. Once, a farmer could expect to finish his or her life as a farmer, although his or her children may have been forced into mining or manufacturing instead. Now, changes happen on a sub-generational level, faster than natural attrition. Coping with these transitions can be difficult, especially for the middle-aged and the elderly due to age itself or age discrimination. 8.Dependency theory; Weaker countries would develop areas, typically in raw materials and agriculture, that would be economically dependent on the mother country. In the post-imperial world, this criticism changed. Imperial powers that controlled capital flows could maintain their economic status vis-a-vis their former colonies by using this dependency to their advantage. Imperial powers would have more choice (more competitive market) in countries from which they could acquire raw materials than those countries would have in buying final goods, particularly as imperial countries had the bulk of the world's financial resources and chose to behave oligopolistically.
9.Free trade undermines national security: God knows how? China freely exports to US and Singapore exports and imports freely.
11.Free trade creates an economic incentive for a race to the bottom in regulatory institutions; countries with lax, lenient, non-enforced, or selectively enforced regulatory legal structures will have a competitive advantage in attracting investment to their countries, and not merely in wages. From the capitalist's point of view, an ideal legal environment would have these features:, Weak or un-enforced labour and environmental protection laws. ,Low or uncollected taxes.
Strong legal protection for property rights.
12.The financial consequences of mobile capital
The diversity of legal systems the world over and the limited degree to which those bureaucracies coordinate their regulatory and tax-collecting efforts can create loopholes to the benefit of corporations and private individuals, who can seek out havens from regulation and tax collection, even if they obey the letter of the law. The freedom of capital to move outside the purview of a single authority has other harmful effects, even where it is not invested in the real economy. The following are common abuses of the free trade in capital:
13.Stability: Free trade implies specialized industries and economic change. Economic changes can lead to strains and considerable changes to traditional economic and political systems. Social changes that Europe passed through over centuries - urbanization, development of national infrastructure, development of property rights, secular and national government, centralized administration, the development of financial sectors, and regulatory systems - can happen quickly in an economy exposed to free trade and capital flows.
Answered By: sensekonomikx - 9/8/2007 |