Pros And Cons Of Free Trade

1. According to study, opportunity cost comes into play in any decision that involves a tradeoff between two or more options. The process of making a decision by choosing between two courses of action, you assume the cost of the option not taken.

i. For example, approximately one and half years ago, I made opportunity costs of going back to college, and I included such costs as tuition, housing, and books. However, the wages that could have been earned during the time I spent going to the University which was forgone is my opportunity cost.

ii. I once invested the sum of 10,000 euros in Real Estate business for 2 years in Nigeria, and then I forgo the returns that could have been made on that same money that was invested if it was placed

Free trade is a policy that was created between two or more nations that allow the unlimited import or export of goods or services between International partner nations. However, when nations don't have free trade agreements, which are treaties that outline the parameters of trade between trade partners, tariffs are imposed on goods and services.

The advantage of a free trade is to eliminate tariffs and makes corporations more competitive in foreign markets.

The Pros of Free trade is stated below:

i. The theory of comparative advantage describes by specializing in goods where countries have a lower opportunity cost, there can be an increase in economic welfare for all countries. However, Free trade enables countries to specialize in those goods where they have a comparative advantage.

ii. The support for globalization represents free trade which promotes global economic growth; creates jobs, makes companies more competitive, and lowers prices for consumers.

iii. The reduction of tariff barriers would lead to trade creation which occurs when consumption switches from high cost producers to low cost producers. In order words, the removal of tariffs will leads to lower prices for consumers – so the price of imported food, clothes and computers will be cheaper. For example, when the United Kingdom joined the European Economy Community, the price of many imports from Europe

Sharing technology with developing nations will help them grow effectively. For small countries but stealing our technologies and IP has become a big problem with our larger competitors like China.

The Cons of free trade

i. Facilitates the flow of illicit trade: It is not a stretch to idea based on scanty evidence that as borders come down and the flow of goods, services and people is facilitated across nations, illicit goods can more easily get through the porous borders as well.

ii. Increased security threats: While the Free Trade Agreement may allow better coordination between security arms of member governments, the relaxation on borders and free movement of people may allow the entrance of individuals from terrorist organization’s as well as criminals to penetrate easily and expand their activity beyond the borders of one country into another.

iii. Increase in structural unemployment may arise in industries in some member countries that are in, “direct competition with other lower-cost trading partners due to a loss of comparative