Free Trade Advantages And Disadvantages

Free trade agreements are the agreements with the cooperation between the countries in order to reduce the trade barriers. This would result in an increase in trade between these countries as well as an improvement in the countries’ economy. The significant trade barriers are the import quotas and tariffs. The trade between the countries can occur in both goods and services. Each Trade agreements are different - different scope, different area coverage, different targeted goods and industries, for example. However, not only the countries will gain benefits from the free trade agreements but this would also affect the countries as well. Therefore, each country is carefully considered both advantages and disadvantages from each trade agreements

This would increase trade among the country members.

- Regional approach to commitments: New developments will be promoted under the TPP. The efficiency in production and supply chains would also be increased. These would result in a job creation, an improvement in the living standards as well as an increase in cross-border integration.

- Addressing new trade challenges: In order to encourage the innovation, productivity and competitiveness in the market, several issues are discussed and concentrated under the TPP, for example, the digital economy and the role of state-owned enterprises in the global economy.

- Inclusive trade: The TPP would ensure that all levels of development and all sizes of businesses will benefit from trade. Especially the small- and medium-sized firms need to understand the TPP and to be able to gain the opportunities of this agreements, so that they will gain advantages from the TPP.

- Platform for regional integration: In addition to a regional economic integration, the TPP also aim to assimilate the economies across the Asia-Pacific Region together.

Japan would gain several advantages from the TPP (Pollmann, 2015) as

Japanese companies then could gain the opportunity to expand its business oversea as well as direct investments in other countries.

- A tariff reduction in the automobile industry would give benefit to the exporting firms, especially Japanese firms, who are a large exporter of the automobile, would gain benefit from this tariff reduction. In addition, the TPP also allows only 45% of the parts of the automobile to be made within the TPP. This would allow the exporting companies to be able to import parts of the automobile from low-cost countries, such as China. So the exporting firms would be able to buy lower-cost parts and sell the vehicles with reduced tariffs to overseas, such as the United States.

- A tariff reduction in agricultural, dairy and other goods will lower the cost to Japanese consumers. However, this would impact the local producers as the imported goods would have a lower price than the local goods, then the consumers would shift to buy the imported goods instead. Luckily, Japan has one of the most stringent food safety laws in the world, so not as much imported goods would be able to pass these food safety laws. Furthermore, the Japanese producers themselves need to increase its efficiency in its production in order to better compete with foreign imported