The Perils Of Free Trade Essay

Submitted By chloe0822
Words: 1123
Pages: 5

The perils of free trade Free trade is a policy that does not restrict economic activity. Most countries have contracted free trade agreements (FTA), such as NAFTA (the North American Free Trade Agreement) and APTA (Asia-Pacific Trade Agreement), which have established open markets. As the world has been globalized, free trade has been a crucial issue regarding the international economy. However, developed countries force developing countries to contract free trade agreements. Although a free trade agreement does not restrict exports and imports and brings economic benefits to nations, developed countries get benefits while developing countries do not. Free trade has negative impacts on developing countries’ labor markets, environments, and economies.
First of all, free trade has negative effects on developing countries’ labor markets. Free trade causes a decrease in employment because of tariff. Free trade includes tariff cuts, so the price of imported foreign goods is relatively lower than the domestic manufactured goods. Therefore, producers have to cut costs and reduce employment to compete with the price of foreign products. Bogliaccini (2013) states that in the short term, employment increases in export countries. In the long run, however, employment decreases because domestic products are replaced by imported products from the trade partner countries. It identifies that free trade contributes to expanding employments at least in the short run, but affects labor markets negatively, in the long run. Bogliaccini (2013) also states that the percentage of employment in industry in Latin America decreased from thirty-four percent to twenty-seven percent during the twenty years between 1980 and 2000. It shows that free trade results in unemployment in developing countries. In addition, free trade does not protect the rights of workers who have to receive fair treatment in terms of hiring conditions, working conditions, and social welfare. In particular, female and young workers in developing countries are threatened by unfair working conditions. They do not receive protection according to fair labor standards. Needleman (2013) identifies that when firms lay off workers to cut cost, female workers tend to be laid off before male workers. The female workers do not get fair rights as same as male workers. He also states that student workers receive low wages, no welfare, and unstable employment. The students work in risky work places that are tightly packed and unsafe. Accordingly, free trade results in increasing unemployment and risks in working conditions.
In addition to labor markets, free trade affects developing countries’ environments badly. Free trade increases developing countries agricultural production from their exports of agricultural products such as rice, corn and rubber. However, the increase of produced crops increases in using pesticides, fertilizers, water, and land. It results in soil erosion and destroys soil nutrients. According to Suphaphong and Gao (2009), it was found that there was an accumulation of salt in soil and the salinity exceeded critical levels in Thailand. It was also found that salinity exceeded standard levels in cultivation ponds, and tanks. The excess amount of salt in soil connects to the lack of soil nutrients and impact on plant growth. For example, malnutrition causes stunted growth of rice and corn. They have thinner grains, and even stop growing. Furthermore, the increase in industrial manufacturing increases the use of chemicals and raw materials which cause pollution, greenhouse gases and waste. Suphaphong and Gao (2009) also pointed out that free trade would cause an increase in CO2 emissions. In the case of Thailand, CO2 emissions increased by 0.07% and particulate matter (PM10) emissions increased by 0.41% after making a FTA with the U.S. This indicates that structural changes in economic policies affect the level of CO2 emissions. As the industries of developing countries…