Topic: Free Trade
Country: United Kingdom
Free trade is when one country lowers, or removes, their trade tariffs and gives subsidies on exports and imports to other countries. Free trade is supposed to be a tool used by countries to obtain resources that are scarce in their country while making the most of the local resources that are available. Instead, large corporations in developed countries who mass produce goods use the free trade agreements of lower tariffs and subsidies to sell their goods in third world countries, which hurts local businesses. This results in an unequal distribution of wealth because the developed nations will exercise a protectionist policy when it come to agricultural trade, which happens to be third countries’ biggest export. These protectionist policies make it hard for third world nations to compete equally in the global market, and thus occurs the conflict of viewpoints on free trade.
The first cause of this problem is the fact that third world countries strongly believe in the protectionist view on trade. This is because smaller third world nations know that the only way their domestic economy can grow is by limiting, or eliminating, foreign competition. By radically increasing the tariffs for imports in their country, this will decrease the international competition faced by local manufacturers, and will allow the the local economies to grow, thus increasing the country’s GDP and strengthening their economy. These countries are aware that with no tariffs large multinational corporations can come in and monopolize the market of their choosing, and that small local businesses are the only way their economy can grow.
Developed nations also have caused problems with free trade by overemphasizing its importance. They often times blame the fact that third nations have not lowered their tariffs, and this is why their economy is so stagnant. But when third world countries open up their trading boundaries, large countries like the USA take advantage of these low tariffs. A 2002 study showed that the US exported wheat 43% below its production cost, creating tough competition for local farmers. This low export price faced from the US is what allows them to sell their goods at such a low price in the international markets, which consequently hinders the growth of local businesses and the overall economic growth of the country.
The UN is in cooperation with the World Trade Organization to help moderate free trade negotiations between countries. In July 2009, the UN wanted to “resist all protectionist tendencies and rectify any protectionist measures already taken,” which shows that the UN leans towards a more free trading style between countries. They have mediated several hundred negotiations in the past such as NAFTA and other large international trade agreements.
The UK strongly supports the concept of free trade as much of our economic strength depends on our trading relations with other countries. As a member of the European Union and the Transatlantic Trade and Investment Partnership the UK notes that strong economic ties with countries all over the world is the best way for an economy to grow. Countries can benefit from trade and investment with other countries while specializing in a specific good to export to other nations, thus increasing domestic production rates and strengthening the economy.
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