free trade versus protectionism

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Post on 15-Apr-2017

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  • This debate never fails to be a furious one.

  • it is accepted by many acknowledged economics circlesdeveloped economies advantage from free trade.

  • Reducing trade barriers decreases costs and stimulates long-term productivity growth.

  • There are, however, some of the undeniable pitfalls of free trade.

  • Protectionists contend that free trade can incentivize foreign currency manipulation and mercantilism.

  • Trade negotiations of the Transatlantic Trade and Investment Partnership (TTIP) and The Trans-Pacific Partnership (TTP) trade deals have provided more fuel to the fire of this ongoing debate.

  • Free Trade Argument

  • classical pro-free trade argument cites the benefits of the increased competition and specialization that free trade brings.

  • lower prices/costs

  • more variety of goods

  • higher quality of goods

  • These factors increase productivity growth and living standards.

  • Trade barriers can cause conflict between countries and lead to fearsome trade wars that destroy the potential for mutual benefits from trade, and also spark the possibility of military conflict.

  • Protectionist Argument

  • Protectionists argue that a free trade policy incentivizes the countries

    So it trades with to practice mercantilism and manipulate their currencies in order to maintain this positive balance of trade.

  • Perhaps, China is doing this very thing.

  • I incline more toward the free trade view, however I do feel that the danger of different nations manipulating currencies and accumulating large foreign monetary reserves should not be ignored.

  • BYM V S SAI HEMANTBBA FOREIGN TRADE UPES ,DEHRADUNUTTARAKHAND, INDIA

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