Trade and Protectionism Essay Example

Free trade is the practice of unfettered exchange of goods between nations without being interfered with by trade tariffs. In free trade, products can go over borders without any restrictions being applied. Trade protectionism, on the other hand, is the process where governments apply stiff taxes and tariffs and impose restrictive regulations on goods being exported to other countries. A classic example of such trade is when His Excellency president Trump, threatened to impose traffic on some of the American trading partners such as China. As a result of protectionism, the torrent of goods coming into the country is slowed down to a trickle. To fight back, China and other nations trading with the U.S have raised arguments indicating that trade should go back to being unrestricted, which is free trade.

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Trade protectionism has proven to be a slippery slope over a long time. In the early 1930s, the government of U.S enacted the Smooth-Hawley tariff; as a result, this move sparked the most infamous case of protectionism in history. There were disastrous results such as a 5 percent rise in imported goods, and the world trade shrank rendering many countries unable to service their debts that were left from the First World War. In unison, American trade partners' also stroke back and stridently reduced their US exports (Krueger 124). This disastrous attempt of trade protectionism by the US of imposing heavy tariffs on their European trade partners is argued by the late Jude Wanniski to have caused The Great Depression.

Free trade has proven to be a better option for global economies over time, more than protectionism and after such an unhappy history of trade, protectionism would seem to incline the scales towards a liberated trade. It increases prosperity by permitting consumers to buy more and better quality products at a low cost. It is the principal driver of economic growth, increased innovation, enhanced efficiency and the greater fairness that goes hand in hand with a system based on rules and regulations. As a result of the increasing benefits, the general trade regarding imports and exports increases too. Pursuing free trade as well as trade protectionism carries its tradeoffs. Seeking trade protectionism as well as free trade means that discriminatory treatment in international trade protection by imposing tariffs are minimized (Krueger 119). There will be a creation of a stable basis for trade, quantitative restrictions being applied on imports, promotion of fair competition and making regional trade arrangements as a way of settling trade disputes and implementing both strategies.

Free trade goes hand in hand with the feminist theory. Free trade has helped give women across the world opportunities. In most places, women are still not majorly involved in the business decisions. They instead do the most significant share of caring for children and doing domestic work. The liberating power of free trade, however, has given them a chance to make financial decisions, there is an economic demand and supply of the domestic products produced by women and gender expectations have been revolutionized (Unger 2). An example is Burundi, which relies on coffee for survival. This coffee is tended on by the women who do most of the domestic work, and their work has given the country economic success. Coffee accounts for 90% of the country's earnings from foreign exchange thanks to the women. This new found economic heft has changed how the society views and regards women. The household no longer holds the belief that the woman is the consumer and the husband the provider but equal breadwinners. Women now have more control and freedom over their lives because of free trade. It does not only happen in Burundi but around the world; women have changed their perceptions of themselves. Now they know they can earn as much money as the men for themselves, and with time, women will have their rightful place in the society thanks to free trade.

The free trade policy is more appealing to the feminists because first, they can have free and easy access to affordable medicines. Governments can produce their generic drugs through free trade, and there will be no need of importing them from non-patented producer and selling them at higher costs. The United Nations have confirmed that the world's most destitute population is made up of women and without affordable medicine, this sizeable poor population of women will not provide care for themselves and their families if trade protectionism was embraced. Second is because women will have access to essential services such as clean water and education. Trade protectionism subjects governments to new rules that might restrict their power to control services trade and investments in the interests of the public (Krueger 120). Since women are the responsible parties for keeping their families healthy and providing education, free trade makes sure it remains that way. If trade protectionism is employed, them women will not have the power to provide for their families if domestic policies aimed at guaranteeing affordability and ease of access are disputed to be trade barriers.

Two main things have driven globalization, one being the significant technological advances and the other is the liberalization of trade. As time passes, governments and international organizations are uniting to promote free trade between their members. They want to protect their economy from foreign competition, and the influence of import tariffs and non-tariff barriers carry. A variety of international organizations founded in the wake of the Second World War such as World Bank, General Agreement on Tariff and Trade and International Monetary Fund and succeeded by the World Trade Organization in 1995 has played a significant role in the promotion of free trade against trade protectionism (Unger 3).

The Comparative Advantage economic theory is in full support of free trade. If a country can manufacture goods and services, then it has an advantage and exports them in turn of imports that are relatively costly if produced at home. This concept gives free trade a positive impact of maximizing the output of every country participating which leads to high economic activities. It generates an innovative and inventive environment for the international organizations providing opportunities that help them survive in the current competitive global market. All the countries represented in these international organizations have national economies that gain access to benefiting by facing the stiffest competition in global markets. Their domestic producers will, therefore, produce more efficient products because of the pressure that comes from these foreign competitions. Furthermore, these organizations require each member nation to have a high factor of productivity that is responsible for raising profits, investments, and savings (Krueger 118). They have a goal of leading their businesses towards boom to ensure an increase in the economic growth of the trading nations, and this is what drives them to promote free trade.

Conclusion

However, the roles of international organizations might change as attitudes swing towards trade protectionism because of the changing patterns of international trade. When trade restrictions are reduced or eliminated, domestic industries are negatively impacted on because of the low-profit factor. Their goods will be readily available at lower prices. As a result, they will be forced out of business that reduces more loss than profits. Developed countries get the more prominent part since they have more capacity to fulfill trade demands than the underdeveloped member nations in the organizations (Krueger 124). Sometimes, one thing does not serve everyone as equally as it does the other and therefore causes a change in the attitudes and roles of international organizations in promoting the goals of free trade.

Works Cited

Unger, Roberto M. Free Trade Reimagined: The World Division of Labor and the Method of Economics. Princeton UP, 2010, pp. 2-5.

Kreuger, Anne O. "Free trade agreements as protectionist devices: rules of origin." Trade, Theory and Econometrics, Taylor and Francis, 2012, pp. 113-124.