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Essay Title: If Free Trade Is So Advantageous To Everyone, Why Have Many Countries Attempted To Increase Protection For Their Own Industries And Farms In Recent Years?

1127 words - 5 pages

Trade between various countries of the world has taken place for many hundreds, perhaps thousands, of years. Originally trade enabled people to obtain food and materials that they could not produce for themselves. In the era of globalization, trades between countries become more frequent than before. Within the contemporary global economy international trade touches many societies and communities though direct and indirect effects. It reaches into our homes, places of work and recreational venues. Although trade has benefits on countries, in recent years, many countries attempted to increase protection for their own industries and farms so that keep them away from free trade. This essay will explain what free trade is and state what the problems of the free trade are and the possible reasons why many countries have attempted increase their trade protection.Take UK as an example, the UK does not have a climate suitable for growing bananas, and therefore needs to import these from abroad. (OECD, 2003) But in recent years, it has been recognised that some countries are "better" to produce certain types of products than others. By 'better' it mean that the country can produce the good more cheaply, quickly or efficiently. (Mankiw, 2002) It seems to make sense then, for countries to specialise in producing the goods that they can produce most efficiently, and to trade their surpluses of those goods for the products they cannot produce, or are less efficient at producing. This is known as the principle of free trade. (http://www.oxfam.org.uk/)However, there are many arguments from the opponents of free trade. The arguments state why they are restricting trade. Meanwhile maybe this kind of reasons could explain why many countries increasing their trade protection in recent years.Many opponents of free trade often argue that trade with other countries would destroy domestic jobs. (Mankiw, 2002) For example, India has an absolute advantage in producing teas. Indian tea farmers can produce tea more efficiency than the farmers in Sri Lanka. If Indian tea joins the competition in Sri Lanka, it will cause the price of teas full. As a result, this will reduce the quantity of teas produced in Sri Lanka and thus reduce the employment in Sri Lanka's tea farms. In order to avoid the abroad tea impact the local market, Sri Lanka government increase their protection on tea. They arranged a meeting about operationalising the Tariff Rate Quota Arrangement in respect of tea. The consequence of the meeting was that since the exports will commence with effect from April, 2000, the quota for year 2000 for tea will be 11.25 m.kgs. Sri Lanka Tea Board would allocate the quota in respect of tea exports from Sri Lanka under tariff concessions. (http://www.doc.gov.lk/) Actually, resistant free trade sightlessly is not sensible. Free trade also creates jobs at the same time that they destroy them. Obviously, once the tea farmers found that they cannot produced the tea more...

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