Free trade has long be seen by economists as being essential in promoting effective use of natural resources, employment, reduction of poverty and diversity of products for consumers. But the concept of free trade has had many barriers to over come. Including government practices by developed countries, under public and corporate pressures, to protect domestic firms from cheap foreign products. But as history has shown us time and time again is that protectionist measures imposed by governments has almost always had negative effects on the local and world economies. These protectionist measures also hurt developing countries trying to inter into the international trade markets.
With the recent global recession we are currently undergoing, it is now time for governments in all countries to work on reducing barriers to free trade. In recent years we have seen a drop in trade and growth in economies coupled with huge unemployment numbers that haven’t been seen since the Great Depression (Lamy, P. 2009). Governments must act to help promote confidence in our economic and social systems (Lamy, P. 2009). Free trade must be part of this recovery process. In order for free trade to flourish all world governments must resist protectionist measures such as: high tariffs, non-tariff barriers or anit-dumping measures and subsidies for domestic firms (Lamy, P. 2009). Free trade can work and there are many measures that governments can do to help promote free trade, which in turns will help developing countries to raise their standard of living for it’s citizens, while protecting their local work force and domestic firms and corporations.
Free Trade Works
Even in these difficult economic times we are going through, there are signs that free trade is growing. For example in Europe, sells of fair trade commodities grew by more than 40% from 2008 to 2009 (Gidney, M. 2009). This in itself shows the high standards of sustainability can be made from free trade (Gidney, M. 2009). Fair trade provides two key benefits that can help with the current world economic crisis. First it provides sustained benefits for producers that can help maintain their business through fluctuations of the world market (Gidney, M. 2009). Second, fair trade helps to maintain fair prices, additional social premium, and long-term partnerships that help provide better living standards for millions of people in over 60 countries (Gidney, M. 2009).
Free trade cannot grow without the aid of governments to help promote and sustain it. Governments must support free trade by first modifying current trade policies to remove barriers against free trade. Lastly governments must act and enforce regulations to protect against unfair trade practices.
What can Governments do to promote free trade?
The basis of free trade is that in a growing economy the comparative-advantage shows that resources flow from lower productivity to those with higher productivity...