Ashton Janowski
A commonly debated topic in the US, and around the world today is whether or not Free Trade is a good or bad thing for an economy. Many economists go back and forth on the issue as there are definitely two sides to the argument, however after further research, it is clear which side's evidence outweighs the other. Free Trade can be defined as a trade policy that does not restrict imports or exports. In simpler terms, this has a similar concept as a Free Market, just in trade terms. The US currently has 14 Free Trade Agreements (FTA’s) with 20 different countries. In 2018, the US imported $2.3 trillion worth of goods which was the highest on record for a single year. The goods that are imported include things such as manufactured goods, minerals, fuel, oil, machinery and other goods that our country doesn’t produce in excess here in the mainland. As a result, we set up trade agreements or Free Trade with other countries in order to import and export goods. It seems like a great thing for all involved, however there are people who disagree with the idea of Free Trade and think it is bad for the economy for a number of reasons such as putting workers in bad working conditions and causing job loss. Although their reasoning can be argued, that evidence does not outweigh the facts presented through research which makes it clear that Free Trade does indeed help the economy since it promotes efficiency and innovation as well promotes growth within the economy.
Free Trade by definition allows countries to trade with one another without any limitations on imports or exports. This means that more products get shipped in and more products get shipped out for a lower price which helps both sides involved in a particular transaction. Since products in excess of 2 trillion dollars are being shipped into the US each year through Free Trade, this causes there to be a demand for companies to be efficient and innovative with the imports they are given from countries like China. According to mercatus.org, “Over time, free trade works with other market processes to shift workers and resources to more productive uses, allowing more efficient industries to thrive.” With this increase in efficiency among industries, these companies are able to become more innovative and produce more in less time. This leads to an increase in wages, being able to invest in things like infrastructure,and ultimately leads to a more dynamic economy that can take what they are given from other countries and turn it into something that the American people will continue to buy and put money towards. Along those same lines, Free Trade allows for new resources to be brought into the country which introduces new items that businesses in our economy can take advantage of and innovate into new products which can turn into money for them, and more importantly, our economy.
A second argument that proves why Free Trade is a good thing for the US economy is that it promotes growth within the economy itself. According to corn.org, “Opening markets fuels export growth. Even growing imports can promote jobs here at home. Half of all imports are not finished consumer goods, but intermediate inputs used by U.S.-based producers.” What this means is that most of the imports coming to the US are raw materials that are turned into final products by companies here in the US. The companies need people to turn those raw materials into finished products so they hire people to do that which creates jobs, and as mentioned in the quote above, growing imports here in the US produce jobs for US citizens. Job creation is a big deal in promoting economic growth and Free Trade does just that for people no matter what field of work they’re in. Finally, in reference to the image below which is also from corn.org, you can see it’s a graph showing the economic growth from FTA partners across the world. The yellow section of the graph represents growth of other countries during the same time period in which a certain country was part of an FTA. The green represents that individual countries growth during the same time. As you can see from the graph, the green exceeds the yellow in every country and by staggering numbers in some cases. This graph statistically proves that Free Trade promotes economic growth, and ultimately, almost every country involved in FTA’s economically grows during the time period in which they are in an FTA.
All in all, Free Trade has many positives, but there are also drawbacks to this style of trade such as deplorable work conditions and job loss when a particular trade is no longer traded between countries. Even with all of that taken into account, it is still clear to see that the positives that come with Free Trade such as promoting efficiency and innovation, as well as causing economic growth within a country outweigh the negatives by far. For that reason, it would be in the US’ best interest, and any country’s best interest, to continue their Free Trade Agreements in order to ensure their economy can continue to grow.
Works Cited
“The Benefits of Free Trade: Addressing Key Myths.” Mercatus Center, 15 Sept. 2019, www.mercatus.org/publications/trade-and-immigration/benefits-free-trade-addressing-key-myths.
Kafele, Baruti Libre. “Free Trade Is the Key to Economic Growth: Baruti Libre Kafele.” FEE Freeman Article, Foundation for Economic Education, 9 Oct. 2016, fee.org/articles/free-trade-is-the-key-to-economic-growth/.
Pettinger, Tejvan. “Benefits of Free Trade.” Economics Help, 28 Mar. 2020, www.economicshelp.org/trade2/benefits_free_trade/.
Tim. “International Markets and Free Trade.” Corn Refiners Association, 4 May 2018, corn.org/policies/trade/international-markets-free-trade/.
No comments:
Post a Comment