Is free trade desirable?

Docs en anglais | 17 pages | 27-02-2008 | Format : | Note : Non noté

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Résumé

A free trade system is a market form in which goods and services can be exchanged between and within countries without any kind of government restriction or regulation.
The free trade debate is obviously the most important debate of the 20th century. It has been very much politicized and the community divided itself into two main camps: The Economic Liberalists and the Neo-Mercantilists. To do a very quick statement, one is focusing on a total free trade system and the other wanted to put in place more regulation about trade organization.
The real question is about this organization is: Is free trade going to be beneficial to all or it will be the cause of diseases such as unemployment in developing countries for example. It raises the question of delocalization and everything that goes on with this notion. That is why autarky is facing free trade as liberalism is on opposition with mercantilism.

It is important to emphasis the fact that one or the other (free trade or autarky) is not completely good or completely wrong. It, at first, depends on the situation and can vary from a situation, from a country to an other.

The free trade between firms is in fact a total freedom in matter of regulation or interference by a government. Today, it simply means that international corporations can freely exchange in the all world.
Concretely, a total free trade would suppress tariffs for the exports and the imports. It would also let a completely free evolution of the capital and the labour (i-e the Human) between the countries and, to finish the intervention of the government to put in place a regulation in order to support the free trade.

Nowadays, the situation is that the developed countries have part of their market in a free trade “mode” and another part regulated by protectionism.

In the mid 20th century, we assist to the emergence of many unions that aim is to agree on a common international trade. These unions are the GATT: General Agreement on Tariffs and Trade (in 1948), the BEU: Benelux Economic Union (in 1948), the EEC: European Economic Community (in 1957), the EFTA: European Free Trade Association (in 1959), Mercosur (in 1991), the WTO: World Trade Organization (in 1995) and finally, the Canada, Mexico and the United States formed the NAFTA: North American Free Trade Agreement in 1993. We assist in Europe to a desire of free trade, of a free union in Europe since the second part of the 20th century.

In a first statement of the situation we are going to see how a free trade union can be benefic for the world organization. By analyzing the different possibilities economically and humanly speaking. Then, in a second step we are going to tackle the comparative advantages of free trade. And, in a third a last part, free trade is going to face autarky in matter of disadvantages.

Table of content:

I) INTRODUCTION

II) ADVANTAGES OF FREE TRADE ORGANIZATION

A. Economic models
1. Adams Smith
2. David Ricardo
3. Hos

B. Benefits from free trade
1. A full access to the market
2. Fair trade advantages
3. Cultural aspect
4. Paul Krugman theory
5. Benefits from delocalization
6. Country survival

III) DRAWBACKS OF FREE TRADE

A. Employment preservation
B. Protectionism
C. New protectionism
D. Anti-dumping
E. Child-working
F. National activities

IV) IS FREE TRADE DESIRABLE?

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