It can be argued that free trade is not fair trade. This is because free trade eliminates tariffs. It gives the economic advantage not only to those producers that are more efficient production-wise (largely because they are more capitalized) but also to those industries blessed with governments capable of delivering massive subsidies. In other words, to the already industrialized and wealthy nations. When tariffs are eliminated, consumers will switch to imported goods and services.
Personally I agree with what Anne O. Krueger is exclaiming and that economic globalization should be implemented. Economic globalization will in the end better the economy as a whole. Some small businesses may suffer, but as an entity the country will benefit. By reducing all tariffs the world of trade will broaden and expand to the lengths of the world. This will allow different parts of the world to enjoy merchandise that is specific to one country.
But Dr. Roberts explains the benefits and costs of free markets and trade in a clear and cogent manner again and again in various scenarios. Of particular value are the treatments of the concepts of 'fair-trade' and so-called trade deficits. These two issues are some of the most divisive and controversial parts of the trade debate. As expected, Dr. Roberts explains the facts in a way that just about anyone can understand. Dr. Roberts also illustrates how we use what he calls the roundabout way to wealth to explain how we get richer when we specialize and trade.
Since the fair tax would enact a flat tax that everyone pays equally, this would allow the taxing to be fair and transparent. Fair tax is an egalitarian viewpoint which means it is equal and fair to everyone. This can be insured because the fair tax only taxes on what we choose to spend on new goods or services, not on what we earn. This transparent tax system will allow American products to compete fairly. This is because the tax for products would become universal.
These views where portrayed by many liberal philosophers such as Adam Smith, in regards to economic management; he believed that free trade and free markets where fundamental to successful economic growth, as individuals, consumers and business would create competition and feel confident within the economy. However more modern liberals believe in a form of positive liberty (More state intervention for progression by providing individuals with the tools to create a basic standard of living to develop their social and economic lives, with systems such as welfare) TH Green believed there was a need to embrace positive liberty as he stated that individual liberty was only achievable under favourable social and economic circumstances (Creating the welfare system). However today’s contemporary liberal democrats have a combined belief of both positive and negative liberty. There is potential to suggest that there is a contradiction within the lib dems with regards to their position on the state. Liberal philosophy clearly remains at the heart of the liberal democrat party.
However, conservatives argue that this is fair, as those who shoulder mores responsibility in society should be repaid more in terms of wealth than someone with less responsibility. This arguably means that it will lead to a fairer society. An 'organic society' could reduce atomism. This is because an 'organic society' sees society as a whole, living entity as opposed to being made up of self-seeking and self-striving individuals. This could lead to society being more cooperative, as people comprehend that everyone is of equal value to society, regardless of the role they fulfil.
Sheltering new industries may pay off later 4. Free trade allows companies the possibility of outsourcing the production of goods for domestic sale. Question No.3: Identify the major fallacies of international trade? Answer: 1. One fallacy is that trade is a zero sum activity, if one trading party gains, the other must lost.
The government, and much of the nation, believed in the principles of laissez-faire economics, which dictated that the economic market should run freely without government interference. According to the theory, free, unregulated markets led to competition, which in turn led to fair prices of goods for consumers. The government did not want to interfere in the free market. Any concern for the plight of the poor during this time was minimized by the tenets of social Darwinism, which became popular in the late 1800s. Social Darwinism adapted Charles Darwin’s theory of evolution, “survival of the fittest,” to the business world, arguing that competition was necessary to foster the healthiest economy (just as competition in the natural world was necessary to foster the healthiest, or fittest, species).
The enabling clause allows developed countries to accord preferential tariff treatment for different categories of trading partners which would otherwise violate Article 1 of the GATT which stipulates that no GATT contracting party must be treated worse than any other. On the other hand, the nature of Free Trade Agreements (FTAs) is inconsistent with the obligations because they grant countries who are party to the agreement more favourable trade benefits than the others. To make sure, these arrangements are trade-enhancing, one such exception under GATT is Article XXIV focusing on special exceptions for FTAs. An FTA is one of the several options available to WTO members wishing to pursue integration beyond that which is possible in a multilateral trade
Free Trade vs Fair Trade Winners and Losers Why trade? Specialization and economies of scale in production lead to greater quantity of production in all trading countries and thus increased incomes and higher standard of living (economic welfare) International trade and international economic interdependence may reduce tensions and promote peace among nations of the world NAFTA Free trade Elimination of tariff, gradual in some cases Exceptions Free capital movements/investment ==================== Rationales Stability Economic prosperities for all parties Will reduce illegal immigration Concerns Economic Disparities Environmental concerns Labor concerns Inequalities Why free trade may not be fair: Limited potentials for trade in the developing world Winners and losers in both developed and developing countries The mismatches Tastes Regulations Standards Cultures Economic and social institutions Etc. Has NAFTA been successful? Economic growth Income inequality and poverty reduction Economic stability Immigration Has NAFTA resulted in real “free trade?” Some non-tariff barriers have survived – The corn and tomato story – The maquiladoras – The emergence of China Perils of Free Trade Transitional job losses (unemployment) Lower incomes for some Loss of tariff income for some countries Infant industries at risk: A need for protection Imperfect capital markets (Note: Some criticize protection of infant industries.) Level playing field?