NationStates Jolt Archive

I suspect that this topic has been covered many times in the past, but I've never encountered it. What are the pros and cons of "free trade," "fair trade," and "protectionism"? This is a topic I'd like to become educated about.

Free trade is a mask for industrialised countries to exploit the industrialising countries.

Protectionism is expensive and redundant for industrialised countries, but essential for industrialising countries.

Fair trade is the best of all, in which the industrialising countries get a fair share of the profits and merits of world trade.

Free Trade is in the long term good for industrialising countries as well as industrialised ones. In the short term people lose their jobs as inefficent companies die out, but in the end due to the benefits of increased trade, you end up better off. Basically there's more competition, so prices fall, so consumers can afford more things, so there's more demand, so companies expand and hire more people.

Protectionism is just a knee-jerk reaction. Only works if you have a big export industry that everyone wants and that cant be sustained.

Fair Trade means whatever the hell the person using it wants it too mean :rolleyes:

Free Trade is in the long term good for industrialising countries as well as industrialised ones. In the short term people lose their jobs as inefficent companies die out, but in the end due to the benefits of increased trade, you end up better off. Basically there's more competition, so prices fall, so consumers can afford more things, so there's more demand, so companies expand and hire more people.

Protectionism is just a knee-jerk reaction. Only works if you have a big export industry that everyone wants and that cant be sustained.

Fair Trade means whatever the hell the person using it wants it too mean :rolleyes:

Well put. I'd also add that protectionism is often a form of vote buying, as it gives short term benfits to specific groups of people (who are well aware of it) while creating long term disadvantages for everyone else in the country (who often don't realise what's happening).

An example: a politician wants to win the votes of, say, grain farmers. He tells them that he will make it difficult or illegal for foreigners to sell grain to the country. This causes the price of grain to go up, and all the farmers are very happy and vote for the politician. Meanwhile, the rest of the country pays more for its food, but since they don't pay attention to every single thing the government does, most of them are unaware of the new grain import regulations and they don't vote against the politician.

Although *in princaple* protectionism is concidered a bad thing - inefficient companies, uncompetative economy etc, in practice I beleive it is the only way for a relativly poor county to get rich. In practice free traid for a poor country means foreign ownership, as companies from rich parts of the world have the recorces and technology to exploit their resorces. I'm not an economist, nor a historian, but I'm not aware of any historical instances of a relitivly economicaly week country becoming rich using free trade policies.

Rich countries, however can exagurate their strength by free traid, as their companies and indeviduals are allready better trained and resorsed to outcompete the opposition, they are the ones who end up winning.

Fair traid is certainly something I advocate, but I don't know much about it's effectiveness (beond improving the lot of the producers themselves) and it's scale does not yet make it something that affects the destiny of nations.

I would have to morally have to support FREE TRADE. A government can ban product from a country if their is a moral reason, (e.g. labour restrictions in country A are unfair or Animal rights are not looked after in country B) but apart from that it should be a free for all. No company has the right to exist, if it is out bid by foriegn buisness then thats just tough. Protectionism is immoral and Fair Trade is unfair (unfair for consumers for paying above the market price).

Protectionism is just as bad for underdeveloped countries as it is for developed countries. It skews against the workers of the country by lowering their purchase power without doing much to raise their wages.

It is almost solely used in underdeveloped countries to gather support for the government from the very wealthy by insuring that they have government support on international markets.

I would have to morally have to support FREE TRADE. A government can ban product from a country if their is a moral reason, (e.g. labour restrictions in country A are unfair or Animal rights are not looked after in country B) but apart from that it should be a free for all. No company has the right to exist, if it is out bid by foriegn buisness then thats just tough. Protectionism is immoral and Fair Trade is unfair (unfair for consumers for paying above the market price).
I'd have to take issue with a few of those points! I'm not sure what princaple you morals are comeing from, and, for all I know, they may be concistent, but for me theres no morral imperitive to free traid, only practical ones. And fair trade is not unfair, no one is forced to buy fair trade, concider it a marketing ploy if you like, and it fits well into free traid, I mean, the money you pay for a good finances it's advertising (which adds no value), the money I pay for a fair traid good pays a higher wage to the producer, that's my business. Add to that, free traid can stablalist the agricultural prduce markets, which has the potential to seriously undermine cocain production!

An example: a politician wants to win the votes of, say, grain farmers. He tells them that he will make it difficult or illegal for foreigners to sell grain to the country. This causes the price of grain to go up, and all the farmers are very happy and vote for the politician. Meanwhile, the rest of the country pays more for its food, but since they don't pay attention to every single thing the government does, most of them are unaware of the new grain import regulations and they don't vote against the politician.

I agree in the west, for example, the US now exports maze to Maxico, even though the costs of production are lower in Mexico. US farmers can sell at below the cost of their competitors because of subsedies, the EU is an exporter of sugar, dispite growing it in sugar beats which are much less productive & more expencive than sugar cane, again sudsedies. However when Mexico was being protectinist, it's famers could sell maze at a lower price than US taxed importers (protectionism to counter protectionism).

In may poor countries produce is 'dumped' on them at below cost price, this prevents local farmers & producers selling their wares, which, at levels just above subsistence, means thay often have too little money to keep themselves solvent, they become dependant on handouts. Literaly millions of people suffer directly and indirectly from free trade, this is not an arguement to abandon it, but an argument against free trade dogmatism, when a country does not have the resorces in terms of training, infastructuer, and capital to compete, it will be taken to the cleaners, free trade has a heavy cost, and just saying it will be alright in the end does not make it any better!

Protectionism is just as bad for underdeveloped countries as it is for developed countries. It skews against the workers of the country by lowering their purchase power without doing much to raise their wages.

It is almost solely used in underdeveloped countries to gather support for the government from the very wealthy by insuring that they have government support on international markets.
I agree protionism: occifies corrupt and inefficient systems, but it can, and indeed does allows what little industry and trade there is within a very poor country to survive. Developed coutry protectionism I do not like, although I can see economic uses for it: if you dump food on an impoverished economy I think you could keep them poor permenantly.

the money you pay for a good finances it's advertising (which adds no value), the money I pay for a fair traid good pays a higher wage to the producer, that's my business.

I take you point but still Fair Trade could never be part of government policy or for that matter claim moral superiority, its just another product.

[QUOTE]Free Trade is in the long term good for industrialising countries as well as industrialised ones. In the short term people lose their jobs as inefficent companies die out, but in the end due to the benefits of increased trade, you end up better off. Basically there's more competition, so prices fall, so consumers can afford more things, so there's more demand, so companies expand and hire more people.

Cause and effect. If "inefficient" companies die out, people lose jobs. If people lose jobs there is less spending. If there is less spending there is less demand. If there is less demand how can companies expand and hire more people?

Question: Does the U.S. have a free trade agreement with China?