01 Critical Report on Free Trade Assignment Sample
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Free Trade Definition:
The overall concept of free trade was put into action in order to eliminate any discrimination against foreign export and import. Both the buyer and the seller belonging to different country and economy can volunteer in free trading as they get relaxation form tariffs and quotas imposed by the local government. The concept of free trade is different than the traditional form of trading where the buyer and the supplier agree to a price which is fair to both the parties (Ong, et al, 2014, p.170)
Fair Trade versus Free Trade:
Free trade is somewhat different than that of traditional trade, which is also known as fair trade. They both have different objectives, supply chain. These two forms of trading have also a different definition of earning benefits as well. The main differences are listed below:
Primary goal: the primary goal of free trade is to reduce economic barrier between two or more nations and enhance their respective economic growth. However, fair trading is somewhat a local approach to trading which emphasizes in improving the internal market and the quality of fellow citizens.
Major actions: both fair and free trading has their own respective working methodology. While free trade removes all the local taxes and quotas which is tagged by the local government on import and export, fair trading aims to improve the financial condition of the organization signed in as a partner involved in a common business.
Supply chain: as free trading involves multiple nations, the supply chain system is very much complex when compared to fair trading. This is because of the fact as the fair trading involves mainly local business institutions. Therefore, the whole circle of the supply chain is somewhat limited in nature (Li et al. 2016, p.12).
Advantages and Disadvantages of Free Trading:
The concept of free trade is extremely beneficial for the countries involved in it.. however, free trade impacts more positively to the developing countries rather than a developed country. some of the most important benefits are as follows:
Enhancement of resource:
Developing nation has limited access to economic resources. These economic resources are mainly labeled as manpower, capital and many more. The free trading agreement allows the smaller developing nations to enhance these resources to a good extent.
Improvement lifestyle of local citizens:
As the smaller developing nations increase their economic resource, the quality of life of their localities s also increases. As free trading exposes them to better job opportunities and they can import better goods which were not available to them easily, it has a direct impact on their lifestyle in a positive manner. The concept of free trade also establishes a better foreign relation.
However, there are some major drawbacks of free trading. The concept of free trading completely takes over their domestic market and the smaller nations are forced to depend completely on the foreign economy. As the labor cost in some of the smaller developing nation is cheaper, the larger economy sometimes takes an uneven advantage. Free trade deals also lay havoc on the environment as according to free trade policy, an organization may shift their manufacturing plant ignoring the environmental safety norms (Weber et al, 2015, p.09).
Author’s View:
The concept of free trade has a mixed impact on the economy. It is quite natural for a larger economy to engulf a smaller one. Therefore, in order to maintain authenticity in the trade, it is advised that economy belonging to same stature continuous the trading. However, in a situation, where economy of varying size volunteers for the trading, it is important for the developed and stronger economy makes no attempts to overwhelm the smaller one. The free trade policy has more benefits than bad if the involved countries maintain transparency in trading (Jotzo et al. 2016, p.265)
Reference List:
Ong, L.H., 2014. State-led urbanization in China: Skyscrapers, land revenue and “concentrated villages”. The China Quarterly, 217, pp.162-179.
Jotzo, F., Karplus, V., Grubb, M., Löschel, A., Neuhoff, K., Wu, L. and Teng, F., 2018. China’s emissions trading takes steps towards big ambitions. Nature Climate Change, 8(4), p.265.
Weber, C.J., Alexander, C., MacQueen, J., Baker, C.A., Gastineau, G.L. and Norman, T., Nyse Mkt Llc, 2015. Systems and methods for trading actively managed funds. U.S. Patent Application 14/822,355.
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