Advantages And Disadvantages

ADVANTAGES AND DISADVANTAGES OF TRADE AGREEMENTS.

Free trade refers to the removal of any barriers, taxes, tariffs, quotas or any other governmental restrictions on international trade which would allow the involved countries to more easily exchange particular commodities. For the most part, free trade is considered a good thing because the lack of trade barriers makes exportation easy and relatively inexpensive. In this way, a country can focus its resources more efficiently and achieve a higher real income. Despite the overall benefit of free trade to a nation's economy, there can be some significant disadvantages to the establishment of free trade agreements

ADVANTAGES:

• Access to wider markets: essential for small economies.

• Access to higher quality products and lower prices.

• Contact with technological and scientific advances.

• Better wages and job quality.

• It opens the gates to the biggest market in the world.

• It implies lower costs on imported inputs and capital goods.

• It generates improvements in productivity and competitiveness.

• It attracts Foreign Direct Investment.

DISADVANTAGES:

• Not all sectors of the economy benefit equally with free trade agreements. There are certainly more sensitive products that are protected with certain trade defense mechanisms.

• The negative effects on certain products can also be reduced if appropriate steps to boost their competitiveness or at least encourage their conversion to activities with a higher growth potential.

• Social upheaval by poverty and exploitation of small farmers and entrepreneurs.

• Loss of opportunity for economic development by selling products at market prices, to the exploitation of natural resources

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