Trade debate Essay

With the advent of technological advances in transportation and information exchange, the world is becoming a community. Free trade within such a community is as desirable as free trade within nations in order that the resources of the world might be put to its best use. The idea behind the theory of comparative advantage which drives free trade is the idea of specialization, which is also used to support optimal production within the smaller, less controversial markets. Suppliers are allowed to specialize in goods that are easier and cheaper for them to provide—that is, in the commodity in which they have a comparative advantage. As a result of ths specialization, the market benefits by experiencing lower prices (Suranovic, 2007). Competition within a free trade market further allows price and other wars to lower prices and improve commodity value, so that consumers enjoy greater value for their money.

This is the kind of benefit that free trade will have on the international market. The argument that free trade will merely leave Americans vulnerable and dependent on foreign goods is misleading because it does not take into consideration the fact that these countries will also become dependent on the goods that Americans produce best. This leaves a situation less like dependency and more like cooperation. In fact, it will be more profitable for American suppliers, as the efforts wasted on producing one product inefficiently will be channelled into the production of something much more profitable. The trade of this profitable commodity will most likely produce a better profit for the producer, increasing the country’s national income (GDP).

In addition to this, it is important to note that international free trade is not synonymous with outsourcing; therefore, it does not necessarily follow that U.S. jobs will leave the country to the detriment of Americans. In such a scenario of free trade, developing countries will be left room to specialize in what they do best, and without trade embargos their goods will become more competitive on the market (Suranovic, 2007). This will make it unnecessary for them to work for foreign companies and take the jobs of their citizens, as they will be employed within their own countries’ firms. Therefore, unemployment will be reduced in all countries involved. Furthermore, suppliers will be able to produce goods across at their true market prices, rather than having to increase prices to compensate for the costs of tariffs. On such a truly global market, all goods will be available to all persons on demand.

Reference

Suranovic, S. M. (2007). “The theory of comparative advantage: overview.” International trade             theory and policy. (E-book). Washington D. C.: George Washington University.        Retrieved on August 9, 2007 from http://internationalecon.com/Trade/Tch40/T40-0.php