Question

Explain ONE (1) advantage and ONE (1) disadvantage of free trade.

Answer 1

Advantage: One of the major advantages of Free Trade is that it provides multiple benefits to customers. Free Trade results in higher access for customers to low priced high-quality goods. Customers are able to get the best quality of foreign goods at competitive prices. In the absence of free trade, such goods could be very costly and could be even inaccessible to customers.

In free trade, tariffs and quotas are generally eliminated. This results in the end of any monopolies which may have existed in the market. So, more players are able to enter the market, making the market more competitive and bringing down the prices of the items.

Disadvantage: One of the major disadvantages of Free Trade is that it may result in job losses. When trade barriers are eliminated, many goods become cheaper when bought from foreign companies than what they would cost when made domestically. When foreign goods are freely available at competitive prices in the market, many domestic companies, majorly in the developing nations, may have to face stiff competition and may not be able to develop at a good pace. A few companies could even face heavy losses. This all would eventually result in job losses in these companies.