Task2 - Ethics >> Negotiating Free Trade

"Negotiating Free Trade"

Many countries around the world are negotiating or have negotiated free trade agreements to encourage trade between their respective nations.

Do you think free trade agreements are a positive or negative development?

In the globalized world that we now live in, free trade agreements are becoming increasingly common. While there are significant advantages to these arrangements, some people believe that there is a downside to such agreements.

International trade is defined as the exchange of capital (money), goods and services across international borders or territories. To facilitate international trade between nations, agreements must be made between states which may have differing commercial conditions. Therefore, the governments of different countries that intend to trade together must agree to the associated commercial conditions. A good example would be sales tax. In one particular country this type of taxation could be quite high while a trading partner of this country may have lower taxation rates on certain goods and services.

As a consequence of these varying conditions, administrators of respective countries are obliged to come together and agree on the laws of trading. The outcomes of these negotiations are often called free trade agreements. For example, Japanese cars might be exported to Australia, and Australian beef could be exported to Japan. The respective governments may then choose to abolish all taxes on these goods coming into their countries as part of a contractual agreement.

However, there can be a downside to such agreements. Perhaps the greatest disadvantage could be the loss of independence and autonomy. The best way to exemplify this would be the circumstances surrounding Japanese rice imports and exports. Rice is a staple part of the Japanese diet, but Japanese agriculture is unable to produce rice as effectively or as cheaply as some of Japan's trading partners. Vietnam and Thailand are more effective at rice production which means that rice from these countries is significantly cheaper than the Japanese equivalent. If Japan allows an importer to monopolize the rice supply, there is a danger that the Japanese may not be able to independently provide food for their people.

Consequently, when considering the above, trade agreements might not be completely advantageous to the countries involved. Negotiation requires give and take, but those negotiating trade agreements on behalf of a country must be cognizant of the potential disadvantages.