Are Trade Agreements a Bad Thing?
Most well-known economists, like Milton Friedman and Paul Krugman, believe that trade with other countries is generally mutually beneficial. Others, like politicians facing re-election, are hesitant to extol the virtues of trade agreements. Depending on the perspective, trade agreements can be both bad and good.
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Labor
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Trade agreements often move labor overseas, which some might regard as a bad thing. Though cotton shirts can be produced in America, trade agreements enable them to be made for a fraction of the cost in cheap-labor countries like China and Mexico.
Cheaper Goods
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As explained in Robert J. Carbaugh's textbook, "International Economics," most trade agreements allow consumers to buy cheaper goods. For example, growing bananas in the United States would cost more money than buying it from a country that can grow it for less due to its weather and soil. As a result of trade, consumers buy inexpensive bananas.
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Specialization
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Trade allows countries to specialize in what they produce best: Because Costa Rica can import cars, the country can divert its money and resources to the production of coffee instead.
Politics
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Because trade agreements can cause countries to lose jobs, as in the case of the United States' exporting automobile jobs, many politicians argue against trade. Political tension between nations can cause trade sanctions, as those between Iran and the United States. Meghan O'Sullivan explains in her book, "Shrewd Sanctions," how a block on trade agreements can hurt citizens of the country with the sanction.
Morals and Ethics
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Trade agreements can make citizens worse off by creating a poor quality of life. Naomi Klein cites several examples in her book, "No Logo": Having children work in sweatshops to make cheap clothes and the destruction of natural resources in South America for oil are two.
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References
- Photo Credit Image by Flickr.com, courtesy of Sharon Mollerus
