FREE GLOBAL TRADE V/s PROTECTIONISM – A CRITICAL REVIEW

Protectionism is the term used about the nations protecting their domestic industries and their workers by providing subsidies for their production and imposing tariffs on competing foreign products. Yet protectionism has been blamed for closing off trade from foreign countries, raising prices and giving domestic consumers less choice. A country that practices protectionism can just as easily be subjected to it by other countries imposing their own import tariffs and awarding subsidies to their industries. Free trade is based on agreements between nations to drop import barriers, allowing foreign goods and services to compete on a level playing field with domestic products. This opens markets for developing countries and in theory improves their economic conditions. Jobs lost in one industry of a developed country can grow in another industry. Free trade is meant to improve the economy of all participating nations. The World Trade Organization (WTO) regulates free trade agreements among member nations. Free trade encourages the relocation of multinational manufacturing sites from developed countries to poorer nations with much lower costs.