Free trade is a government policy that promotes specialization, efficiency, and increased production by not discriminating against imports or exports and not mandating the elimination of import and export tariffs and duties.
When trading partners have freedom, they are less likely to participate in warfare against each other.
In an open market, a nation’s capital and labor resources can be utilized.
nFree trade is advantageous for economic development.
Protectionism involves safeguarding domestic industries from international rivals by implementing various measures such as tariffs, subsidies, import quotas, or other restrictions on imports. Despite the benefits of free trade for the global economy, many countries still enforce protectionist policies.
Offers substantial benefits to a specific group of people.
Higher prices are causing consumers to experience a loss.
There are two types of costs associated with protectionism: monetary costs and non-monetary costs.
Textile protectionism in the textile industry has resulted in poor families losing nearly 9% of their disposable income.
It causes the loss of more jobs than it prevents.
Protectionism may lead to a decrease in quality if higher quality products become less accessible or completely unavailable.
It leads to the deprivation of personal freedoms.
According to estimates, protectionism results in an annual cost ranging from $50,000 to $134,686 per saved textile job.
There are two categories of costs associated with protectionism: monetary costs and non-monetary costs.
Approximately $14 billion in costs are incurred by consumers due to export restrictions on cars.
nQuota rents can increase prices since the costs of auto quotas have been approximated to be
n$2.2 billion to $7.9 billion per year.
The addition of import quotas caused the price of a Japanese car to rise by $2,400.
The cost of quotas for saving each auto job per year was $241,235.
The protectionist policies caused a loss of $1.4 billion for the dairy industry.
nQuota incurs an annual rental expense of $250 million.
Chilean tax laws apply the same treatment to both local and foreign companies.
Chile has a relatively low tariff rate of 10% compared to other countries.
Chile’s trade industry will gradually reduce tariffs by one percentage point annually.
Beginning in 2003, there will be a gradual reduction in the tariff rate. Initially, it will decrease to 6%, and then continue to decrease by one percentage point each year. The goal is to reach a tariff of zero by 2010.
Chile has designated free trade zones in both the far north and south regions.
It is widely acknowledged that conducting business in the Japanese market is highly difficult.
Protectionism is exemplified by Japan’s trade system.
Japan has constantly upheld a robust protectionist stance concerning specific domestic markets.
Due to import restrictions aimed at protecting their farmers, Japan has imposed higher prices on rice for their consumers, resulting in a cost that is five times higher than the international market price.
Rice Imports and Exports in the Japanese Market
From an objective standpoint, it can be concluded that there is no easy solution. The optimal choice is complete free trade, regardless of the outcomes. This strategy would restore the concept of government as a “servant” to its citizens, safeguarding their life, freedom, and possessions rather than redistributing wealth. Promptly implementing free trade would also result in a swifter reallocating of resources to more productive endeavors, whereas a gradual approach would impede this resource shifting.