The Disadvantage Of Increasing Trade Liberalization Economics Essay

The trade liberalization have been accelerated a lot in the resent years, some countries believe that the lower barrier of trade will increase the efficiency of economy. But does it really benefit the development of all economy? In the global view the international trade can really decrease the opportunity cost, but if we look specific into a certain country, it may not true. So I think the acceleration of trade liberalization have somehow limited the development of economy of some countries.

First let’s take a look at the developed side in the world. Just one month ago the US and China was about to fight an exchange rate war. The root of this issue is just because the lower trade barrier had damaged American economy. In America, the imported manufactory goods are dominate the market because of the cheaper labor force in developing countries like China, India and Mexico. The manufactory industry in US was hurt a lot in this competition. (Wang Ping and Zheng Zeyu, 2009)The unemployment had increased in because of this problem. And those unemployed worker in manufactory sector can hardly switch into other sectors because of the lower education. (Joyce P. Jacobsen, 2007) So the damage US get from the world trade is very complex. That is why US want to solve the problem by setting higher tariff or make Chinese government to revalue RMB. It is actually will have bad result in achieving free trade. But for defending the right of labor US government rise this issue in this way.

Besides this point, the illegal goods export become more easier since the trade liberalization, because those illegal goods like drug can hide in the huge amount of other good or the lower barrier make the custom careless in the import products. Because US allowed 9500 companies’ track go across the border between US and Mexico for free from 2001. Because those tracks only have to stop 20 second at the border some drug smuggler use this advantage to export drug into America. Until last year, the police have found this business. (Washington Time, 2009) This kind of cases will also become popular since the trade liberalization increased. It will damage mainly the developed countries, because most of the countries that produced a lot drugs are developing countries like Mexico, Myanmar and Vietnam. So it is a big disadvantage of free trade too.

Some damage that caused by increasing trade liberalization also affect developing countries economy too. As the video we see in the class, most researchers thinks that the world trade can help developing countries a lot. But in the other hands, the increasing trade liberalization will shape the economy in developing countries in an unhealthy way. Because of that in the world trade, only if they got comparative advantage in some kinds of goods the can benefit themselves. So most developing countries are focusing in manufactory. Most labor force in developing countries is in manufactory sector. Even export manufactory can get lot of benefit for the country from world trade but for the development of a country it may not a good way. A health country should balance the development, if over focusing in one sector will let the economy loss adaptability. For example, China is facing such a problem. More than a half of the GDP of China is exporting the manufactory product. When US planed to increase the tariff against China, there is a panic among enterpriser in our country. Even a 3% increasing in tariff will make the clothe manufactory loss all the profit in export. So we see that there is an implicit threaten for these over specialized developing countries.

The other problem cause by the trade liberalization is the use of nature resources. In the world trade, another kind of good that developing countries export a lot is the natural resources. The woods and coal are the very important resources in production. Most developed countries especially US and Japan always try to avoid using those resources inside their country. Shan Xi, the main coal supporter of China, export huge amount of coal to other countries every day and mainly to Japan. A lot of those coal mines are owned by individuals (mostly illegal), those owner will not consider the trade issue in a global view, instead they only focus on the interest they get from the illegal coal trade. (Jizhe.cc, 2009) These kind of resources are not infinity so most wise governments have plan about how to using these kind of resources. For those poor countries that get money from selling natural resources, may suffer a scarcity in the future. And those illegal trades of coal or oil will take advantage since the trade liberalization improved.

The third point that trade liberalization will hurt developing countries is the pollution. Most developed countries put their high tech goods in the world market or they just sell the patent. Most big amount of production work were in developing countries where got cheaper labor forces. Then the pollution in developing countries became a big problem. As we discussed earlier in this semester, the most developing countries were in industrialization, they get most benefit in producing huge amount of manufactory goods. But those work are producing a lot of pollution inside the country. And in the climate change issue developing countries become the sinner. So the highly specialize become an environmental problem for developing countries too. And the requirement of limiting the greenhouse gas or other pollution gas, have some how limited the development of those countries too.

In my opinion, both developed and developing countries have somehow negatively affected by the accelerated of trade liberalization. According to Paul A Samuelson, the free trade will hurt one side between the countries. Free trade can benefit the world a lot in theory, but it also brought a lot new problems for countries’ development. However, the free trade just at the beginning so if we want it really help the development of every countries, it need a long time observation and research.