Question

Case for Free Trade

The act of opening up economies for trading is known as free trade or trade liberalization. This is done by bringing down trade barriers like tariffs. Trade liberalization allows goods and services from everywhere to compete with domestic products and services.

Globalisation along with free trade can adversely affect the economies of developing countries by not giving equal playing field by imposing conditions which are unfavorable. With the development of transport and communication systems goods and services can travel faster and farther than ever before. But free trade should not only let rich countries enter the markets, but allow the developed countries to keep their own markets protected from foreign products.

Countries also need to be cautious about dumped goods; as along with free trade dumped goods of cheaper prices can harm the domestic producers.

What should be done by the developing countries to protect from negative impact of ‘free trade’? Mention any two steps.

Hint:

Developing countries can use a combination of protective measures and support for local industries to gradually integrate into the global market while minimizing the negative effects of free trade.

Answer 1

To protect from the negative impact of free trade, developing countries should: 1. Implement protective tariffs and trade barriers to shield their domestic industries from unfair competition. 2. Encourage the growth of local industries by providing subsidies, financial aid, and training to enhance their competitiveness in global markets. These measures help in safeguarding local jobs, industries, and ensuring that the benefits of free trade are distributed more evenly.