Free Trade and Government Participation

All government seeks full employment, high standard of living and high quality of life. Free trade is supposed to facilitate those things, yet we do not have free trade. This is a true statement because when the government intervenes, things are not as simple as they should be. The government imposes laws and restrictions along with taxes and tariffs, which no longer make trading free.

Free trade agreements set up international bureaucracies to govern the participants. It also ensures that all parties comply with the terms of the trading agreement. The problem with free trade in America is it generosity has caused the foreign industry to take over the United States marketplace. This has resulted in high unemployment rates because the consumers and corporations can purchase foreign goods for a little less than domestic product. If each nation can produce what it does best and permits trade, over the long run everyone will enjoy lower prices and higher levels of output, income and consumption that could be achieved in isolation.

Trade restrictions that are put in place by the government on foreign products lower the standard of living for American consumers. Tariffs, quotas, and other trade barriers are the functional equivalent of a tax. It raises the cost of foreign goods and increases the price that consumers pay. The structure of trade restrictions imposes an unbalanced burden on those least able to pay. Nearly all governments limit, to some extent, the freedom of their citizens to freely trade with the citizens of other countries. The World Trade Organization (WTO) is a primary international body that is supposed to help promote free trade; however, it is very opaque and will not allow public participation, but welcomes large corporations.

Multinational corporations are another type of nongovernmental actor and are private businesses headquartered in one state that invest and operate extensively in other countries. These transnational corporations or international corporations have a lot of controversy surrounding them. Multinational companies try to avoid the restrictions government puts in place by doing business in that country. Multinational corporations use the corrupt government in the lesser developed countries to avoid the restrictions that are put in place. These governments are offered bribes in exchange for their cooperation. They are in business to make profit, and they do so by minimizing the cost of the factors they use in production, both the primary factors, land, labor and capital and secondary factors such as taxes and regulations.