Arguments Against Free Trade Policy
Free trade may have some advantages but it is not free from criticism by economists. There are number of Arguments Against Free Trade Policy also. The following arguments against free trade policy can be put forward.
1. Harmful to underdeveloped and weak countries. This is the prime of all arguments against free trade policy. The industries in underdeveloped and weak Countries cannot survive for long due to unequal competition of well established industries of the developed countries Industrial development of newly established and weak countries cannot be expected under floe trade policy. India had a very sad experience on account of this policy of free trade, when several of its industries were forced to close down since they were unable to face the unequal competition from Britain. Cottage and small scale industries too find it difficult to fight against competition from foreign large producers.
2. Dumping. Dumping is the another arguments against free trade policy. Under free trade, some foreign well established competitors resent to dumping of their goods at a throwaway price in the backward and underdeveloped countries. They sometimes sell their products even at a loss. It does cause irreparable damage to those countries. The main purpose of damping is to capture the market and create monopoly.
3. Imports of Harmful Commodities. As there is no restriction on the imports and exports of some commodities which are injurious and harmful to health such as narcotics, opium, hashish etc. are, also imported. It causes irreparable damage to the country.
4. Exploitation by Multinationals. Foreign multinationals widens their mallets almost in every country of the world and succeed in capturing the markets due to their powerful economic background. This situation leads to the ruthless exploitation of the poor, backward and underdeveloped countries by them retarding the economic growth of those countries.
5. Against National Interest. Another arguments against free trade policy is that free trade policy cannot be used in the national interest because-
(i) National resources cannot be used for the nation’s interest
(ii) Planned economic development is not possible
(iii) Employment opportunities cannot be harnessed because government has no power to interfere in the trade and industry
(iv) Key and strategic industries like defense etc. cannot be developed in nation’s interest. Thus the policy cannot be said to be in the larger interest of the country.
In view of the above arguments against free trade policy, it can be concluded that the policy is against the national interest of a country and therefore, it has been abandoned by almost all countries of the world.