Free trade is a form of trading policy that allows member countries to conduct business without government interference. In most cases, the companies involved in the trade are privately owned by people who have made choices to produce specific goods (Froning, 2000). Free trade has many benefits that lead to making revenue for the country and wealth for company owners. The wealth and revenue are created through specialization, reduced tariffs, innovations that attract other nations to engage in business and may others.
Free trade fosters innovation and allows member states to produce goods in a competition. Each state would like to sell more of their goods to the other state; this will lead to the production of high-quality goods. These trade will create a variety for citizens to choose at competitive prices, which leads to improved life standards. Life standards of a country’s citizens are among markers of a country wealth (Froning, 2000). With innovation, more goods and services of technology are created. Medical technologies have contributed to reduced costs of meeting healthcare needs. The quality of health care has improved, and this are factors that contribute to a stable economy.
Free trade creates opportunities for American companies, by creating a large market for produced goods hence increasing profit margin. From the colossal profits, privates may choose to expand their operation to different regions and create working opportunities for citizens at national and international arenas (Froning, 2000). People with jobs are definitely tax compliant, and this makes wealth for a country. From statistic, trade-related jobs are the best paying than those which are not based on trading activities.
With reduced tariffs on exports and imports for local companies creates an opportunity for local companies to get goods and services at a relatively cheap price. This avails affordable products for citizens, even with low purchasing power thereby increasing life quality of the general population which is a wealth-creating the asset for any economy.
Free trade has an aspect of diplomacy which is covered in the policies for the trade. The diplomatic ties ensure the involved countries share a concern and support each other for economic growth and other national matter (Froning, 2000). This form of support promotes an environment for economic development
In conclusion countries like America have been able to succeed and be world economic leaders due to the application of free trade policies. With free trade, a country have economic dynamisms and have created opportunities for the market for local privately owned companies.
Froning, D. (2000). The Benefits of Free Trade: A Guide For Policymakers. Retrieved August 30, 2015, from http://www.heritage.org/research/reports/2000/08/the-benefits-of-free-trade-a-guide-for-policymakers
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