Free Trade in the World Today

    Free trade is the trade of items between different countries without any restrictions or limits.  Although it may seem that we still commonly practice free trade, we do not.  Free trade has many advantages, but it also has its fair share of disadvantages.  There are many organizations for the promotion of free trade and just as many for the abolishment of it.  Free trade is uncommon in today’s global economy, but many organizations and countries are trying to encourage it, while others are trying to destroy it.

    As it was said before, free trade is the trade of items between different countries without any restrictions or limits. This idea of free trade started with classical economists extending the principles of laissez-faire to international trade.  The classical economists also asserted that the economic law of comparative advantage, the law that states that countries should produce goods that they can make easily and import the goods they can not produce easily, combined with free trade would be beneficial to all the countries.  However, this idea was not very popular since some countries could produce much more things, as well as more important things than other countries.  Since many people opposed this idea, it never really took off.  One organization that still asserts that free trade is the right way to “control” international trade is the World Trade Organization (WTO).

    The WTO is a multilateral organization composed of 140 countries that sets up rules and regulations to promote and develop free trade.  The WTO was formed in 1995 after the General Agreement on Tariffs and Trade (GATT) was disbanded.  The GATT, although it brought many changes, was disbanded after 47 years.  The WTO followed in its path.  The WTO, for ten years, has worked hard to create free trade in the global economy.  Although the WTO has been working hard, some countries are trying to avoid free trade.  Although there are organizations that are against free trade, there is another organization fighting for free trade.

    The North American Free Trade Agreement (NAFTA) was created in 1992 by the United States, Mexico, and Canada to abolish all tariffs and trade barriers between these three countries.  NAFTA has not had a very profound effect on either of three countries’ economies, except for Mexico.  By removing some of the trade barriers from these three countries, Mexico was able to produce many more products for less, which meant that American and Canadian made goods were being produced for less in Mexico.  Although the affect on all of these economies have not been severe or especially beneficial, the organization still exists.  NAFTA has not gotten rid of all tariffs and trade barriers between the three countries, in fact it has only gotten rid of a few.  NAFTA is scared of the affects of free trade on these three economies since it will most likely only help only Mexico.  Other affects from free trade could harm all three economies, or help them, but NAFTA is afraid to take that risk.  NAFTA is being criticized because by removing trade barriers and tariffs, jobs could be outsourced to Mexico from the United States.