The main criticism of free trade agreements is that they are responsible for outsourcing employment. There are seven drawbacks: industrial products accounted for 43% of intra-African exports between 2012-2016, while they accounted for only 20% of exports to the rest of the world. In 2015, medium and advanced technology products accounted for 25.4% of intra-African trade, but accounted for only 14.1% of African exports to industrialized countries and 13.7% of the continent`s exports to the world (Chart 2). (6) (8) Reality: U.S. trade deficits are generally good for Americans. Reality: free trade does not create more jobs, but neither does protectionism. Free trade can reduce jobs in inefficient industries, but it frees up resources to create jobs in efficient industries, raise overall wages and improve living standards. On the other hand, protectionism tries to protect jobs that the market does not maintain, to the detriment of more innovative industries. Outsourcing jobs in developing countries can become a trend with a free trade area. Due to the lack of health and safety legislation in many countries, workers may be forced to work in unsanitary and below-average work environments. This is why international trade rules established in free trade agreements (FTA) must be used strategically. Free trade agreements should stimulate trade between two or more countries. The six main advantages of strengthening international trade are: The reality: the only beneficiaries of trade restrictions are inefficient enterprises and the special interests that work towards this protection from competition.
The specific categorization of products (SPC) permanently frees sensitive products from liberalisation. In a scenario where the sector with the highest current tariff revenues would be excluded from liberalization, UNCTAD simulations estimate a long-term wealth gain of $10.7 billion. Revenue is expected to fall to $3.2 billion (or 7.2% of current customs revenue). GDP and employment growth are expected to increase by 0.66% and 0.82% respectively. Intra-African trade is expected to grow by 24%, while Africa`s trade deficit will fall by only 3.8%. (6) A better solution than protectionism is to include regulations in trade agreements that protect against inconvenience. Another thing about a free trade area is that everything that is imported from outside generally cannot be freely traded within the zone. For example, two countries that are members of a free trade area, such as the United States and Mexico, are waiving each other`s tariffs. For example, if the United States imports bananas from South America, they can apply a number of tariffs. Reality: it is the overall level of trade – exports and imports – that most accurately reflects American prosperity. Wealth is defined by the breadth and diversity of what Americans can consume.
More exports increase prosperity only because they allow Americans to buy more imports and encourage more non-Americans to invest in America, which helps the U.S. economy grow. The restriction of imports makes Americans less well off. UNCTAD is also assessing the impact of the agreement on subsector employment (Figure 4). Please choose topic: Deloitte Tohmatsu Consulting LLC and show Compass`s Free Trade Trial in your post. Despite the many benefits this agreement will bring, it is expected that not all countries will benefit in the same way from the free trade agreement. While the expected average GDP growth is around 1%, growth in some countries is expected to be above 3%, while in some others, contraction is expected (Chart 5). Chart 6 shows that, in the PSP scenario, fewer countries suffer customs losses of more than 20% than the full scenario of the FREI trade agreement.
(6) The main conditions for free trade agreements and free trade zones are: the