ECO610 Discussion 2 Week 2 Trade Policy

The argument in favor of free trade asserts, in its most basic form, that all nations that take part in marketing and do not erect any barriers to it would benefit from getting goods at lower prices and creating more jobs in all countries. This argument is not legitimate and should not be used. The principle of free trade asserts that all countries that participate in it will benefit from reduced prices for goods and an increase in the number of employment available in both countries. It is quite probable that the labor expenses and salaries in that nation are comparable to what they are used to, and the manufacturing is carried out following the laws of that country (Zhao, 2021). The fact that the work is perceived to be compensated cheaply does not make it an improper practice.

I do not believe that it would be appropriate for the nation that is doing the importing to impose a labor standard on other countries because these markets are distinct from one another, and the price of labor is the average price in that labor market, although we may have the impression that it is low-cost labor. Until recently, Chinese employees demanded better working conditions and compensation. It is surprising given that China is renowned as a draw owing to its cheap labor costs and wages.

Because of the problems caused by workers coming forward and voicing their wants, China will transition from an economy with lots of low-cost labor to an economy with higher-cost workers, and it will rely on increasing the number of workers involved in making the products to sustain its economic growth. Since of the impact that the growing cost of labor will have on prices, earnings, and profits, and because some companies may find it less advantageous to have their manufacturing plant in China, China will eventually be forced to rebalance its economy to deal with the situation (Zhao, 2021). The rise in prices can also impact those individuals and businesses who depend largely on imports from China.

References

Zhao, S. (2021). China’s Perceptions Of NAFTA And Changing Roles In The Asia-Pacific. In Cooperation Or Rivalry? (Pp. 225–242). Routledge.