Free trade and globalization are becoming increasingly unpopular in wealthier countries, with low-skilled people bearing the brunt of the consequences
Free trade in simple terms means that countries can do business among themselves without any restrictions and barriers. The credit of origin of globalization, which is a wider socio-economic process, goes to the very idea of free trade.
The supporters of free trade believe least economic barriers there will be in the world, the more each country integrates itself into the international market. The whole world will increase its wealth more and the society as a whole will benefit.
However, protectionism is against the idea of free trade. Under this, countries levy huge taxes on foreign goods to make them more expensive, so that the home-made goods are promoted in local markets with the objective of self-sufficiency. Under the protectionism, the domestic industries are kept aloof of foreign influence.
Dwindling support for free trade and globalization
In the present times, free trade and globalization are becoming increasingly unpopular in the wealthy countries and low-skilled workers are mostly affected due to this change.
There has been significant decline in support for free trade and globalization from 2002 to 2008 in Japan, the US and other European nations. In many countries, political leaders also began to campaign against free trade, globalization and immigrants. The rise of Donald Trump and Boris Johnson are some of the examples of this new opposing wave.
The main narrative against the idea of free trade is that globalization has only benefited the countries with cheap labour force.
The ex-US president Donald Trump had alleged that all American jobs are being stolen by the Indians, Chinese and Mexicans. France leader Marine Le Pen also claimed that free trade with developing nations had a devastating impact on French and European industries and millions of Europeans became jobless as a result.
Validity of claims opposing free trade and globalization
Free trade allows enterprises to relocate the production units to those countries with cheap labour workforce.
After decades of growth and development in rich countries, significant working population there enjoys better lifestyle who demand higher wages. Given this, big brands and multi-national companies establish their production houses in China, Vietnam, Bangladesh and India where they get cheap labour force. This becomes possible only due to free trade.
So, the argument is that the labour force in the US and rich nations becomes jobless.
Some brands even produce the goods at cheap costs and venture in new markets with disruptive prices. This affects the local producers of that particular market.
Due to the competition from big companies, the goods produced by the local companies become costly and are ultimately forced to shut down their units. As compared to the big companies, the local companies use manual processes of production with low skilled workers. So, when these local units shut down their units, lakhs of workers become jobless.
Big MNCs use automated production process which require high skilled workers, so there is no place for low skilled workers.
Under free trade system, workers often work in inhumane conditions and MNCs exploit them. These also exploit weak labour laws in less developed countries.
In order to bypass the labour laws, MNCs prefer to hire workers on contractual basis rather than regular basis or resort to production outsourcing in order to avoid paying social security benefits to workers.
The workers working in smaller industries do not have access to social security and they live in poor conditions. The collapse of garment factory in Bangladesh in 2013 is the prime example in this context. The factory used to make garments for big brands.
So, can we blame free trade for such tragic conditions? Can rich countries blame the poorer ones for such accidents? This is a question to ponder over and seek answers to.