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Tugas 2 ADBI 4201

Free trade agreements (FTAs) are legally binding accords that eliminate tariffs and barriers, promoting economic growth and consumer access to diverse products. Historically, the concept gained traction with David Ricardo's theory of comparative advantage, leading to increased efficiency and global competitiveness. Modern FTAs, exemplified by the European Union, have shifted trade practices from protectionism to fostering international commerce, with expectations of accounting for over 50% of global trade by 2030.

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12 views1 page

Tugas 2 ADBI 4201

Free trade agreements (FTAs) are legally binding accords that eliminate tariffs and barriers, promoting economic growth and consumer access to diverse products. Historically, the concept gained traction with David Ricardo's theory of comparative advantage, leading to increased efficiency and global competitiveness. Modern FTAs, exemplified by the European Union, have shifted trade practices from protectionism to fostering international commerce, with expectations of accounting for over 50% of global trade by 2030.

Uploaded by

Argagandung Permadi
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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A free trade always benefits a country's economy.

Some argue that free trade boosts economic growth, lowers consumer prices, and increases
market access for businesses. Others believe it can harm local industries by exposing them to
excessive foreign competition, leading to job losses and factory closures. Do you agree or
disagree with this statement? Support your argument with examples.

I Agree for the Agreement because A free trade agreement (FTA) is a legally binding
accord between two or more countries to eliminate tariffs and other barriers on traded goods
and services, facilitating the free flow of international commerce. The FTA aims to boost
economic growth by allowing businesses to specialize in production based on their comparative
advantages and providing consumers with access to a wider range of high-quality and
competitively priced products.

Historically, free trade can be traced back to the 15th and 16th centuries, during which
European merchants formed trading companies to reduce the costs associated with importing
and exporting goods across borders. However, protectionist policies dominated international
economic thought for much of the following centuries, with mercantilism becoming a popular
theory that advocated restrictive trade practices aimed at accumulating national wealth through
exports.

It wasn’t until the publication of David Ricardo’s influential book, “On the Principles of
Political Economy and Taxation,” in 1817, that free trade gained significant traction among
economists. Ricardo championed the idea of comparative advantage, which holds that countries
can benefit from specializing in producing goods for which they have a lower opportunity cost,
leading to increased efficiency and overall economic growth.

In modern times, FTAs have become an essential tool for nations looking to expand their
trade relationships, create jobs, stimulate economic development, and increase
competitiveness on the global stage. With more than 300 FTAs currently in effect around the
world, they represent a significant shift from the protectionist policies of the past and are
expected to account for over 50% of global merchandise trade by 2030.

The success of free trade agreements is demonstrated through numerous real-world


examples, such as the European Union (EU) and the United States’ various bilateral and regional
FTAs. The EU, which began as a six-member coal and steel community in 1957, has since grown
into a single market of 27 countries with over 500 million people. The EU’s common external
tariff eliminates trade barriers between member states while setting a uniform tariff for non-EU
countries, fostering a unified economic entity that enables the free flow of goods, services, and
capital.

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