Smallbusiness.chron.com. (2017). Negative effects of free trade. [online] Available at: smallbusiness.chron.com/negative-effects-trade-5221.html [Accessed May 8, 2017]. 1.1 Problem The purpose of this document is to describe and analyse the impact of trade agreements and sugar imports on the US sugar market and on the US sugar programme. 1.2 Background Given that the United States produces domestic sugar from both the sugar cane and sugar beet industries, the United States is one of the largest sugar producers in the world and generated more than $4 billion in cash revenue (USDA) in 2015-2016 (U.S. Department of Agriculture (USDA) Economic Research Service (ERS), 2017A. Sugar beet accounts for 55 per cent of production For the above reasons, both advanced and less developed countries have moved away from the policy of unrestricted international trade since the First World War. Such unilateral or unbalanced growth has serious economic and social consequences. When a country pursues a free trade policy based on the principle of comparative advantage in terms of costs, it becomes excessively dependent on the foreigner for the transfer of its production and the import of various products. Such over-dependence harms their interests, both in times of peace and in times of war. Where there are no trade restrictions, there is a risk of a significant influx of harmful and low-quality products from abroad.
The unrestricted importation of these products is detrimental to people`s health and efficiency. This will have the effect of reducing the well-being of society. Given the negative impact of free trade on the welfare function, countries will eventually be forced to take restrictive measures. In such a situation, despite the levying of import duties, country B continues to enjoy a cost advantage over A. The flow of goods from B to A can continue to flow with impunity. At the same time, country A can secure revenues from imports. In this case, the import duty is not contrary to the principle of free trade. In short, free trade policy implies not resorting to direct or indirect restrictions on international trade in goods and services.
Free trade is a trade in which countries engage in economic activities « without restrictions or barriers such as import and export duties, » barriers, and market entry policies (Johnston, Gregory, & Smith, 2011, free trade). Many countries have benefited from free trade, especially developing countries. .