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So we have discussed free trade many time. We know that there free trade has a lot of advantages.

But despite
this fact this policy has never been completely adopted by all the countries of the world and probably will be not.
Lets talk about all visible disadvantages of free trade.
1) Free trade policy works smoothly if all the countries cooperate with each other and follow this policy. But lets
imagine If some countries decide to gain more by imposing import restrictions. As a result the system of free
trade will not be able to work.
2) Economic Dependence. Free trade increases the economic dependence on other countries for certain essential
products such as food, raw materials, etc. Such dependence proves harmful particularly during wartime.
3) Political Slavery. Free trade leads to economic dependence and economic dependence leads to political slavery.
For political freedom, economic independence is necessary. This requires abandonment of free trade.
4) Unbalanced Development. Free trade and the resultant international specialisation lead to unbalanced
development of national economy. Under this system, only those sectors are developed in which the country has
a comparative advantage. Other sectors remain undeveloped. This results in lop-sided development (developed
only from one side).
5) Dumping. Free trade may lead to cutthroat competition and dumping. Under dumping, goods are sold at very
cheap rates and even below their cost of production in order to capture the foreign markets.
6) Harmful Products. Under free trade, injurious and harmful products may be produced and traded. Trade
restrictions are necessary to check the import of such products.
7) International Monopolies. Free trade may lead to international monopolies. It encourages the estab-lishment
of multinational corporations. These corporations tend to acquire monopoly position and thus harm the interest
of the local people.
9) Reduction in Welfare of Certain Groups. While free trade tends to maximize world production of goods and
services, it may simultaneously hurt the welfare of certain group in every country. Under free trade, the output of
those commodities in which the country has comparative advantage tend to increase to meet the export demand,
and the output of goods in which the country has comparative disadvantage contracts due to pressure from
import competition. Thus, the real income of the groups engaged in the export industries will rise and real income
of those engaged in the import competing industries will fall.
10) Harmful to Less Developed Countries:
A. Free trade is harmful for the less developed countries for the following reasons:
B. Competition under free trade is unfair and unhealthy. The less developed countries find it difficult to compete
with the economically advanced countries.
C. Under free trade, gains of trade are unequally distributed depending upon the level of development of different
countries. The terms of trade are favourable for the developed countries, and un-favourable for the poor
countries.
D. Less developed countries generally experience unfavourable balance of payments. The problem of un-favourable
balance of payments cannot be solved under free trade policy.
E. Free trade policy adopted by the British government in India led to the destruction of Indian cottage and small
scale industries.
F. The less developed countries cannot protect their infant industries under the policy of free trade.
G. Free trade may endanger economic and political independence of the backward nations.
Despite the fact that I have only told you about disadvantages of free trade Iam in favour of this policy. It gas a lot
of advantages and we discussed about it many times. I just want we dont forget about all these disadvantages
and do not consider the free trade policy as only one way to rule the world economy.

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