The Case for Free Trade

Brainstorm What is “Free Trade”

The Case for Free Trade By trading, nations (or regions) are able to have more goods than they would if each tried to be self-sufficient. Free trade allows world production to be maximized because of the effects of specialization and economies of scale. This makes it possible for every household to consume more goods then it could without free trade. Agriculture is an example of the effects of economies of scale. –Agriculture in Canada and particularly in Saskatchewan was able to increase its productivity significantly by varying all factors of production. –In recent years this phenomenon has occurred in other parts of the world with the result that the production of food has outstripped the demand for food.

Cont… There have been three consequences of this success story: –many countries are producing surpluses of agricultural products which they would like to sell somewhere –with the result that the price of food has been driven down –resulting in strong competition between nations for a share of the available market for agricultural products

Ethanol This is not the case today With the push to create an alternative to gasoline, the production of ethanol has increased. What does this mean? –Much of the grain produced is being turned into ethanol, instead of being sold for food. –This means that there is less food, increasing the price of grain and thus increasing the price of food.

The Dilemma What are the problems with the increase in food prices? Where is the balance between keeping food costs down and protecting the environment? What is going to be the next step?

NAFTA Assignment – Find out what NAFTA is and what it’s purpose is? H/O - NAFTA

Discussion Respond to this: “Free trade has increased the standard of living in all nations who engage in these international economic agreements."