Free Trade: A Path towards Development

As for definition, Free trade is a trade in which countries around the world carry out
commercial transactions 'without limitations or barriers, such as foreign trade tariffs, obstacles to
market entry, and policies (Johnston, Gregory, & Smith, 2011, free trade). Theoretically, free
trade was a way to break down barriers to international, remove taxes, and enable prices to be
naturally set by supply and demand. According to the World Trade Organization (2010), this
gives the underprivileged countries like the Philippines the opportunity to focus on the
production of goods that obtain from their natural resources and the environment with the
capacity to sell the same goods to the developed world, while at the same time being able to
purchase back goods which may not be produced in their home country. Free trade offers several
benefits to countries, especially those in the developing stage. In connection to free trade, last
November 03, 2019, According to the article of ABS CBN News, during the Opening Ceremony
of the 35th ASEAN Summit in Bangkok, it was discussed that the Philippines is set to benefit
from the China-led free trade pact, as the China-led Regional Comprehensive Economic
Partnership or RCEP will 'integrate' all existing free trade agreements in ASEAN, profiting its
members in the long run, and the Philippines could even reap 'incremental' gains based on what
'additional access' a regional free trade agreement would bring, as an analyst said. And also, a
free - trade pact will also open up a wider market for foreign trade, whilst also motivating growth
in infrastructure, energy, and technology-based industries. But the question, will the agreement
result in positive and significant advantages for the people of our country or it will worsen the
situation?
This may make it look "heartless" to losing sectors, but whether one supports free trade
or protect local trade, there will always be winners and losers. In my personal view,
hypothetically, as I address the article, free trade is meant to remove partial barriers to trade and
to increase the economy not only in developed countries but also in developing nations alike. In
a free trade agreement, both economies can encounter accelerated growth rates technically. As
such, sellers and buyers from different economies may exchange voluntarily without any of the
domestic government applying tariffs, quotas, incentives, or restrictions on their products and
services. Free trade enables the accumulation of products and services by domestic workers and
gives them a significant advantage. Free trade has had done more good deeds by giving positive
impacts on making a formidable link between the different economies and continents in the
world
Free trade has been established for countries such as Japan, South Korea, China, other
East Asian countries, and most advanced countries around the world. Trade liberalization has led
to the development of these countries and the achievement of their present level of 'developed
countries' in the world. The countries formed 'free trade and economic partnership contracts that
helped to facilitate cross-border trade negotiations' were important for facilitating trade, tech
assistance, services, social and environmental issues (Zeng, 2010 p. 651). It has helped countries
to engage in trade in a specified area that has prevented them from exploiting each other in terms
of natural resources. As a result, the countries have made progress. This has also worked for
underdeveloped nations, such as those in Asia-Pacific countries and Saharan countries. Increased
revenues for these countries are channeled to the development of such infrastructure projects and
the improvement of social services for citizens. Besides, foreign direct investment creates
employment for domestic workers, helping developing nations to reduce their unemployment
rates. This is one of the achievements that has greatly contributed to the shift from
underdeveloped to developed countries. For example, foreign investment has contributed to
China's development. China is one of the developing countries with the largest foreign direct
investment reserve (Chen, & Emile, 2013 p. 120).
Also, developing countries like the Philippines often advance and depend on their
economy through strategic free trade agreements. 'Developing countries' is a broad term.
According to a widely used definition, a developing country is a nation with low levels of
economic resources and/or low living standards and cannot withstand with no such notice (Vitez,
O., February 2019). Developing countries can benefit from free trade by increasing their size or
access to economic resources. In general, nations have limited economic resources. Economic
resources include land, labor, and capital. Land represents the natural resources found within the
borders of nations. Developing countries with friendly neighbors may also be able to import
goods more often than not. Imports from neighboring countries ensure a constant flow of goods
that are readily available for consumption (Vitez, O., February 2019). Stronger foreign relations
are usually the unintended result of free trade. Developing nations are often subject to a global
threat. Developing strategic free trade relations with more powerful countries can help ensure
that a developing nation has extra protection from international threats. Developing countries
could also use free trade agreements to improve their military strength and internal infrastructure,
as well as to improve them politically. Free trade allows developing nations to fill the gaps in
their production processes. Individual citizens may also visit foreign nations to increase their
education or experience in specific methods of production or business (Vitez, O., February
2019).
As for the new China-led free trade pact issued by the government, it has significant
benefits as such that China is one of the developing countries with the largest foreign direct
investment reserve (Chen, & Emile, 2013 p. 120). China has enticed many foreign investors due
to decreased market barriers such as 'uniform tax for domestic and foreign investors' and free
trade increasing its gross domestic product (Davies, 2013 p. 11). As a result, China's economy
has steadily grown, making it one of the most developed countries. This has shown how to trade
liberation has had an impact on the development of countries through a trade deal that
encourages foreign investment. Also, according to the article of ASEAN Briefing (2017), China
was the second-largest trading partner in the Philippines in 2015 with a total trade value of US$
17,646 billion or 13.6 percent of the total trade between the Philippines and China. There were
huge trade advantages for the Philippines, during President Duterte's visit last year, as he
completed a State Visit to China, securing investment and credit line pledges of US$24 billion,
or almost double the initial quantity identified. Only at the time, Trade Secretary Ramon Lopez
said that the total amount would include US$ 15 billion in investment projects and US$ 9 billion
in credit facilities. Earlier estimates put the total mega deal at US$ 13.5 billion.
 In a paper entitled 'Good Trade Liberalization under the ASEAN Economic Community:
Effects on the Philippine Economy' published in the Philippine Review of Economics (PRE) in
December 2015, authors Dr. Ramon Clarete (UPSE) and Philip Arnold Tuano (AdeMU)
examined the economic impact of the liberalization of trade in goods in ASEAN. The Global
Trade Analysis Project (GTAP) model was used to assess the impact of the ASEAN Free Trade
Area (AFTA) in 1992, the results of the Philippines study showed the following that Thirty-six
of the 40 industries that imported goods were able to benefit from this compared to the 16
industries that export. However, the gains were much greater than the losses of the other
industries. Wages of both skilled and unskilled labor, capital cost increased, while land rent
decreased. Free trade helps to create more goodwill not just in trade and investment, but also in
the mobility of foreign workers/managers and tourists across countries through even more
cultural and educational. And lastly, the Philippines received some 237 million dollars,
equivalent to 0.05 percent of GDP, as a result of the liberalization of trade in goods under the
AFTA. However, in FDI net inflows, the Philippines reported an increase of almost four times in
just 10 years. Vietnam and Singapore have benefited the most in the southern region, while
China and Hong Kong continue to attract large FDIs. In labor remittances, China is #1 in the
world, while the Philippines is #1 in ASEAN and #4 worldwide, perhaps alongside China, India,
and Mexico. The Philippines has also reported that its international tourism revenues have
increased by more than twice.
Also, Free trade allows free movement of labor and capital across countries and regions.
Free labor and capital movements ensure that the countries covered by the trade treaties can
acquire the necessary factors of production for their enterprises, which will help them to improve
their productivity and output. Some countries in Europe suffered labor shortages at the end of
1950, while others experienced high levels of unemployment. For example, Italy experienced
economic problems, such as high unemployment, while other countries, such as Germany, had a
lack of different types of work and a shortage of experts (Zaiceva, & Zimmermann, 2008 p. 429).
As for our fellow OFW, Free trade helps to solve the problems of unemployment in our country
by allowing the free movement of people from our countries to more developed countries where
they can work. This, in turn, helps us reduce unemployment and achieve their economic
objectives through increased income from abroad. As a result, people's incomes are increasing,
resulting in improved living standards for people in developing countries. Free movement of
labor created employment, increasing the economic status of people, which was a greater
achievement of the country's economic objectives of reducing unemployment (Nicoleta, &
Camelia-Daniela, 2011 p. 303).
But based on the article of Leon Teeboom (2019), Free trade is driving the growing
global greenhouse gas problem, because workers in developing countries end up producing
goods at a much lower cost and under lower working conditions, generally using older and dirtier
energy sources, such as oil and coal, Hornborg argues. This happens as economies worldwide
consume more of the planet's declining natural resources and fail to develop clean fuel
technology, such as solar and wind power. Also, putting all these factors together – job losses,
economic imbalances, deplorable working conditions, and environmental degradation – and free
trade falls on the negative side of any economic equation: it is bad for job growth, bad for
working conditions, bad for global equality and bad for the environment if not properly run and
dominated by developed countries.
Nevertheless, there is no doubt that free trade has benefited our economy as it has
launched up many new markets in the world. Free trade has provided customers the opportunity
to obtain higher quality products and services at lower prices. It can be concluded from the
discussion that free trade has been a reality for developing countries since it has made a
significant contribution to the development of current developed nations. Also, with the aid of
the developed countries, developed countries like the Philippines can achieve such an increase in
their net economic growth. Therefore, based on my personal view, I believe that free trade has
had a positive impact on developing countries as it has aroused their economic development
goals and free trade has therefore been an accurate aspect for developing countries.

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