The Deficits of a Free Trade Zone

Complete economic integration is a dream of economists, but that is a long way off. Many countries simply do not have the capital or the gross domestic product to be on an equal footing with the larger countries in the world, such as the United States or the United Kingdom. These under funded and economically challenged countries have turned to specialized free trade zones as a way to help boost their economy. A free trade zone is an area where there are limited taxes or tariffs placed on exported goods, as a way to entice industries into "setting up shop" within their country.

There are problems that arise with a trade deal involving free trade zones, such as with the skilled trades coming from the areas within these types of countries. One such criticism is that there are dirty politics afoot. Huge benefits are given to incoming businesses and industries, while domestic industries suffer. This form of corruption in government is forcing smaller industries under, as the larger companies move in to do business.

In most free trade zone areas and the stock trades that are open for business there, the wages are so significantly lower that outsourcing is occurring in many nations. Take for example the many "call centers" in the United States. Corporations have found that by outsourcing their call centers to foreign countries such as India, they can save money since hourly wages are a fraction of what they are here. This translates into big revenues by the outsourcing company and a loss of domestic jobs.

Why would a country not want to set up a trade deal in an export processing zone, where they would not have to worry about high tariffs and taxes? They can relocate their factories there and not have to worry about government interference in the form of high taxation. However, when huge industries move out of an area, this leads to a huge deficit in the economy and can lead to a recession. These are but a few of the issues that need to be kept in mind when politicians are discussing free trade with an export processing zone area within a foreign country.

You absolutely need to stay informed of how a free trade zone affects your line of work. Many people thought they would not be affected only to find their jobs being moved to another country. By staying in the know you can make informed decisions and stay abreast of local developments and know about current laws that affect you personally.

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