Disadvantages of Free Trade Agreements
The biggest criticism of free trade agreements is that they are responsible for job outsourcing, which is where we will start with the list of disadvantages:
1. Increased jobs outsourcing. Why would that happen? Reducing tariffs on imports allows foreign companies to expand and hire workers. Low-cost imports make it difficult for U.S. companies in those same industries to compete, so they may reduce their workforce. Many U.S. manufacturing industries that can't compete did, in fact, lose business and lay off workers as a result of NAFTA. Another fact: one of the biggest criticisms of NAFTA is that it sent jobs to Mexico.
2. Theft of intellectual property. Many developing countries don't have the same protection for patents, inventions, and new processes as the United States and the laws they do have aren't always strictly enforced. Companies that take advantage of free trade agreements in these countries often have their ideas stolen. They must then compete with lower-priced domestic knock-offs.
3. Crowd out domestic industries. Many emerging markets are traditional economies that rely on farming for most employment. These small family farms can't compete with subsidized agri-businesses in the developed countries.
As a result, they lose their farms and must look for work in the cities, aggravating unemployment, crime, and poverty.
4. Poor working conditions. Multi-national companies may relocate jobs to emerging market countries that don't have adequate labor protections. As a result, women and children are often subjected to grueling factory jobs in sub-standard conditions.
5. Degradation of natural resources. Emerging market countries find their timber, minerals and other natural resources depleted as the multi-nationals move in. Without environmental protections, deforestation and strip-mining reduce their jungles and fields to wastelands.
6. Destruction of native cultures. As development moves into former pristine areas, indigenous cultures can be affected as local peoples are uprooted and often killed.
7. Reduced tax revenue. Without import tariffs and fees, many smaller countries must find ways to replace that revenue.