Disadvantages for trading business if UK becomes free trade zone

Free trade stands for the removal of any barriers, taxes, tariffs and government restrictions on international trade to allow involved countries to exchange particular goods. As it makes export and import relatively easy and inexpensive therefore it is considered to be the best trade option in the UK. It, however also acts like a double-edged sword. Apparently, it is a fair opportunity for all the involved countries but it carries some disadvantages for the UK economy. Few disadvantages are outlined in the following article.

Unemployment

The prime disadvantage of free trade in the UK is that its local market will become dependant on the global imports. For example, wholesale jewellery items are being imported from other countries, if these items are being imported without any addition of taxes or duties, their market price may become less than the jewellery items produced by the local manufacturers. Retailers will prefer to buy imported products than local products. It may lead to a short-term unemployment and local market instability.

Over estimation of Free Trade benefits

The UK economists have over estimated the free trade benefits and related charges. It is not necessary that free trade will bring economic development in all UK regions. It is true that some areas of the UK are more attractive for a greater level of economic development than the others and resultantly it will lead to non-development in other areas. Underdevelopment will surely lead to interrupt country’s gross economy and disrupt the stability built due to the older trading system.

Market Fluctuations

If a country starts free trading with the neighbouring countries, it will automatically gain the global exposure. The UK is also not an exception. If a wholesaler exports wholesale perfumes or wholesale clothing items, he would set the goods prices relative to the global market. If the market price is high, the UK will earn high prices from the export. What if the global market prices for particular products go down? It will surely affect the export values and also the local markets in the form of low wages or ultimately unemployment or further reduction in the prices.
Restructuring of the System

The UK aims to start trading with both developed and developing countries therefore it is an active member of EU and WTO. However, in free trade circle, all countries participate and the members remain in competition with each other. This may lead to restructuring of the systems that is really expensive for every economy. Operational aspects and corporate management setups are also being transformed time to time to catch up with the competitors and win the battle. It ends up as a costly process.

These pointers clearly show that free trading is not an advantageous and profitable option for all countries. However, the extent of disadvantages for any country in free trade is related to its level of technology and extent of competition, especially for the wholesalers.