Definition and Benefits of Free Trade

The terms free trade, free markets, or open markets are certainly often heard in the public especially in recent years. The discourse that Indonesia immediately follows the free trade has been carried out by various parties for a long time, although there are still pros and contras to follow. There are those who argue that Indonesia must implement free trade right now, and there are also those who argue that our country is not ready to follow it.

However, like other economic policies, free trade also has the advantages and disadvantages that we will discuss here. Basically, free trade is the freedom for businesses to sell their products abroad without trade barriers. These trade barriers include the policies of a country's government regarding taxes, import quota, customs, etc. that are made to prevent foreign producers from selling their products.

The products are not only limited to goods or services, but also include labor and capital flows. Free trade will allow companies from one country to establish a branch of their company in another country. Workers from a country can also find work in other countries with little or no obstacles.

A simple illustration of free trade is a market that can be entered into more broadly and beyond the territorial boundaries of a country.

The Benefits of Free Trade

From the explanation of free trade above, we can find out that there are advantages and disadvantages of applying the policy to a country. However, in here only the benefits of free trade will be discussed such as:

Meet the Country's Needs

One of the advantages of free trade is being able to meet the needs of a country. Free trade allows the country to import products with more affordable price.

Improve Product Quality

Another advantage of free trade is that it can improve product quality. Free trade triggers business people to improve the quality of production due to wider competition, namely the international market. In order to be able to compete and survive in the sector, business people must make innovative and creative breakthroughs and improve quality.

Open New Jobs

Other advantages of free trade are opening new jobs. Free trade is not only for goods or services, but also labor and capital. So foreign companies that set up branches in other countries can absorb existing labor in the country, thereby reducing the number of unemployed people. In addition, competent labor can also get a job in other countries and not only in their own country. So free trade also not only helps the country but also helps the community's resources.

That is the definition and advantage of free trade. Now with the advent of free trade, it means that domestic producers must also increase their production. Sector expansion is also needed to increase production.

One of the largest industrial centers in West Java is Karawang New Industry City. As one of the industrial estates in West Java, KNIC is an industrial area that has used the latest technology that is useful for increasing production.

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