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 Form 4 Business studies lessons and notes on international trade

Disadvantages of free trade area

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Answer Text:
Disadvantages of free trade area
-It may lead to importation of inferior goods and services to the country, as the member country may not be able to produce high quality as compare to other non-member countries
-It may discourage the growth of the infant industries due to competition from well developed industries in other countries
-It may lead to importation of harmful goods and services, that may affect the members health such as illegal drugs
-It may lead to lack of employment opportunities especially where more qualified people have moved from their country to secure job opportunities in the country
-It may lead to reduced government revenue because no tariff may be charged on the goods and services
-A country may be tempted to adopt technology not suitable for its level of development.


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