What Are the Setbacks of Trade Agreement

Trade agreements are formed between countries to facilitate trade and investment opportunities, promote economic growth, and create jobs. While trade agreements have their benefits, they also come with their setbacks. In this article, we will delve into some of the setbacks of trade agreements.

1. Job losses in certain industries

One of the primary concerns with trade agreements is that they can lead to job losses in certain industries. When countries open up their markets to foreign competition, it can lead to domestic businesses being unable to compete. As a result, they may be forced to close down, leading to job losses. This can be particularly problematic for industries that are heavily protected by tariffs and other trade barriers.

2. Negative impact on small businesses

Trade agreements can also have a negative impact on small businesses. Small businesses often struggle to compete with larger companies, but with trade agreements, they also have to compete with companies from other countries. This can lead to smaller businesses being forced out of the market, unable to keep up with the competition.

3. Environmental concerns

Trade agreements can also have negative impacts on the environment. When countries engage in free trade, they often prioritize economic growth over environmental concerns. This can lead to environmental degradation, as countries seek to increase their exports and exploit their natural resources. For example, a trade agreement could lead to logging or mining companies being given greater access to protected areas, leading to the destruction of habitats of endangered species.

4. Loss of sovereignty

Trade agreements can also result in countries losing their sovereignty, as they are forced to follow the rules set out by the agreement. This can limit a country`s ability to create its own laws and regulations, as they have to adhere to the terms of the agreement. Furthermore, some trade agreements allow corporations to sue governments if they feel that their profits are being threatened by new laws or regulations.

5. Unequal distribution of benefits

Trade agreements can also lead to an unequal distribution of benefits. While some industries and businesses may prosper, others may suffer. Furthermore, the benefits of trade agreements may not be equally distributed among different sections of society. For example, trade agreements can lead to an increase in low-cost imports, which may benefit consumers but may also harm local producers and workers.


Trade agreements have their benefits, but they also come with their setbacks. As countries negotiate new trade agreements, it is essential to consider the potential drawbacks and work to mitigate the negative impacts. By doing so, countries can ensure that trade agreements promote economic growth while also protecting workers, the environment, and other important societal values.