In terms of how international trade affects societies, it could be said that there are more pros, as international trade gives smaller economies a chance to open up to world trade. However, there are social costs introduced. Social costs are defined as the private costs and the externalities. Only individuals cannot be considered in decision making, international trade will affect the society and this is social cost. For instance, where international trade increases externalities in the form of environmental damage, then there are social costs associated with recovery. Another important factor is the use of labor conditions. These are found to be human resources available for international trade. In some nations, they can be so exploited that it leads to the process of the weakening of labor unions in the different nations. Therefore, social costs are not just associated with the environment but also with respect to other work aspects such as unionization etc.
While international trade is important, it has to be sustainable and balanced for the benefits to exist in the long term.
Some categories of environmental damage and social costs that are associated with a company involved in free trade could be made as the responsibility of that company. For instance, if company A has potential externalities, and has rights to a depletable oil resource, then that company has an onus of responsibility to use the oil responsibly. Legal fees and regulatory reforms can be imposed on the company. This is a solution implementable on the local level in international trade to reduce environmental impact and social costs. However, this cannot be a strong solution, as sometimes poor countries lack the resources to enforce laws. In such cases, an international agreement or enforcement strategy works better.
Border enforcement taxes could be applied to such countries where there is exploitation of environment and where there are high social costs. Green tariffs and import barriers could be applied to enforce sustainability in practices. Carbon equalization sanctions, trade sanctions and controls will be applicable on the international level.
Despite these regulatory standpoints at the local and international level, enforcement disadvantage still exists. Most countries sign up stating their commitment to regulate but are not penalized for not complying, so environment and social costs remain high. Some form of penalization in regulations has to become applicable. Locally, criminal laws should combine with land and environment conservation laws.