1) People are one of the major resources in an economy.
2) By opening barriers to trade, people (particularly the poor) are fully exposed to fluctuations in the global economy.
3) This creates macroeconomic instability, diminishing investor confidence in the country due to uncertain expectations.
4) This uncertainty impacts negatively on consumer confidence, hampering economic progress.
5) More importantly, it leads to diminished well-being for people at the bottom of the distribution. The result is social dislocation, further hampering development efforts.
For illustration of (5), one need look no further than the UK, where the prosperity associated with the freeing up of markets in the 17th and 18th centuries puzzled and alarmed contemporary intellectuals. Of course, the persistence of the market system eventually dramitcally raised the living standards of all but not without considerable strain on society in the mean time. In economic terms, social capital was greatly diminished.
We saw the same process in the 1980s when Thatcher's reforms, while celebrated now, wrought havoc on the most vulnerable people in society. Britain still has the second highest inequality of the EU15, one of the highest levels of poverty and the lowest levels of social mobility, all of which can be attributed diminished social capital. To this I would add productivity: people suffering from a break down of community relations are, in general, less responsive to education*, mostly due to lack of incentives for improvement.
Other examples are not hard to find, this blog gives an excellent example from the perspective of AIDS workers in South America:
"Free trade agreements (FTAs) such as CAFTA and AFTA , while purporting to
promote liberty and free enterprise, erode the infrastructure necessary for
basic health care and development. The pharmaceutical patent-related provisions
of these FTAs reduce the safeguards in place (by the major international
trade/intellectual property law, TRIPS) for promoting public health, effectively
blocking access to and use of affordable ARVs in Latin America for those who
need them most."
If those that espouse free trade arguments feel that AIDS will not affect the economy, their economics needs a little amending.
Electorates are often derided for squealing about the freeing up of trade when actually it is the result of rational economic choice. If we accept that social stability is the bedrock of its macroeconomic counterpart, unbridled free trade doesn't seem so economically desirable after all.
*This statement comes with the necessary caveats. There is formal and anecdotal evidence that a large proportion of successful entrepreneurs come from difficult backgrounds.