International Trade & Contemporary Trade Policy (Essay Sample)
Demonstrating your understanding of international trade theory and the contemporary context of trade policy, critically discuss the benefits of free trade and explain why protectionism and impediments to trade continue.source..
International Trade Theory & Context of Contemporary Trade Policy
Trade between or among different countries takes a lot of factors into consideration based on the type of exchange involved in the transactions. Like in domestic or any other type of trade, countries engage in this type of trade with the sole purpose of maximizing profits. However, the dynamics change at the international level, and certain principles are guiding the trade transactions should be taken into consideration due to the increased cost of cross-border trade. International trade theory tries to analyze the principles guiding international trade through models designed to address the specific concerns arising during various transactions from this trade. However, the principles can prove to be a challenge to the transacting parties as they give birth to contemporary trade policies aimed at promoting and regulating or controlling international trade. Trade policies can serve either two countries, at a bilateral level, or more than two on a multilateral stage which can also include economic integration of particular regions through central organizations built on mutual understanding among the nations within the area covered.
Discuss the benefits of free trade
Globally, trade is becoming free of barriers at a steady rate. Countries and regions are fast recognizing the benefits which accrue as a result of free trade. “Nations are almost always better off when they buy and sell from one another”. Free trade is applicable in various fields, and countries can, therefore, diversify. Some of the obvious benefits of free trade are that it helps in the removal of trade barriers between countries and makes it possible for nations to sell and buy products from other countries freely. Despite the obvious benefits of free trade, some people tend to believe that it is not good for the economy of a nation. Most of them postulate that free trade damages production of goods domestically which is a valid point. However, one can also opine that through free trade, countries and industries get engrossed in competitive battles which further lead to the production of high quality products for the consumers. Many countries globally hence aim at producing quality goods at a relatively cheaper price for the consumers. The benefits of free trade are quite pronounced and will be discussed in depth.
One benefit of free trade is that it helps or leads to the removal or reduction of trade barriers. Free trade has helped immensely in the removal of trade barriers between countries which engage in it. Subsequently, nations are able to trade freely with other nations. Subsequently, the removal of trade barriers opens doors towards the access of new markets.
* Access to new markets. Free trade allows the establishment of firms owned by foreigners in other countries. It also permits n
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