Perspective On International Trade And Trade Policy
Introduction
International trade and trade policy are interrelated. This is because trade policy affects international trade. International trade and trade policy has become a hot topic in the country. This is because people have different opinion on international trade and trade policy. Some think trade policy has negative effect on international trade. Others think trade policy has no effect. This paper analyzes perspectives of international trade and trade policy.
Perspective of international trade and trade policy
International trade refers to the exchange of goods and services across international border. International trade represents a great share of gross domestic product in many countries. The number of countries involved in international trade has increased. This is because barriers to trade have been eliminated. Before, countries were not able to participate in international trade because of trade barriers. Examples of barriers to international trade include tariffs, quotas and non tariff barriers. The barriers affected trade differently. A tariff is a tax that is imposed on imported goods while a quota is a limit on the amount of goods a country is allowed to export. Tariffs and quotas have adverse effects on trade. Both tariffs and quotas raise the prices of goods that have taxes and quotas imposed. On the other hand, tariffs and quotas lower the demand for goods that have tax imposed or quotas. This leads to low profits in the country. Apart from tariffs and quotas, non tariff barriers like regulations affect goods being imported or exported (Smith, 2002).
Countries found it hard to carry out free trade because of trade barriers. Some countries used quotas to limit the amount of goods imported so as to achieve advantage over other countries. Tariffs and quotas have similar effects. This is because they limit the amount of goods imported and protect consumers in the country from being exploited. Tariffs raise the prices of goods in the market and lower the demand for goods and then supply of goods. Also, a supply limits the supply to certain amount and this raises the process and lowers demand. Most countries were unable to participate in international trade because of trade barriers. The countries were restricted from exporting products because of tariffs and quotas (Smith, 2002).
International trade has expanded for the last two decades. This is because of elimination of trade barriers. Both developing and developed countries have participated in international trade. The countries have developed trade policies to govern international trade. Trade policy is a set of rules and regulations that relate to trade. Every country has established trade policy that is appropriate for the country. The main aim of a trade policy is to help international trade run well. Trade policy helps trading partners set clear goals that they can attain. For example, US has established trade policy to govern international trade. The trade policy includes tariffs, quotas and regulations. Most countries have come together to form trading unions. This is to eliminate the effects of trade barriers. International trade is important as it helps countries import what they do not have. It also allows countries to export goods to other countries. International trade has helped improve economic situations in most countries. This is because countries benefit a lot from international trade (Zampetti, 2006).
International trade and trade policy has become a major issue in many countries. People have different views on international trade and trade policy. Some think some countries are not working to promote international trade because of their trade policy. Others think countries are working to enhance international trade. A large percentage of citizens think that countries are not promoting international trade. This is because the countries have established trade policy that does not allow other countries to participate in international trade. Most countries have developed policies to govern import and export of goods in the country. For example, countries have developed tariffs and quotas to prevent trade in the country.
The countries have imposed tariffs on imported goods so as to protect consumers in the country. People in the country are not able to import goods from other countries. The tariffs have increased the prices of goods imported and lowered the demand for the goods. This in turn has lowered the supply of goods in the country. Most countries have been affected by increase in trade tariffs. For example, developing countries and some developed countries are not able to compete in the international trade. Superior countries like United States have established trade policy that influences other countries. The trade tariffs have led to slow growth in international trade. The tariffs are likely to affect trade in future if countries do not take the necessary steps to reduce trade tariffs (Zampetti, 2006).
Further, some people think that trade quotas have affected international trade. This is because countries impose quotas on goods and limit the supply of the goods in the country. This leads to increase in prices and low demand for the goods. Developing countries and developed countries have found it hard to trade with superior countries in the world. Powerful countries like United States have also developed quotas that govern trade in the country. The government uses quotas to control supply of goods in the country. This increases demand for goods produced in the country and reduces demand for imported goods. This has led to slow growth in international trade and affected trading partners (Zampetti, 2006).
The country has also established other regulations that govern trade in the country. The regulations have had negative effect on international trade. This is because policies in one country affect international trade and make it difficulty for other countries to participate. Governments in different countries have developed regulations that govern international trade. The regulations differ from one country to another and they limit the growth of international trade. Some people argue that countries that are powerful like United States have developed regulations that affect international trade (Zampetti, 2006).
Most people in United States think that United States should support the goal of increasing international trade. This is because the country has developed policies that affect international trade. Most people in 2001 supported President Bush in reducing trade barriers so as to ensure countries import and export goods. A large percentage of the citizens wanted the government to eliminate barriers to international trade. For example, the citizens wanted the government to reduce tariffs so as to enhance international trade. Only a small percentage of the citizens thought that there was no need to eliminate trade tariffs as they protected citizens. Some people thought that reducing taxes on imports can help promote international trade (Zampetti, 2006).
Other people argued that they were pleased by US role in international trade and there was no need to reduce trade tariffs. A large percentage of the residents argued that the government should improve trade by encouraging globalization (Zampetti, 2006).
The world trade organization was formed to eliminate barriers to trade. The organization was formed to replace general agreement on trade and tariff (GATT). Most countries came together to form the world trade organization. The world trade organization plays various roles in international trade. The world trade organization helps ensure free trade between countries by eliminating trade barriers. In addition, world trade organization monitors trade policy in the member countries. This is to ensure their no countries that affect trade between the member countries. This is by reviewing the trade policy in different countries. The member countries are required to review their trade policy. This prevents trade tariffs, quotas and government regulations from hindering free trade. The world trade organization negotiates with member countries so as to lower tariffs and eliminate quotas. This is to enhance international trade in the world. GATT also performed the same roles as world trade organization (Zampetti, 2006).
Some people argue that world trade organization does not encourage free trade between countries as the practices have affected international trade. Though the world trade organization is aimed at promoting free trade, the organization encourages other policies that hinder international trade. For example, WTO encourages countries to use retaliation measures to punish countries that do not conform to the rules set by the organization. If a country fails to lower trade tariffs or quotas, then other countries are allowed to raise their tariffs so as to punish the member country. Most people have criticized the WTO as it interferes with international trade instead of promoting it. The organization helps eliminate trade policy that slows international trade. Currently, the organization does not encourage countries to develop effective trade policy. This is because powerful countries force other countries to comply with the measures set. The world trade organization needs to change trade policy in different countries so as to encourage international trade. The organization should work hard to lower the trade tariffs, quotas and remove regulations that affect traded. This will improve international trade (Zampetti, 2006).
Conclusion
International trade involves selling and buying of goods. Most countries have engaged in international trade. This is because it contributes a lot to the gross domestic product of the country. Most countries have experienced difficulties when trading with other countries. This is because of trade policy. The trade policy has interfered with international trade. For instance, countries have raised tariff rates so as to reduce demand for imported goods. Increasing tariffs increases the prices of goods in the country and interferes with international trade. Others have used quotas to control the supply of goods in the country. This has had negative impact on international trade. Government regulations and other regulations have also affected international trade.
The world trade organization plays an important role in reviewing trade policy in member countries. The organization helps eliminate trade policy that hinders international trade. Most people have criticized the organization for encouraging retaliation tariffs. The tariffs affect international trade and slow the growth of international trade. Most people argue that the organization should change its policy framework so as to ensure countries participate well in international trade and they do not affect each other. Moreover, people claim that countries should reduce trade tariffs and quotas so as to encourage international; trade. This will encourage free trade among member countries in future.
Reference
Zampetti, B.A (2006).Fairness in the world economy: US perspectives on international trade relations. Edward Elgar Publishing
Smith, E.V. (2002).Perspectives on international trade. Nova Publishers
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