Free Trade And Trade Agreements

1738 WordsNov 12, 20157 Pages
Introduction Free trade strikes when there are no obstructions placed in the way by governments to limit the drift of goods and services between trading nations. When there are barriers to trade, likes of tariffs and subsidies, its sole purpose is to shelter domestic producers from international competition and transmit, rather than create trade flows. Free trade is way to create wealth for many countries and the citizens of all participating nations by giving the consumers the opportunity to buy more, Better quality goods at low costs some of the known examples of free trade agreements NATA 1994, AFTA 1992 and various European union trade agreements etc. All these agreements played a vital role in economic growth for a nation, improved…show more content…
It delivers goods and services to those who value them the most. It helps the two nations to gain from specializing in the producing those goods and services they do best. It is called that the law of comparative advantage. Where producers produce goods, which they are skilled at, for example Germans producing beer and the French producing wine, those goods increase in abundance and quality (Tupi 2006). Trade allows consumers to benefit from more efficient production methods. For example, without large markets for goods and services, large production runs would not be economical. Large production runs, in turn, are instrumental to reducing product costs. Lower production costs lead to cheaper goods and services, which raises real living standards (Tupi 2006). Free trade promotes innovation and competition; it provides Gate to a larger variety of goods and services is the purpose of trade. Imports, then, are not a disadvantage, a necessary evil for the good of exporting. One exports so that one may acquire goods and services in return (Froning 2000). Free trade usually improves the quality of life for countries citizens. Nations can import goods that are not already available within their country. Importing goods may be cheaper for a developing country than attempting to produce consumer goods or services within their borders. Many developing nations do not have the production processes available for converting raw materials
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