Int Trade Essay Example | Topics and Well Written Essays - 1500 words

Int Trade - Essay Example As a result, these countries choose to trade domestically or locally. To note, international trade brings in more income to a country than local trade (Organisation for Economic Co-operation and Development, 2009). When a country engages in international trade, it could have the greatest number of customers as well as investors. A substantial amount of income could be expected. In such case, it is proper to review the current international trade policy of the world towards an equal opportunity for countries to grow and develop. The freedom to trade or free trade shall be thoroughly discussed and analyzed. Free Trade Free trade is defined as an economic system wherein labor, goods and capital flow freely between countries without barriers that could hamper the trade process (Smith, n.d.). This means that a country could trade whatever goods and services to other nations. There is equal opportunity to trade for the participating countries. There is no barrier such as tariffs, import qu otas and taxes (Smith, n.d.). In other words, there is no intervention from the government (Anon. â€Å"What’s,† n.d.). The area in trade is open to everyone who is interested. There is no restriction of some sort. This economic policy allows foreign individuals and companies to trade smoothly and efficiently as the domestic producers (Smith, n.d.). Stated otherwise, in this system, both the foreign and domestic producers have the same autonomy with regard to trade. They both have the same rights in trading. For nations to apply this system, they make free trade agreements (FTAs). Countries actually adopt this economic policy for economic and political reasons. According to Arnold Miller (2004), there is easy â€Å"access to one another’s markets† if free trade agreement is formed. This is logical since in FTAs, members are prioritized. This is to say that a free trade agreement creates a reciprocal obligation between the members (Organisation for Economi c Co-operation and Development, 2005). A member is obliged to observe the free trade rules all throughout the life of the agreement. If a member grants free trade rights to another member, the other member is also obligated to accord the same right. In another aspect, there are countries which decide to form an FTA to encourage investment liberalization and trade (Miller, 2004). Developed and developing countries usually create FTAs under this reason. Politically, FTAs are used to reaffirm and strengthen relations between countries (Miller, 2004). For instance, the United States of America created an FTA with Israel in 1985 as a sign of economic cooperation and strong relation (Hassanien, 2010; Bard, n.d.). Basically, to make trade completely free would create an economic system wherein all types of government protection and intervention would be absent and borders would be open to â€Å"unlimited amounts of imported goods† (Anon. â€Å"What’s,† n.d.). It is con tended that the result of such trade policy would be very beneficial to developed and industrialized countries. It would be easy for such countries to introduce and market their products to the domestic producers. On the other side, as to the developing countries, allowing a trade which is completely free would cost them inequality and poverty (Anon. â€Å"What’s,† n.d.). Take for instance, countries such as Nepal, Haiti, Zambia, Peru and Mali have adopted free trade in their