Assignment:
1. Businesses, employees, and consumers are equally important when it comes to creating trade policy. As the consumer, spending habits affect pricing, selection, and quality of goods available in the market. Economists have base estimates of consumer's gains from trade on the increase in consumption possibilities provided by trade. Presumably, this increase comes from the theory of comparative advantage, which encourages countries to specialize in the production of certain goods and services. The production of these goods and services allows the country to enjoy economic advantages. In addition to the lower cost of the imports, consumers should enjoy more competitive prices from domestic producers, as well as other benefits that are improved to stay competitive such as improved producer efficiency, improved service, and responsiveness to consumers. Trade not only allows consumers to buy goods not available in the internal market, it also generates significant improvements in the domestic market. Often times, the consumer wears the hat of the employee also (Douglas, 1994, p 196-202).
Trade policy can affect business trade across international borders by making trade easy or hard, this is why businesses should be considered when creating a trade policy. Trade policy can include the imposition of import tariffs, quotas on imports and exports of certain goods. Subsidies are also included in a trade policy, it is used for local producers to support them against international competition. Governments often enter into bilateral trade agreements with other countries, in hope of reducing tariffs and barriers to business and establishing a free trade area. This can be beneficial to some businesses, but can also lead to increased competition from abroad. Barriers may also be increased in the form of trade sanctions or a ban on trade against another country
2. Trade policies, I believe, should benefit both businesses and consumers. In representing the direct interests of business, the government has a tremendous responsibility to ensure that our businesses are represented well so as to have a competitive advantage in the free market. Additionally, the government should address trade unfair practices that affect our businesses adversely. (Chabot College). There is no denying that there are so many benefits that accrue from international trade. Free trade ensures goods and services reach the shores of America, thereby significantly increasing the standard of living of Americans. (Froning, 2000).
The benefits of free trade are numerous, and I believe, they outweigh any risks foreign trade might impose on our economy. The United Sates is the world's largest economy. Trade is vital to our prosperity. The following is a list of some benefits of free trade:
Free trade promotes innovation and competition: Through global economy, the shirt you are wearing may have had several countries contributing to its manufacturing. Free trade can generate innovation. In today's global market, free trade ensures innovation and ingenuity. Economic darwinism is the language of the day. Workers in today's world who are not innovative will be left behind.
Free trade generates economic growth: Free trade fosters opportunities for our businesses, thereby increasing sales, profit and margins and market shares. Opponents of foreign trade point to the loss of factory jobs to inadequate protectionism against foreign competition. The current political climate gives us a glimpse of what might be on the horizon as far as free trade is concerned. Opponents of foreign trade seem to forget that workers are consumers too; they fail to realize that trade can boost the overall employment situation. (Joint Economic Committee). On the whole, trade policies benefit both businesses and consumers, supporting more productive economy, expanding the variety of products consumers can purchase, encouraging investment, as well as rapid economic growth. (USTR).
Trade policies should be balanced between businesses and consumers. We live in a changing global economy. Foreign trade cannot be avoided. We need the government to continue to enforce fair trading policies to protect our businesses because a healthy economy, a healthy business culture eventually helps consumers.
Write your answer in 200 words.