International Trade

International trade is good countries because it allows then the freedom to choose the products that desire and increases wealth in the economy. Trade is voluntary. Free trade is beneficial to the economy. Listed below are several reasons for this.

• Infant Industries

o Free trade spurs competition which increases the incentive for business to be efficient in their use of resources.

• Job Protection

o Free trade lessens the potential for other countries to erect trade barriers in retaliation to our trade barriers. When other countries put trade restrictions in place this harms US businesses and results in job losses.

o Investor business daily reported, “And among developed nations, the Harvard study found GDP among those with open policies during the same 20 year period grew an average of 2.3 percent annually -- contrasted to growth of only 0.7 percent annually among those with restrictive policies.”

• Standard of Living

o US businesses can produce products effectively and efficiently which are priced at competitive levels and still afford to pay high wages.

o Investor business daily reported, “Citizens in countries that have an average tariff rate of 4 percent or less have an average per-capita income of $17,000 compared to only about $2,000 for those in countries where tariff rates are 20 percent or more, according to a recent Heritage Foundation study.”

• Specialization

o Competition guarantees the best products at the best price. Free trade encourages competition and benefits the world economy. Countries with multiple products are stronger than those that are just single product countries.

o Investor business daily reported, “A Harvard study which examined data from developing nations over the period 1970 to 1990 found that those with open trade policies registered economic growth at an average rate of 4.5 percent annually -- compared to only 1 percent among those with closed borders.”

• National Security and Fairness

o National security products should be protected by trade rules and regulations. Even when countries violate fair trade we should still try to dismantle trade barriers since they are not good for the economy.

References:

Perspective, "Free-Trade Tax Cut," Investor's Business Daily, September 18, 1997

The production possible curve shows what a country can produce with the resources the have available.

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