Essay On Global Trade Liberalization

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INTRODUCTION Regional trade agreements and global trade liberalization are common terms that are used to analyze different market structures in the market. According to international economics, RTAs (Regional Trading Agreements) are the agreements in which members give each another privileged treatment with respect to the extent by which the trade barrier have been established. On the other side, global trade liberalization, is a general term referring to the depletion of trade boundaries globally to ensure free trade among all states. Free trade agreements are more formal than the global trade liberalization policies. It is deemed that Regional Trade Agreements are yielded from the global trade liberalization. That is; a classical form of trade liberalization. BODY Global Trade Liberalization Classic Trade Theories When talk about trade and exchange we have to mention the concept of absolute advantage by Adam Smith (1776) and the concept of comparative advantage by David Ricardo (1817). A country has an absolute advantage when it can produce greater output of a good and service by using less input in production. To Smith, tariffs and quotas should not restrict international trade, and country should focus on production of goods in which it has an absolute advantage. In (1817) other theory has been developed from Adam Smith's absolute advantage theory, which is comparative advantage theory by English neoclassical economist David Ricardo. The concept of comparative advantage based on that a country should specialize in producing those products in which it has comparative advantage and exported, and import goods which it has a comparative disadvantage. Economic theory has developed over time ... ... middle of paper ... ... freedom in trading within the global trade liberalization as harmful to the economy. This is because the benefits that are talked about in the system are not easily accounted. This is different from the regional trade agreements, which incorporate some stricts policies among the member states. It is also significant that there economic oppression between the developed and the less developed countries that are in global trade arrangement. Some of the developed countries take advantage of the less-developed countries by selling substandard commodities, especially food commodities. This means that the less developed countries pay for these commodities expensively in relation to the quality that they possess. Preferably, the two trade environments intend to create an environment that is free from trade barrier. These trade barriers can be technical or non-technical.