Importance Of International Trade

What is the importance of International Trade Policy in the context of International trade?
International trade plays a major role in the exchange of goods and services between countries that may not be available to them. This allows nations to expand markets for both goods and services; it gives rise to the world economy, in which prices, demand and supply, affect and are affected by global events. The international trade policy is what they are certainly encountered when they enter the market. Most methods used for international trade is free trade. Free trade has proved to be one of the best ways to open up foreign markets to U.S exporters; although it may benefit the U.S it can also hurt many countries around the globe.
Free trade
Free trade eliminates all restrictions when trading takes place between two countries. Some of those restrictions are quotas, governmental impediments, subsidies, and tariffs. Some countries have more benefit to free trade than others based on their natural resources, geographical features, and climate. Although, free trade provides benefits for some countries, removing a trade barrier on a specific good will hurts the domestic industry, employees, and shareholders that produce that good. Some industries that are hurt by free trade influence political power to get hold of barriers. Consequently, barriers to free trade continue to exist, although, it causes large economic costs.
Reasons for Deviation from free trade
Free trade has been misrepresented all over the world such that people think it can bring “well-being” to developing as well as undeveloped nations. Anti-globalization people maintain that free trade creates an unequal distribution of income between developing and developed countries....

... middle of paper ...

...ead some people to import products illegally, creating a black market in their country.
Whenever a small country implements a quota, national welfare falls. The more restrictive the quota, the greater the loss will be in national welfare. National welfare may rise or fall when a large country implements an import quota. National welfare in the exporting country falls when an importing country implements an import quota. An import quota of any size will reduce world production and consumption efficiency and thus cause world welfare to fall.
In overall, both free trade and trade barriers: tariffs, subsidies, and quotas, have the same consequences; can hurt market prices and impose large costs on an economy. When countries implement any of these policies, the consequence is a negative effect causing poor countries and the third world to depend on advanced nations.