Case Study
CASE STUDY 4
PREPARED BY:
GOPI A/L KALAIRASAN
CASE STUDY 4
1) There are some 200 economic integration agreements in effect around the world already, far more than even a few years ago. Virtually every country is now party to one or more free trade agreements. Supporters argue that free trade is good for nations.
a) What is the basis for their support? That is, what are the specific benefits that countries seek by joining an economic bloc?
Free trade is a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports) or quotas. According to the law of comparative advantage, the policy permits trading partners’ mutual gains from trade of goods and services.
The specific benefits of countries joining under the free trade agreements (“FTA”) are likely because of FTA that promotes innovation and competition. This is because it makes the economic sense to buy a product more another who specializes in such production or who can make it more easily or for less cost. Indeed, access to a greater variety of goods and services is the purpose of trade. Imports, then, are not a sacrifice, a necessary evil for the good of exporting. One exports so that one may acquire goods and services in return. This logic is evident on a personal level as well.
Free trade is the only type of truly fair trade because it offers consumers the most choices and the best opportunities to improve their standard of living. It fosters competition, spurring companies to innovate and develop better products and to bring more of their goods and services to market, keeping prices low and quality high in order to retain or increase their market share.
Free trade also promotes innovation, along with goods and services, the flow if trade circulates new idea. Since companies must compete with their overseas counterparts, American firms for example
PREPARED BY:
GOPI A/L KALAIRASAN
CASE STUDY 4
1) There are some 200 economic integration agreements in effect around the world already, far more than even a few years ago. Virtually every country is now party to one or more free trade agreements. Supporters argue that free trade is good for nations.
a) What is the basis for their support? That is, what are the specific benefits that countries seek by joining an economic bloc?
Free trade is a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports) or quotas. According to the law of comparative advantage, the policy permits trading partners’ mutual gains from trade of goods and services.
The specific benefits of countries joining under the free trade agreements (“FTA”) are likely because of FTA that promotes innovation and competition. This is because it makes the economic sense to buy a product more another who specializes in such production or who can make it more easily or for less cost. Indeed, access to a greater variety of goods and services is the purpose of trade. Imports, then, are not a sacrifice, a necessary evil for the good of exporting. One exports so that one may acquire goods and services in return. This logic is evident on a personal level as well.
Free trade is the only type of truly fair trade because it offers consumers the most choices and the best opportunities to improve their standard of living. It fosters competition, spurring companies to innovate and develop better products and to bring more of their goods and services to market, keeping prices low and quality high in order to retain or increase their market share.
Free trade also promotes innovation, along with goods and services, the flow if trade circulates new idea. Since companies must compete with their overseas counterparts, American firms for example