Share
Explore BrainMass

Economics

1-Do trade agreements really represent "free trade" or do they just restrict trade?

2-As the world population continues to increase, strained trade agreements, such as NAFTA and others will continue as more and more developing countries compete for the finite resources our 'good earth' can provide.?

You can view the world population statistics here: http://www.census.gov/ipc/www/idb/worldpopgraph.html

3-The trade balance is certainly an indicator of a countries economic stability. As far as China versus the USA, which economy is more stable?

Solution Preview

The response addresses the queries posted in 1221 words with references.
//This query requires you to have an understanding of free trade and you are also required to analyze that such agreements actually represent free trade or restrict trade. I would like to guide you on this which would help you to satisfy & fulfill your query. See the text below: //

Answer 1:

Free trade can be referred as a trade policy which enables the trading partners to deal with each other without enough governmental interference. Such agreements permit mutual gain for trading partners by exchanging goods & services. The exporters of U.S. have got highly benefited due to Free Trade Agreements with 14 countries. The United States implemented six new free trade agreements with Bahrain, El Salvador, Honduras, Guatemala, Nicaragua and Morocco in 2006 (Free Trade Agreements, n.d.). The primary objective of Free Trade Agreement is to ensure trade liberalization. In such agreements, governments do not put any artificial barriers to restrict or limit the transaction of products & services between trading nations.

Free Trade Agreement provides several benefits for the countries participating in it. Free trade is helpful for supporting the comparative advantage. This specialization enables the countries to take advantage of their efficiencies and increase output. Free trade increases the size of market and helps in lowering the cost and increasing productivity. It facilitates efficiency of resource allocation which further leads to higher productivity and innovation with the help of new technology, marketing & distribution methods.

Free trade benefits the consumers by providing wide variety of products & services at low prices due to increased competition. It helps in increasing foreign exchange gains, employment and economic growth. Free Trade Agreements are also opposed by some protestors and lobby groups (Edge, n.d.). They argue that such agreements increase instability of domestic economy as it becomes dependent of global markets and new industries find it very difficult to establish themselves in the competitive environment without ...

Solution Summary

The response addresses the queries posted in 1221 words with references.

$2.19