If we do engage in foreign trade, should we limit foreign trade to nations that engage in "fair trade" by giving us access to their domestic markets and reciprocal import tariff reductions that mirror our tarriff reductions on our imports from them?
Fairness in Foreign trade is essential for the benefit of all the countries engaged in importing or exporting to and from each other. But to derive maximum benefit out of the trade must observe reciprocity, reduction of tariff access to the domestic markets etc. Unless international trade is governed by bilateral trade and mutual agreements, economic sustainability can not be realized.
However, all countries try to reach a contradictory goal with the intention of boosting their exports to enhance the income and profits or their businesses and earn more foreign exchange. At the same time they impose restrictions on imports by levying higher tariffs on the goods imported from other countries.
This way they protect their domestic industries from facing any competition. It is an unrealistic approach as all the countries endeavor to achieve the same objective.
1).If we do engage in foreign trade, should we limit foreign trade to nations that engage in "fair trade?
( Further addition)
The theory of foreign trade based on the following two models propounded Ricardo and Ohlin Heckscher.
Ricardian Model: and
THE Ohlin Heckscher model:
The Ricardian model is about the difference in comparative advantage on the basis of technological differences that exist between different/two nations. Note it is basically supply side, not *demand side, of these differences engaged in international trade. You may remember here that this model assumes that all other factors remain similar between the trading countries.
THE Ohlin Heckscher model:
This model is based on the Ricardian theory of International Trade keeping in view that pattern of trade is guided by the properties of factors of production.
By trading with each other ...
Fair Trade implies a sustainable development for local communities. For individuals or private consumers it should be visible in their shopping bags, while for business it should be in their supply and offices. For local authorities and national governments, it should be reflected in public procurement and responsible consumption.
Under fair trade the wages and working conditions should be fair. There must not be any exploitation of the labor, working conditions must improve, and more opportunities and economic freedom are made available. It must ensure that children under the age 18 go to schools and not forced into hard and hazardous jobs. They may get better medical facilities, nutritious food and clean water to drink.
Ironically, all countries try to reach a contradictory goal with the intention of boosting their exports to enhance the income and profits for their businesses and earn more foreign exchange
Reciprocity means granting of mutual concessions in tariff rates, quotas and removal of other commercial restrictions. Reciprocal agreements may be made either with an individual country or a group of countries