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http://topics.nytimes.com/top/reference/timestopics/subjects/i/international_trade_and_world_m arket/index.

html Microeconomics Current Events II The term trade is defined as voluntary exchange; however, it is most often used to describe the voluntary exchange of goods between countries. In an article of The New York Times, entitled International Trade and World Market, the merits and detriments of free trade between nations are discussed. The article states that in 2011, free trade agreements were passed with South Korea, Colombia, and Panama. The choice indicated in this article was the choice made by Congress to allow free trade with three additional countries; Congress made the decision to exchange the US's goods with those of other countries instead of the decision to make the US self-sufficient. This choice serves to improve the nation's economy, because other countries have comparative advantages in other goods; Congress signing a free trade agreement allows the US to trade with three additional countries which have these comparative advantages; the importing and exporting of goods to and from other countries is benificial to both countries because of specialization; if one country specializes in one good, and another country in another good, it is more beneficial for the two countries to trade with one another than it would be for each country to produce all of its own goods. The main factor of production considered in this decision is labor; one of the main arguments against free trade is the argument that jobs in the US will be lost as a result. In addition, countries with a higher supply of workers are also able to more readily produce certain goods. Another factor in the decision were the consideration of natural resources and human capital; some countries are better equipped to process a certain good than other countries. The main opportunity cost that must be considered is the possible loss of jobs of US workers. If more goods are imported from foreign countries, less demand will exist for domestically processed goods. Because imported goods are often cheaper than domestic goods, domestic processors will suffer. As this happens, lay-offs are likely to occur. If free trade were not to be established, the opportunity cost would be the lower prices on goods that would have been established as a result of the free trade. Another, less obvious, opportunity cost of not allowing free trade would be the political ties that could have been made with other countries; the article states that these particular free trade agreements were primarily politically driven, and that the actual impact of this agreement on the economy is small.

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