International Trade and Business

International Trade is not a trend that was just invented, but it existed long ago when
ancient Greek sent their ships to Egypt and to the coastline of what are now Italy and Turkey.
Since then, it has been a vital feature in the world and the era in which we live in. This type of
trade is known as the movement of goods and service across national borders in exchange for
money. It helps to give rise to the world economy as it is a growing contributor to global wealth.
International trade contributes to better lives and a higher average standard of living. As
countries trade globally it provides them an opportunity to be introduced to goods and services
that are not available in their country and this ties in with the idea of comparative advantage, the
idea that when we trade, we benefit. Trading globally allows countries to use their resources
efficiently as they specialize in what they are best at and import what they are not. Through this
essay, it will discuss the different strategies in which countries adopt towards trade, the benefits
of free trade and globalization and how these affect us as consumer and the impact on our future.
Three Big Policy Strategies
As mentioned above, trade is an exchange of goods or service between sellers and buyers,
however, when two countries trade it is then known as International Trade, as it is done across
national border. When countries trade globally they adopt three big policies. The first policy is
known as autarchy or mercantilism. Autarchy is a policy of determined self-sufficiency of
economic matters. Mercantilism similar to Autarchy sees the national government playing the
leading role in economic policy and trying to maximize their resources and using them to further
develop and strengthen the nation. However, this policy is not considered good for the wealth of
people, especially mercantilism as it is seen as a recipe of war historically. As mercantilism
became the dominated economic thought in Western Europe, such as England, France, Spain,
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Italy and Portugal, from the 16th to 18th century it increased the military conflict between the
states. Each governments goal was to do the best for its country by obtaining a strong military
that would help prevent attacks from other countries and assist in its own colonial expansion. As
a result , this kind of policy condemn their citizens to poverty, invasive government control, lack
of diversity and shoddy product by local business ,as merchants persuades government to
authorize laws to protect their business from other competitions. In 1651, England applied this
concept to the Navigation Act which made all goods imported to be carried by the British,
making them the monopoly of merchants and shippers.
The second strategy is the free trade or internationalism. Free trade is referred to the
exchange of goods and service between countries that elect not use any protectionist measures. It
is a trade with no tariffs, quota or subsidies. This is normally done between countries that are
close to each other geographically. NAFTA which is also known as North American Free Trade
Agreement is regional multilateral treaty between Canada, United States and Mexico that was
signed in 1994. This treaty allows the flow of goods and service between the three countries to
be tariff free and to help eliminate the barriers to trade and investment. The EU is also another
important area where free trade agreements were signed such as the European Free Trade
Association (or also known as EFTA). This is a free trade organization between Iceland,
Norway, Switzerland and Lichtenstein. Free trade agreements has shown that the freer the trade,
the greater the wealth that is created. Furthermore, Internationalism which is similar is the idea
of being a fully interconnected participant in the global economy. This can be seen through the
League of Nation, an international organization established after World War I, in an attempt to
move humanity towards coordinated, worldwide solution to international problems. Both free

trade and internationalism is beneficial not only to the countries which signed the agreement but
also for the worlds economy.
The third policy is a combination from both autarchy and internationalism. It encourages
government to invest domestically to encourage the economy of their own and place limits on
the number of foreign goods that are imported into its country. This strategy is known as exportled development. Export-led development uses the tools of mercantilism and protectionism to
grow select local industries until they are strong enough to compete on the world stage.
Countries can aggressively engage in free trade and allocate the money theyve profited from it
towards improving their economy and making it richer. Even though, this method contradicts
with free trade, as it implements a quota, it allows countries to restore their economy after events
like a World War. South Korea took in this strategy to start-jump their economy and had very
successful results. This also worked very well for others such as the Asian-Dragons: China,
Japan, Singapore, and Taiwan, as it ultimately increased the countrys GDP.
Free Trade and Globalization
Free trade is the trade of goods and services between sellers and buyers without the use of
any tariffs, quotas or subsidies. The product and the price and quantity at which it is traded are
determined by the market forces of supply and demand and not by the government regulation or
intervention. Trading globally has been a trend that not only increases the efficiency of resources,
but also encourages countries to take part in the global economy. This reflects the idea of
globalization. Globalization is the increasing strengthening of ties between countries, which
enriches the global relationship, in both economic sense (international trade and the increasing
free-market) and cultural sense (technology and social media). In todays era, globalization and

free trade are critical as it benefits both the rich and poor countries, as long as they are willing to
trade globally. It helps to reduce prices, increase efficiency and have a higher economic growth,
which produce higher incomes and increases GDP. Furthermore, globalization encourages
nations to trade with one another to increase its communication with one another and to
exchange of technical know-how, which will strengthen the ties between nations. As a result,
multinational firms will be more incented to expand and operate overseas. This encourages
investors to invest in multinational companies that could have a significant impact on developing
nations. Globalization has brought many undeniable rewards along with the advancement of
cuisines, entertainment, and different cultural rituals that are very different from our own. As
global trades increases, it will result in better communication between nations and create a wide
variety of goods and services, such as better technologies and transportation, which ultimately
raises the living standards for the world as a whole.
Serious Problems and Road-Blocks with International Trade.
International trade is a vital feature of the era we live in today; however, it also has its
downsides. Majority of all international trade is carried out either within the developed Northern
economies or between the Northern economies. This brings to the attention that the economies in
Global South are not considered to be part of the game. It is true that not all nation is able to
receive the benefit of international trade; however, a great number of economies in Global South
wishes to participate, but does not have the ability to do so. Countries in global south, such as the
ones in Africa, they do not have facilities that could produce quality goods or the capital savings
to invest in high-tech manufacturing machineries or export-led development, due to their state of
poverty. International trade promotes the idea of global free trade and nations all wishes to profit
from it. As a result, nations will only buy products from others in which they have a comparative
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advantage in, i.e. chinas inexpensive goods and labour. Trading with China often results in the
discouraging ones own domestic market, resulting in a decrease of jobs and decrease in profit.
Thus, even when trade is mutually beneficial, it creates a winners and losers, owing to the
number of people and the different groups of people who are affected. However, at the same time
interconnectedness between nations could also be the key in destroying their own economy.
When there is a major world issue like a financial crisis, it will immediately affect the rest of the
world. This could be seen in the 2006-2008 mortgage crises in United States. The mortgage
crisis threatened almost all of the banking systems as bankers were giving out loans to clients
that were unable to pay back. This almost created a worldwide recession, which shows that
when everyones hand s seems to be in each others pockets, as one problem hits one region, the
rest of the world suffers with it. This also brings back the fact that because American can be seen
as a hegemon, its actions will have a significant impact on the rest of the world. On the other
hand, another major drawback is the MNCs, which is known as multinational corporations. They
are large, for profit business enterprises with offices, branches or outlet that is managed in
managed in more than one country. There are several drawbacks about MNCs that includes cooperating and supporting regimes, as long as they have access to their markets and is able to
profit from it. They also take advantage of lax employment standards and regulation such as
child labour and the use of sweat shops manufacturing. As a result, as the benefits often blind
many from seeing the dark side of the international trade; it does have some major drawbacks as
well.
Personal Reflection
In my opinion, I do believe that globalization will endure and will characterize our future.
This is because it is already an essential component in the world day and it will only continue to
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increase as it contributes to innovation and the transfer of technology. Over the past decade,
technological advancement and competition has skyrocketed and made the living standards
around the world higher. As we all know, technological change comes from the effect of
international trade with foreign countries and competition. The increase in foreign trade and
competition has been the key to the innovation that has revolutionized transportation and
communication. Automobile industries are importing different parts of cars from foreign
country to minimize the cost while maintaining its quality for consumers. Despite the fact that
globalization does decrease employment, it has been adopted by mostly all the major countries
around the world in North America, Asia and Europe that is has already been part of the daily
routine that is hard to change. Moreover, this is also due to the goal of society nowadays. As
competition continues to increase and societys goal has been so focused on maximizing profits
that trading globally will allow them to accomplish it as it brings back to the idea of comparative
advantage. As technology has become a big part of our lives, innovation has become a key
indicator on whether one could survive in the industry. The intensity of competitors has
definitely elevated both the pace of innovation and standard of products and their quality. The
apple products are an excellent example. Apple designs its own products where it is then sent
over to Foxconn, a multinational electronics manufacturing company located in China. Apple is
able to manufacture its product while keeping its cost to a minimum. Apple is not the only
company that does it, Samsung, HP, and Dell also adopts the same method.
With the impact of globalization in mind, I believe free trade will continue in the future.
Free trade allows countries to trade with one another with no tariffs, quotas or subsidies. In other
words, it is a trade that benefits all the parties. It tightens the relationship between countries and
allows utilize comparative advantage in a free marketplace. Allows everyone to save time and

effort and experience a greater diversity of things. Moreover, as countries open up their barrier to
trade, it will increase income and thus its GDP. I do believe that free trade among nations will
really benefit us as consumers, because many countries has already been diversified, especially
Canada since its population is build upon immigrants from all over the world. It provides us
with a greater variety of goods and services. Furthermore, when countries work together, they
create a sense of mutual respect for one another and which makes it less likely for the nations to
fight. In my opinion this would make citizens feel safer and more inclined to live in certain
countries.
In summary, international trade will continue in the future and its impact on us will be
great. The changes and increase in globalization may not seem like it affects us, but in fact, I
believe the impact is great it acts like chain affect. As innovation increases it results
technological change, which raises the living standard and also the standard for business
industries. In order to keep up with the change in trade and globalization the standard for future
business workers will rise as well. With the standard of living raising it means that the
expectation for jobs will raise and money will also be harder earn. Through this essay, different
trading strategies that countries adopt have been examined in details and along with the benefits
of free trade and globalization and how as consumers, we are affected by international trade.

Bibliography
Orend, B.O (2013). Introduction to International Studies. Ontario, Canada : Oxford University
Press.