International Trade What is International Trade? International trade is defined as trade between two or more partners from different countries in the exchange of goods and services. In order to understand International trade, we need to first know and understand what trade is, which is the buying and selling of products between different countries. International Trade simply globalization the world and enable countries to obtain products and services from other countries effortlessly and expediently. International trade has been in existence throughout history and has an economic impact on the participating countries. Trade in most countries has a share of the Gross Domestic Product (GDP) and helps to boost the countries overall economy on a yearly basis. International Trade for the United States is available to all business and companies and is flourishing, even though as a country we import more goods than we export, which affects our country's economy.
The World Trade Organization (WTO) is the central body of the multilateral trading system-based in Geneva. The WTO primary job is to oversee the functioning and administration of trade agreements, including dispute settlements and serves as a forum for future trade negations and law makings. The WTO review legal matters and disputes and is the reviewing body or "watchdog" over international trade. The WTO agreements cover goods, services, intellectual property and set procedures and the governing body for international trade, and other trade agreements, such as the free trade agreements the United States have with other countries. Free Trade is the concept we use when referring to selling of products between countries without tariffs, fees, or trade barriers. Free Trade simply is the absence of government interference or numerous restrictions, which has been labeled as laissez fair economics.
Free Trade grants easier access to goods and services, promote faster growth for the economy, and also allows for the outsourcing of production of goods, which hurts the economy. Many believe that the free trade hurts developed countries and nations, due to the loss of jobs by international competition and can reduce the country's GDP. Overall, free trade agreement with other countries can save time and money and increase participating countries economy. North American Free Trade Agreement (NAFTA) There are various trade agreements the United States have with many other countries and I will do a brief overview of a few of them. The most noticeable one is the North American Free Trade Agreement, which include the United States, Mexico, and Canada. This agreement was constructed and approved in January of 1992 and formed the largest free trade area.
NAFTA eliminated and reduce tariffs and non-tariff barriers in addition to comprehensive provisions in the way trade was conducted between these countries. Conclusion NAFTA was born out of the original Canada-US Free Trade Agreement of 1988, which did change the existing agreement concepts, but essentially eliminated all tariffs on goods. Mexico was not included in the original trade agreement; however was added with the suggesting by the US in order to have free trade between borders. Mexico and Canada's trade was contingent on the United States agreement between both countries, which the two countries did not eliminate most of their tariffs until 2003. NAFTA has ultimately been a success story, after many had doubted it could have been accomplished. There are still some existing problems, most notably with the US duty actions and the investigation facing British Columbia's lumber exports.
This agreement is still a work in progress and I believe this free trade agreement is a winning situation for all countries involved. Free Trade of the America (FTAA) Another important free trade agreement on the horizon is the Free Trade of the America (FTAA), which include all nations in the Western Hemisphere except Cuba. The 34 nations, which include Brazil, Jamaica, Chile, Haiti, to name a few, proposed an agreement which would be modeled after the NAFTA between United States, Canada, and Mexico. The Government and Heads of States of 34 nations met to create a Free Trade Area of the Americas, which eliminate barriers to trade and investment. The agreement was scheduled to be completed by the year 2005 and was to be partially completed by the year 2000 with the hopes of following. A third draft has been submitted for approval; however the agreement is still a work in progress.
The last meeting held in Washington D. C. in February 2005 was a discussion among participating countries took place in an effort to finalize the agreement. International trade is a vital part of the world's economy and it helps to stimulates countries lacking products and services and offers continued growth and stability to those countries who supply the products and services.
Trade has been in existing for centuries and I believe every country in the world will be involved in trade with each other, in one way or another. The trade agreements which are being used by various countries are a work in progress and all of them have their problems; however I believe when all the knots are untangled those agreements will be a beginning of a new age in this world. I believe International Trade will be the foundation that unites the world as one.