The debate on International trade policies and transitions

For instance, in reference to trade, the head of the European Central Bank, Mario Draghi, opined that a lot of people were concerned about how open trade could offer fairness, safety, and equitability in the activity. Additionally, an economist at Princeton University, Alan Blinder, remarked that even though individuals easily come to terms with job losses resulting from the technological change, they are quite annoyed when such losses result from what the people consider as trade policies. He further noted that most economists reason that David Ricardo had the right perception 200 years ago but there are many individuals who believe his view was quite wrong (1). In this case, he was defending trade as a normal phenomenon just like technology, recession, and the likes.

The final remark emerged from a professor of economics at Dartmouth College, Nina Pavcnik, who purported that the counterattack against globalization is caused by hos it worsens the situation of certain people and not the doubt about the overall benefits of trade. Each nation J has "comparative advantages" -- aspects which it stands out in doing. Thus, open trade allows the state to focus on its economic activity on the things it does well so that such products are exported to the other nations (Moser and Rose 8). Consequently, it imports other goods and services from states which can manufacture other products most efficiently. Furthermore, Mexico produces oil and due to free trade, it has made it export more oil to other nations hence making the quantity oil available for use insufficient (Serrano, Martínez, Rodríguez, and Salazar 20).

The cost of oil in the country increased despite the fact that it manufactured the same product but when exportation increased globally the economy improved. S. automakers to improve quality (3). In the counter aspect, the competition factor is disadvantageous in another perspective because for losing nations, factories close and there is devastation due to job loss whereas the winners have lower wages and less security for the employees in the effort to lower costs for particular products. Open economies offer room for trade and investment as witnessed across Europe with thrice faster growth because Furthermore, through free trade, there is global interconnectedness and trade creation (European Commission 7). Considering that fact that the Western Europe people took years fighting one another over land, politics, religion, and other affairs in World War 1 and World War II, free trade could be seen as a mode through which peace was laid (Drozdz & Miškinis 11).

According to Paul Samuelson’s assertion dynamic gains from trade might not always be beneficial. In particular, when there are free trade agreements with a poor nation, the rich countries such as America have lower wages. Another observation is that when an opening allows giving of offshore amenities opportunities which were conventionally never globally mobile might have the same impact of a mass inward migration into developed nations such as USA, Canada, and others hence wages fall. Nevertheless, there is a feeling that protectionist measures on offshore services may create a more critical situation as compared to what free trade does. Several trade models, in varied times, could help explain whether free trade is fair and worth. In that case an annual welfare improvement would be 3 billion dollars and each home would have 300 dollars whereas an individual gets 130 dollars each.

Besides, through the Trans-Pacific Partnership trade agreement, FTA Australia would begin to sell their products at higher prices in North Asian regions where prospective Australian entrants as New Zealand were well-known (Dixon and Rammer). Resultantly, since New Zealand, the beef exporter is a non-FTA they would have a 15% competence in the pricing of beef and would require to lower beef by 15%. Similarly, their other products in which tariff reduction could happen would be dairy, lamb, and wine with a 10% reduction. On the other hand, there was a foreseeable increment of the price of exports by 1. Looking at the case of America Vernon established that the expanse and wealth of American market offered U. S. organizations a great incentive to create new products and even though prior to the agreements products were being produced and sold in America only, the demand in the other developed countries allowed the US to export (Ricardo 2).

With time the demand for new products would be more in other developed nations after some time to a level that foreign producers had to start producing in the home markets. The assumption was that American companies may come up with manufacturing amenities in advanced nations as the demand grew hence exportation from the U. Thirdly, there is new trade theory that emerged as a result of Krugman who opines that the capacity of a company gaining economies of scale, otherwise understood as unit cost reductions related with an output in form of large-scale could have a significant impact for international trade. With economies of scale and the impact it generates, the trade could result in an increment of numerous goods accessible to the customers and reduce the average cost of such goods.

Apparently, when there are no trade states may not make it manufacture those products where economies of scale are vital (Shaikh 4). On the other hand, when trade exists, markets are broad and they back up the manufacture of what is essential in achieving economies of scale. Thus, trade is collectively beneficial since it permits the specialization aspect of production, the achievement of economies of scale, and the manufacturing of a wide range of products at a price that is low. Similarly, demand conditions such as the kind of home demand for the service or product of a given industry influence capacities to grow and offer to the firm pressure to meet the needs of sophisticated and demanding clients. The third aspect that Porter talks about is related and supporting organization and it indicates that when the supplier is other associate companies are either there or absent then international competitiveness is affected because it could broaden or constrict spill over and the emergence of other companies.

Similarly, performing organization could be clustered within a nation under Banking in Toronto, Calgary’s oil and Gas, High tech in Kitchener Waterloo and Ottawa, Ontario’s hothouse tomatoes and Montreal’s apparel and that gives it an upper hand of exporting internationally. Finally, the competitive advantage comes as a result on the structure, rivalry and strategy of the firm based on the circumstances governing its creation, organization, and, management and the kind of domestic rivalry exhibited at home. Varied management ideologies have differing effects on the state competitive advantage. d. Dixon Peter and Rimmer, Maureen. "Free trade Agrement : What 's really at stake if China dels falls through ?" (2015): n. p. Drozdz, Jolanta and Miškinis, Algirdas "Benefits and threats of free trade.