International Trade Paper
RUNNING HEAD: Trade Paper
Trade Paper
Bethany Cantrell
Economics, Semester 2, Block 2nd
Mrs. Combs
April 30, 2014
Free trade is something every country should be involved in. Free trade is the unrestricted purchase and sale of goods and services between countries without the burden of constraints such as tariffs, duties and quotas (Investopedia, n.d.). Free trade is important for three reasons. It increases competition, it minimizes war, and it increases export. There are three organizations that support free trade and economic stability. These organizations are the North American Free Trade Agreement (NAFTA), the European Union (EU), and the Association of Southeast Asian Nations (ASEAN). A trade barrier is “a measure that governments or public authorities introduce to make imported goods or services less competitive than locally produced goods and services” (Ministry of Foreign Affairs of Denmark, n.d.). There are three major barriers to world trade. The barriers are tariffs, quotas, and embargoes. The most commonly used barrier used to free trade is the tariff. A tariff is a tax on imports. There are two types of tariffs, revenue and protective. A revenue tariff is used to raise income without restricting imports. A protective tariff is used to raise the cost of imported goods and protect domestic products. An import quota is a restriction imposed on the value of or the number of units of a particular good that can be brought into the country. Examples of the US quotas are sugar, shoes, shirts, and cloth. An embargo is a complete restriction on the imports or exports of a particular good. Often embargoes are used for political reasons. Other restrictions are rigorous health inspections and difficult licensing requirements, which are called standards. Last but not leas are subsidies. Subsidies are direct financial aid, tax credits or deductions, to certain domestic industries. This lowers production
Trade Paper
Bethany Cantrell
Economics, Semester 2, Block 2nd
Mrs. Combs
April 30, 2014
Free trade is something every country should be involved in. Free trade is the unrestricted purchase and sale of goods and services between countries without the burden of constraints such as tariffs, duties and quotas (Investopedia, n.d.). Free trade is important for three reasons. It increases competition, it minimizes war, and it increases export. There are three organizations that support free trade and economic stability. These organizations are the North American Free Trade Agreement (NAFTA), the European Union (EU), and the Association of Southeast Asian Nations (ASEAN). A trade barrier is “a measure that governments or public authorities introduce to make imported goods or services less competitive than locally produced goods and services” (Ministry of Foreign Affairs of Denmark, n.d.). There are three major barriers to world trade. The barriers are tariffs, quotas, and embargoes. The most commonly used barrier used to free trade is the tariff. A tariff is a tax on imports. There are two types of tariffs, revenue and protective. A revenue tariff is used to raise income without restricting imports. A protective tariff is used to raise the cost of imported goods and protect domestic products. An import quota is a restriction imposed on the value of or the number of units of a particular good that can be brought into the country. Examples of the US quotas are sugar, shoes, shirts, and cloth. An embargo is a complete restriction on the imports or exports of a particular good. Often embargoes are used for political reasons. Other restrictions are rigorous health inspections and difficult licensing requirements, which are called standards. Last but not leas are subsidies. Subsidies are direct financial aid, tax credits or deductions, to certain domestic industries. This lowers production