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Barack Obama

Essay by   •  December 16, 2010  •  Essay  •  710 Words (3 Pages)  •  1,825 Views

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Tariffs, specialization and voluntary export restraints: the average American doesn't know much about the subject matter of free trade aside from what they've heard in mainstream culture. Too often, people get caught up in the terminology, and dismiss free trade as another topic simply fit for political debate. Free trade isn't literally trading without a price, but is instead an untaxed and an uninhibited flow of goods between countries. Countries should be trading freely with one another; it is so important that citizens of the United States attempt to further this idea. Free trade should be universally instituted because it would benefit the economics of all countries, help to maintain international peace, and reflect on the morality of all participating nations.

Free trade can be described as internationally trading goods without tariffs, (taxes on imports) and other tax barriers (such as quotas or voluntary export restraints). A quota is a limit issued by the government on how much of a certain good or service can be imported into the country. Whereas a voluntary export restraint is an agreement between two countries in which one limits the amount of exports to the other. Yes, these are some wordy definitions, but stay with me here. You're probably wondering, why does this information pertain to me? The answer is, because tariff and non tariff barriers highly decrease how much U.S. citizen's use and how much we get from other countries. The reason we use tariffs and tax barriers is mainly for the government's benefit; if the government taxes imports then they are automatically getting more money. So who loses in this situation? The U.S. consumers who have to pay more for products are those most affected by free trade restrictions. Society in general loses because the losses that consumers undergo are much worse than any gain the government may have. Free trade is like trading on a level playing field; it increases the output on a global-level and allows specialization to take place. Specialization means that nations specialize in certain goods and services that they have a lot of and can produce at a low cost. Consequently, this allows less fortunate countries to export these goods for imports from other countries. They can get more goods at a cheaper price than what it would have cost them to produce the same imported goods domestically. International trading allows the world to consume and produce more than would be possible without trade, creating an opportunity benefiting all countries. This means that everybody wins! Countries are helping each

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