1.More 3. Creates Jobs Increased employment could be

1.More Trade leads to Increased GDP
Increased Net Exports produce jobs and motivate financial
development. They give local organizations more involvement in producing/manufacturing
for remote markets. After some time, organizations gain a competitive
advantage in worldwide exchange as they
experience significantly lower production costs. As indicated by
economic data from the Federal Reserve Bank of St. Louis,
manufacturing output in the U.S has grown by 80% throughout 25 years thanks
to trade. This is value added. The constant push for Net Exports will make
countries attempt to export and import as much as they can/willing to do. Furthermore
these Imports give us access to items that would not generally be accessible,
for example, fresh fruit products in the winter. With more foreign items
being imported into countries, consumers encounter more variety of products
and lower costs – as importing goods is less expensive than producing them
locally.  The US Chamber of Commerce
states: “Companies’ imports of intermediate goods, raw materials, and capital
goods account for more than 60% of all U.S. goods imports—lowering costs for
manufacturers and other businesses and helping them hone their competitive
edge”. All these advantages ultimately increase a countries GDP, as consumer
spending is increased, industry spending is increased, and Net Exports is increased.

 

2.Gives Opportunities for Companies to enter Larger Markets
With the involvement in
International Trade, foreign countries seek great opportunities to have an
impact on larger markets. With countries constantly importing foreign goods
to domestic markets, it allows smaller countries to be involved by exporting
their products to these domestic countries. International trade introduces
countries into Foreign Markets and uses their strong sectors to expand
worldwide – then embracing their strengths to have maximum benefit on
economic trade. An example is Brazil, which has been known for having a
strong agricultural sector. With the implement of trade, Brazil was able to
increase their beef exports from US$468,463 in 1997 to US$4,943,902 in 2017.

As countries took advantage of Brazil’s agriculture in trade, these imports
turned Brazil into the World’s biggest beef exporter by 2016 with 19.60% of
the entire world beef exports. Brazil was able to master an agricultural
sector, and used it to bring themselves into a more positive state in the
economy through international trade.
http://www.brazilianbeef.org.br/ExportsByYear.aspx
1997, 2017 Annual Reports

3. Creates Jobs
Increased employment
could be generated as the market for country’s products extends through
trade. International exchange creates more work-places through the foundation
of newer businesses taking demands of different nations into account. So
while businesses are adapting to demands, these changes will create jobs in
order to fulfill these demands. An OECD analysis shows that trade is a
machine for job development in countries, substantially as the world moves
from a recession to a global recovery. The OECD also states that: “Of the 14
main studies undertaken since 2000 reviewed in the publication Policy Priorities for International Trade
and Jobs, all 14 have concluded that trade plays an independent and
positive role in raising incomes.” The OECD has performed a series of
analysis’ and each determined that trade does increase jobs and/or raise
incomes. Further trade will get countries economically involved with each
other, allowing for more jobs to be created to fulfill tasks. An example of
this would be with the implementation of a free trade agreement: “The pending
free trade agreement with South Korea alone could boost U.S. exports by $10.9
billion a year and create 70,000 new jobs”. Since countries act more under
trade, more jobs will be created and the unemployment rate of countries will
decrease.
 
 

Points and Evidence for Negative Impacts

1.Reducing Tariffs Exposes Domestic
Businesses to Foreign Competitors
A common method to boost exports is to make
trade easier overall. Governments do this
by reducing tariffs and other Protectionism barriers from imports.

This reduces jobs in domestic industries that aren’t able to compete with
foreign competition. As competition will most likely enter market’s with
lower prices – domestic businesses will struggle to adjust their costs
without losing profits. So as countries do their best to increase Net
Exports, their domestic businesses will not be able to compete with foreign
competitors (who are taking advantage of low protectionism in the country). This
brings businesses out, as they fail to be competitive. For example GM vs
Toyota. GM’s domestic share in the 1991 car market was 35%. This number was
20% in 2011, all due to foreign car companies – mostly Japanese being
imported into domestic industries. By 2008 Toyota covered 17% of the US
market which had risen from 1991’s 8%. GM substantially lost business and
sales due to international trade.
 
 
 

2.Poor Countries Are Exploited and Left to decay:
International
Trade has not been valuable to poor nations as a result of the unfavorable
impacts on their economy. Underdeveloped nations must depend upon the
developed countries for their own economic development. Since these economies
rely on developed nations buying their resources, land, or products – they
often get cleared out and exploited for their resources. As seen today,
Africa experiences poverty, slavery, and child soldiers as they only get
exploited for resources – and are not aided by their importers. This is a
negative effect of international trade as the lower protectionism/laws allows
these countries to be fully ‘used’ for their resources because larger
countries just can. To show the value of Africa’s resources: “a single
old-growth tree from the rain forests of Africa can be worth more than
$20,000 on the world market”. Since most trees worldwide are planted
artificially due to consistent deforestation, the remaining real trees in
Africa have huge values and are abused for their resources over time.

Additionally most Africa mining sectors are manipulated: “Kabila regime transferred
ownership of at least $5 billion of assets from the state-mining sector to
private companies under its control… with no compensation or benefit for
the State treasury”. Over $5billion worth of resources was taken out of the
African mines – with no values being funded to the Kabila treasury. African
colonies are stripped off their resources and are left with no help, all due
to these larger companies taking advantage of international trade.

3.Can Lead to Job
Losses
The
EPI (Economic Policy Institute) states job losses to be the most negative
impact of International Trade. International Trade eliminates jobs in sectors
that are not being used, as cheaper foreign goods are able to out-sell
domestic products. Once these domestic-companies go out of business, job
positions will be lost. The National Bureau of Economic Research states that:
“Individuals who in 1991 worked in manufacturing industries that experienced
high subsequent import growth earned lower cumulative earnings over the
1992-2007 period….as they were at elevated risk of exiting the labor force”. Additionally,
the biggest change happened due to major imports from China. 28% of all
imports were from China in 2007. A huge increase from 2000’s 15%.  At the same time, the U.S was losing their manufacturing
jobs. In 2000, manufacturing labor force was above 10% but dropped to 8.7% in
2007 – since China was exporting goods for cheaper that the US was
manufacturing. Although imports may be good for a countries economy, it leads
to job losses as seen by the NBER – due to constant foreign competition
thriving domestic businesses out with competitively lower costs.

 

 

Additional Points and Evidence for Chosen Side (3 minimum)

4. International Trade allows
Free Trade Agreements
International Trade can create additional trade agreements
between countries. Under trade agreements, countries can majorly improve
their economies by settling trade terms for the most beneficial trade results
(i.e when US, Mexico, Canada dropped significant Tariffs). These have major
potential to impact other countries in the same manner that NAFTA impacted
the US. Tremendous advantages have come out of U.S. free-trade agreements
(FTAs), which cover 20 nations. These nations speak to roughly 6% of the
world’s population outside the United States, but just last year these
business sectors obtained almost 50% of all U.S. exports, as indicated by the
U.S. Bureau of Commerce. The United States ran a total exchange surplus with
its exchange partners of more than $271 billion in the course of eight years.

Numbers like these could be potential to other countries if they were to
issue FTA’s themselves. So, with the implement of international trade these FTA’s
could benefit countries to the max-point where they benefited the U.S.
 

5. Promotes Efficiency in Production
International Trade
promotes productivity as nations will attempt to adapt better techniques for
production to lower costs and stay competitive. Nations that can produce an
item at the most minimal conceivable cost will be most profitable in the
market with larger shares. In this manner a motivating trend to produce
efficiently is created. This will build the standards of products and consumers
will have a decent quality item to devour. As companies compete to produce at
the lowest possible costs – manufacturing becomes more efficient with the
attempt to use the least resources as possible whilst maintaining a high
profit. An example is the efficient production in the U.S: “The value added
by U.S. factories is more than $2 trillion a year”. With the U.S adapting to
economic demands, they were able to mass increase their production rates. Manufacturing
is the most dynamic sector in the U.S economy and is mainly due to
international trade. As the U.S wants to stay economically competitive, they
used their production to its full potential and made it the most profitable
out of all industry sectors.
 

6.  Increases Consumer Spending
Trade
brings down world prices and increases competition, which gives advantages to
consumers by raising the purchasing power of their own salary. As countries
are distributing at the lowest price they can (heavy competition), it gives
consumers advantages. This further leads to Consumer Surplus’ as they end up
paying less than they are prepared for. Additionally people are willing to
buy goods as prices are cheaper than before. This transitions to more
disposable income for consumers – allowing them to purchase more products and
increase GDP under the consumer index. “The
purchasing power of American households has increased by $18,000 annually due
to access to imported goods.” Imported goods create competition and grant
consumers more disposable income while companies compete for the lowest
prices. Since consumers have more money to spend with lower prices, they are
more likely to spend this money and further improve the economy.  
 

7. Companies’ Sales and Profits Will
Increase
If companies get involved
in trade exports and imports, they will be able to largely increase their
profits. As trade widens the spread of different products to countries,
companies can export to these countries to grow and promote productivity. A
UK survey studying company exports revealed that:
“companies who begin to export see a 34% increase in productivity in their first
year alone” and “exporting companies, on average, have over double the annual
revenue of non-exporting companies ($3.4M compared to $1.6M)” As companies
are able to step in and take advantage of trade, they can massively increase
their sales and ultimately profits. Overall this will be good for countries
in which the companies are located in – as better performing
corporations/organizations will result in a more advanced economy.

 

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