Question

Provide 400 words to evaluate the importance of free trade agreements as well as the role the economy plays in creating global poverty when international companies focus on bottom line profits.

Answer 1

Export deals have a huge effect on the worldwide economy and investment. They are essentially responsible for shaping business relationships between companies around the globe. Small business exporters need to be mindful of the effect trade deals have had and would have on their companies to thrive in the international climate. Likewise, borrowers need to know the trade deals to better understand their customers' needs and financial issues

A free trade area is established when two or more nations develop policies of preferential trade liberalization by removing or significantly reducing trade barriers among themselves. A customs union meets free trade liberalization policies by imposing a common external tariff for non-member countries. There is much more to a growing market. Members lift limits on the free movement of labor and capital. Furthermore, members can to some extent harmonize national policies, including monetary , fiscal, and social policies, and grant a degree of political and legal control to a single governing authority.

The benefits of free trade have already been proven through a range of worldwide pacts. New Zealand and Australia implemented a trade-liberalization agreement between them in 1983. Australian exports to New Zealand grew by an average of 10 per cent each year for the three years preceding the agreement. After implementation, exports rose 18 per cent annually through the fiscal year 1985. New Zealand’s exports to Australia also increased as trade barriers declined.

National states regularly ratify treaties on a number of topics, including human rights, prisoner care and territorial waters, as well as on international commerce and financial transactions. This collaboration is the basis of universal public law. Trade treaties are particularly important in that they provide protections that help governments prevent the worst harm that protectionism could inflict on their citizens. The General Tariff and Trade Agreement's "most-favored country" and "fair treatment" clauses require nations to treat all trading partners equally, and not discriminate between domestic and imported products.

America's trade deficit is increasing whenever non-Americans choose to raise the amount they invest in the US. Dollars that leave the U.S. as part of the trade deficit will return as "capital account surplus"that is, the net investment funds that come into the U.S. More investment means expansion of existing enterprises, more new enterprises, higher productivity of workers, and more output-enhancing activities, such as research and development, all of which increase prosperity.