Question

How does globalization play a role in the political economy of trade policy? Consider the current administration’s policy on international trade. What actions may be considered alarming? What actions may be considered beneficial?

Answer 1

Globalization is a process of interaction among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by IT. Globalization refers to increasing exchange of goods and services across, financial transactions, communication, interaction of people across cultures through the international borders.

Trade and globalization policies can impact on the wages and incomes of American workers. Globalization has resulted in grouped among market in the world and improved communication and understanding of business opportunities around the world. Goods and services previously available within a country brought available to new markets foreign country as a result of globalization.

All investors can get new investment opportunities and learn about markets even if far distance than earlier. Probable risks and profit opportunities are within easier reach credit to better communications. Moreover, countries with positive relations between them are able to increasingly unify their economies through investment and deal. Some companies are fighting strong competition from outside their home country. They are compelled to supply materials and outsource labor from other countries.

Globalization has the effect of increased competition. Companies are made their target area, growing from local areas and home countries to the rest of the world. Suddenly, this story of ‘sourcing and outsourcing’ turned many companies into global ones. Globalization has facilitated this and made the transition to global markets easier.

Free trade offers nations numerous advantages. Governments erect trade barriers and intervene in other or change free trade. A tariff is a tax imposed by government on imported goods.

=====================================================================

Trump administration’s approach to international trade policy, including international trade and investment treaties as well as the key influencers of trade policy in the new administration. President Trump withdrew the US from the Trans-Pacific Partnership (TPP), a cornerstone of President Obama’s international trade policy. President Trump has also focused criticism on the North American Free Trade Agreement between the US, Canada, and Mexico (NAFTA).

                  The future of a bilateral investment treaty (BIT) between the US and China is now in doubt. As recently as 2015, the treaty was in the early stages of negotiations. The Trump administration has taken no official position on the TTIP between the US and the EU countries.

Trump selected Peter Navarro as Assistant to the President and Director of Trade and Industrial Policy. President Trump has nominated Robert Lighthizer to lead the Office of the US Trade Representative (USTR). President Donald Trump has emphasized three recurring themes regarding trade policy: the importance of trade balances, including bilateral trade balances, currency manipulation to gain unfair advantage in trade, and “disastrous” trade agreements. Asia figures prominently in these concerns. Other US government agencies, including the US Department of Commerce, may also control international trade policy under the Trump administration.

===========================================================

A country which restricts in trade, either by import tariffs or by export taxes, is expected to improve their terms of trade as a result.

Donald Trump’s International trade policy giving an alarming of coruscating issues and fierce threats of protectionist retaliation. But the world has been in the dark about how much of this rhetoric his administration might turn into certainty.

Trade barriers are government-induced restrictions on international trade. Which are as follows:

Tariffs

Non-tariff barriers to trade

Import licenses

Export licenses

Import quotas

Subsidies

Voluntary Export Restraints

Local content requirements

Embargo

Currency devaluation

Trade restriction

Advantages of International Trade

1. International trade helps each country to make optimum use of its natural resources.
2. Natural calamities impact affect the production of a country negatively. Deficiency in the supply of goods at the time of natural calamities can be imports from other countries.
3. It enables a country to obtain goods which cannot produce or due to higher expenses and can from other countries at lower costs.
4. Stability in prices
5. Exchange of technical know-how and establishment of new industries
6. Due to international competition, the producers in a country attempt to produce better quality goods at the minimum possible cost.
7. Foreign trade leads to specialization and encourages production of different goods. Goods can be produced at a comparatively low cost

Disadvantages of International Trade

1. Impediment in the Development of Home Industries.
2. The underdeveloped countries have to depend upon the developed ones for their economic development
3. Excessive exports may exhaust the natural resources of a country
4. International trade breeds rivalries among nations due to competition in the foreign markets. This may eventually lead to wars and disturb world peace