Question

Variation in the price of agricultural and non-agricultural commodities is determined over time, by demand-supply dynamics. The last two decades have seen a significant increase in the volume of international trade and business due to globalisation and liberalisation sweeping across the world. This has led to rapid and unpredictable variations in financial assets prices, interest rates and exchange rates, and subsequently, to exposing Multi-National Corporations to financial risk. As a result, financial markets have experienced rapid variations in interest and exchange rates and stock market prices, thus exposing the corporate world to a state of growing financial risk. We can hedge the risk of price variations in stocks, bonds, commodities, currencies, interest rates, market indices etc. Given this context please conduct the necessary research and answer the following question.

How is a country's economic well-being enhanced through free international trade in goods and services? Provide and discuss two relevant examples specific to your jurisdiction.  

Answer 1

International Trade is an exchange of goods and sevices among countries. Free Tade is a policy in which trade is not restricted in anyway i.e Trade without barriers. Since the free International Trade in gods and services is mutually beneficial for both the countries involved in the trade therefore both the countries can sell their specialized goods acroos the globe. conclusively, it will enhance the export rate of both of the countries which will improve the country's well being effeciently and effectively. It is also seen that export of goods and services allowed trade to avail different type of benefit such as export incentive and tax exemption has been provided to export of services so they can compete over the market. even there is risk of loss due to exchange rate, interest swap rate, currency fluctuation , supplier or importer can hedge all the risk through variou financial transaction such as entering contract as hedging tracaction , future contract.

international Trade is a type of "Increasing-Sum" game in which all the players will get benefit i.e. both the countries will get benefit in the terms of economic growth.

Two relevant examples -

1) Agreement between the United States, Mexico and Canada called as American Free Trade Agreement (NAFTA).

2) Trans- Pacific Partnership.