International Trade - What Is International Trade?

International Trade

What is International Trade?

International trade is defined as trade between two or more partners from different countries in the exchange of goods and services. In order to understand International trade, we need to first know and understand what trade is, which is the buying and selling of products between different countries. International Trade simply globalization the world and enable countries to obtain products and services from other countries effortlessly and expediently.

International trade has been in existence throughout history and has an economic impact on the participating countries. Trade in most countries has a share of the Gross Domestic Product (GDP) and helps to boost the countries overall economy on a yearly basis. International Trade for the United States is available to all business and companies and is flourishing, even though as a country we import more goods than we export, which affects our country's economy.

The World Trade Organization (WTO) is the central body of the multilateral trading system-based in Geneva. The WTO primary job is to oversee the functioning and administration of trade agreements, including dispute settlements and serves as a forum for future trade negations and law makings. The WTO review legal matters and disputes and is the reviewing body or "watchdog" over international trade. The WTO agreements cover goods, services, intellectual property and set procedures and the governing body for international trade, and other trade agreements, such as the free trade agreements the United States have with other countries.

Free Trade is the concept we use when referring to selling of products between countries without tariffs, fees, or trade barriers. Free Trade simply is the absence of government interference or numerous restrictions, which has been labeled as laissez fair economics. Free Trade grants easier access to goods and services, promote faster growth for the economy, and also allows for the outsourcing of production of goods, which hurts the economy. Many believe that the free trade hurts developed countries and nations, due to the loss of jobs by international competition and can reduce the country's GDP. Overall, free trade agreement with other countries can save time and money and increase participating countries economy.

North American Free Trade Agreement (NAFTA)

There are various trade agreements the United States have with many other countries and I will do a brief overview of a few of them. The most noticeable one is the North American Free Trade Agreement, which include the United States, Mexico, and Canada. This agreement was constructed and approved in January of 1992 and formed the largest free trade area. NAFTA eliminated and reduce tariffs and non-tariff barriers in addition to comprehensive provisions in the way trade was conducted between these countries.

Conclusion

NAFTA was born out of the original Canada-US Free Trade Agreement of 1988, which did change the existing agreement concepts, but essentially eliminated all tariffs on goods. Mexico was not included in the original trade agreement; however was added with the suggesting by the US in order to have free trade between borders. Mexico and Canada's trade was contingent on the United States agreement between both countries, which the two countries did not eliminate most of their tariffs until 2003.