International Trade 2 - Essay Example

1. In your response you mentioned that free trade forces companies to innovate. Innovation in the 21st century has become a critical success factor due to the fact that the proliferation of free trade has increased the level of competition in all industries. The use of free trade also increases the volume of transactions among countries. The NAFTA agreement greatly increased the level of trade between the United States, Canada, and Mexico. The level of trade between these three countries reached $904 billion in 2011 (Trucknews).

Imposing trade barriers hinders the ability of a country to compete in the global marketplace. Free trade is not perfect and as you mentioned in your response it also has disadvantages. In the United States a lot of factories have closed down because the firm’s owners decided to move the operation oversees in search of cheaper labor and lower operating costs.2. I agree with you that imposing barriers of trade is a counterproductive strategy. Most countries around the world have moved away from protectionism practices that impose barriers of trade and instead they are joining the free trade movement.

There are many bilateral and multilateral trade agreements worldwide including NAFTA, MERCOSUR, TPP, and G-3. You are correct in your premise that the decision of using free trade should be made by the governments of each nation. Sometimes governments have to move away from free trade in certain industries in order to protect a local product. Protectionism practices are often used in the agricultural industry.Work Cited PageTrucknews.com. 23 March 2012. “NAFTA trade totals reach record level in 2011 at $904 billion.

8 April 2013.