International trade - Essay Example

China and the south East Asian countries such as Singapore have been in focus for their export based economies (Rivera-Batiz & Oliva, 2003). External trade is usually heavily controlled by countries by applying duty against imports and subsidizing exports. Free trade means the government does not discriminate against national and foreign producers of goods. The price of goods is determined through the equilibrium of supply and demand. A country which allows free trade does not impose high import duties and neither does it subsidize its exports through schemes and promotions. Body 2)Advantages of International Trade The major advantages of international trade are – It enhances the competitiveness of local industries as they come into contact with international best practices and technological knowhow.

It helps the country to overcome the shortage in natural resources. One example is the import of crude oil by many countries to overcome the natural deficiency. International trade allows consumers to buy products at low cost. An example of this has been the proliferation of manufacturing industries to China. Manufacturing goods produced in China are low cost and thus leads to benefits to the end users. International trade can be a vehicle for poverty reduction. China has increased its GDP rapidly in the last 20 years by becoming an export hub for international companies.

This has reduced poverty and created employment for a billion Chinese (Rivera-Batiz & Oliva, 2003). Disadvantages of International Trade Some of the main disadvantages are – International trade can lead to destruction of local industries if they are not able to compete with the cheap products imported from abroad. International trade can lead to jobless growth of the economy. This can cause social unrest among the population. India is a country whose exports largely consist of services such as Information technology.

However IT is a capital intensive sector which creates very few jobs leading to large scale unemployment in the country. International trade can also lead to depletion of natural resources such as coal, iron-ore etc. if they are exported to other countries (Rivera-Batiz & Oliva, 2003). International trade has also caused various environmental and human rights concern. It is alleged that the factories in China and Mexico do not follow the strict environmental guidelines followed in developed world.

They are also accused of employing child labour to reduce the cost of products (Rivera-Batiz & Oliva, 2003). 3)Major Trading Partners of UAE The major trading partners of UAE are Japan, China, European Union and India. Japan is UAE’s biggest export partner (17.27% share) and China is the biggest import partner (15.03% share) (Oxford Business Group, 2010). 4)Most Important Exports OF UAE The most important exports from UAE are crude oil, natural gas, fish, dates and products which are re-exported after processing (Zaman, 2011). 5)Trade Policy of UAE UAE signed the General Agreement on Trade and Tariff (GATT) in 1994 and became a WTO member in