International Production and Trade - Essay Example

Dumping has led to development and enactment of various rules and regulations for international trade to foster more cooperation among different countries. Lack of proper and comprehensive and binding international trade regulations, tensions between trading partners are likely as states try to maximize domestic gains from trade, often at the expense of trading partners’ welfare. Chapter six of the notes also deals with selling products from one country to a different country, is likely to affect the domestic business and trade in the importing country.

This requires the government to formulate laws and regulations to enable a level playing ground for all players in the business, both local and international trade. International traders are likely to bring in cheaper products and services that are likely to disrupt the demand and supply of the business environment and will greatly affect the sales in of the local businesses, thus leading to losses and loss of jobs in the country. There is need to have in place regulatory measures to ensure there is a level playing field and that international trade does not affect the local businesses in the negative way (Fried 34). . WTO ensures that all the rules and agreements entered in to by various countries are observed to the later and the countries failing to follow the rules will be punished through appropriated sanctions from the body.

Chapter six also discusses the various perspectives of international trade. The three main perspectives of international trade include the Liberals, mercantilists and structuralists, who have different views and opinions regarding to how trade should be conducted on the international scene. For liberalists, international trade should be conducted using the ideas of thinkers such as ideas of Smith and Ricardo, who give various conditions within which the trade can flourish on the international arena.

In Ricardo’s theory of comparative advantage, he provided liberal ideas about how trade can flourish between countries using their strengths and weakness in terms of their production of goods and services. According to both Ricardo and Smith, global trade should not be based on who can produce the most of any give product, since this can be disadvantageous for businesses due to the limitations of scarce resources. This limitation means that no particular country can produce as much as it wants of all goods and services; opportunity cost must therefore be considered.

Absolute advantage cannot therefore be relied on as a policy for international trade. On the other hand, comparative advantage is the best policy because it allows countries to produce whatever they can produce efficiently and then getting the other products from other countries or businesses that also have a comparative advantage in the production of such products and services. According to