Increasing International Trade Agreements

Since Adam Smith published The Wealth of Nations in 1776, the vast majority of economists have accepted the thesis that free trade between nations improves overall economic well-being. Free trade, generally defined as the absence of tariffs, quotas or other government barriers to international trade, allows each country to specialize in products that it can produce cheaply and efficiently compared to other countries. Such specialization allows all countries to earn higher real incomes. 30. Fagiolo G, Reyes J, Schiavo S. World Trade Web: Topological properties, dynamics, and evolution. Phys Rev E. (2009) 79:036115. doi: 10.1103/PhysRevE.79.036115 24. Sopranzetti S. Free trade agreements and international trade: a network approach. World Econ. (2018) 41:1549-66.

doi: 10.1111/twec.12599 Globalization and trade offer new opportunities, but are not without challenges. For many reasons, developing countries may find it difficult to compete globally. Non-traditional trade obstruction measures are more difficult to quantify and assess, but they are becoming more important with traditional customs protection and lower import quotas. Anti-dumping measures are increasing in both developed and developing countries, but they are disproportionately confronted by developing countries. Another major obstacle is the rules that require imports to comply with technical and hygienic standards. They entail costs for exporters that may outweigh the benefits to consumers. The European Union regulations on aflotoxins, for example, cost Africa $1.3 billion in exports of cereals, dried fruit and nuts per European life saved9 Is there a right balance between costs and benefits? Some countries, such as Britain in the 19th century and Chile and China in recent decades, have implemented unilateral tariff reductions – reductions that have been made independently and without contrary action by other countries. The advantage of unilateral free trade is that a country can immediately benefit from the benefits of free trade. Countries that remove trade barriers alone do not need to postpone reforms while trying to convince other nations to follow suit.

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