Free Trade and its Benefits Essay Example | Topics and Well Written Essays - 750 words

Free Trade and its Benefits - Essay Example e study of this subject very seriously. According to Lipsey,International Trade is a transaction and trade of goods and services between two individuals living in different countries,two companies operating in different countries and even two governments indulging in some form of trading activity.International trade becomes Free Trade when there are no taxes, quotas and tariffs are levied to these transactions. International trade becomes controlled trade when taxes and quotas are present in the trade activity involving two parties from different countries.There are certain advantages of Free Trade such as efficiency,improved standard of living and foreign earning.The disadvantages of Free Trade are plenty too.These include government revenue loss, deterioration for local industry and outflow of foreign reserves.It is widely believed that free trade leads to efficiency.This can be explained by a diagram,but we must keep in mind that opposite of free trade is one where the host govern ment charges either tariffs or quotas on imported goods. In the above diagram, it can be seen that free trade is more meritorious to a situation where either no international trade is taking place or where the trade is not free. At first there is no free trade. The market is work at a point where D=S or where demand is equated to supply. The equilibrium quantity of goods traded at this point is represented by â€Å"Y†. If the country decided to indulge in free trade then SW will become the supply curve and fewer goods will be traded in the market at point â€Å"Y1†. The reason why the quantity of goods traded in the market is reduced is because the imported goods are cheaper and local production of goods has reduced and the gap between Y-Y1 is filled by imported goods. This is a point of controversy and economists who are against Free Trade argue that free trade will lead to closure and downsizing of local businesses resulting in massive unemployment in the country. Un der these circumstances Free Trade looks like an evil and it looks a valid claim that imported goods should be stopped from penetrating the local markets. However, the supporters of Free Trade claim that it leads to better utilization of world’s scarce resources. They use the theories of absolute and comparative advantage to justify their claim and recommends that the country should divert from production of goods in which it does not have an absolute and comparative advantage to the good where these advantages can be exploited. However, many countries choose a different route and exploit the benefits of allocative efficiency. They charge some sort of taxes to imported goods or give subsidies to local industries to make sure that local production remains high and local industries are able to compete with the imported goods. This leads to partial improvement in local industries situation, but at the expense of efficiency. Hence, one can see that any trade that is taxed or rest ricted cannot yield same amount of efficiency as uncontrolled trade. Free Trade also renders certain other advantages too. It leads to an increase in choices that people can make. This is a necessary condition for improvement in living standard of people. Hence, Free Trade allows people to live a better life. Free Trade

Environmental Regulation and Protection Essay Example | Topics and Well Written Essays - 1000 words

Environmental Regulation and Protection - Essay Example The political factors include; environmental regulation and protection, consumer protection, international trade regulations, employment laws, taxation, and competition regulations among others. Environmental Regulation and Protection The government through Environmental Protection Agency imposes various rules and regulations to protect the environment. These rules impact on businesses directly especially the manufacturing industries which are high pollutants of environment. Moreover, customers are nowadays buying products from green companies who are environmentally friendly thus putting pressure on businesses to go green (Robbins & Coulter, 2009).Those businesses who have not appreciated green strategies thus risk losing their businesses. The New South Wales Department of Environment and Climate Change (DECC) is the body concerned with environmental regulation through Protection of Environment Operations Act (PEOA) of 1997. Businesses are supposed to acquire licenses and carry out environmental training for the staff. Strict penalties and fines are applied to those individuals and businesses that contravene the law and pollute water, air, land and for improper waste management. The organization thus needs to continuously update itself on environmental laws to avoid prosecution. For example, a copper manufacturer was fined $28, 000 for causing toxic overflow in Sydney (NSW, 2011). Fernando (2010) argues that businesses should convert environment issues to their own advantage. Those businesses who protect the environment earn themselves a good reputation. Others engage in continuous innovations hence improving the environment as well as the business. Businesses also are forced to use environmentally friendly product and packages and also processes and these are cost effective. For example, McDonalds was forced to use recycled materials in packaging and transport by customers. Consumer Protection The government has the responsibility of protecting consumers form uncouth businessmen through various measures such as setting quality standards, safety standards and ensuring efficient distribution of goods and services (Fernando 2010). Sometimes, businessmen carry out extensive advertisement of products thus attracting buyers but the goods may be substandard. It is the role of government to ensure all relevant information is put on labels to avoid such instances. It also enforces regulations such as those stipulated on standard weight and measures Act, consumer protection Act among others. Such rules impact on the business as it is required to change its advertising techniques as well as pricing. For example, a government control on cigarettes may force businesses to close or lower production. In India, the Essential Commodity Act of 1955 allows the government to declare any commodity as essential hence control its production and distribution (Fernando, 2010). International Trade Regulations Most countries have opened their borders to free trad e but sometimes, they enforce trade restrictions to protect critical industries from competition. Most countries have also entered into trade agreements with trading partners and these agreements form basis for international trade rules. For example, World Trade Organization (WTO), North America