Assignment: International Trade and Wto Essay

Submitted By ergen_kz
Words: 5631
Pages: 23

Different countries occupy in the global economy as a whole and in some markets a different position. To protect their interests, each participant of international trade is trying to perform certain actions, i.e., doing some politic in this area. There are two main types of policy in the field of international trade:
1. Foreign Trade Policy.
2. International trade policy.
Trade policy - relatively independent direction of fiscal policy of the government related to the state regulation of foreign trade through taxes, subsidies and direct restrictions on imports or exports.
Most economists consistently advocated the liberalization of foreign trade, as the effects of trade restrictions are short term in nature. However, in practice the way of free trade is worth a large number of barriers which are used as instruments of trade policy - tariffs, quotas, voluntary export restraints, and so on.

Under foreign policy is a meaningful impact on the state trade relations with other countries. The main objectives of foreign policy are:
- change in the degree and ways to enable the country to international division of labor;
- change in the volume of exports and imports;
- change in the structure of foreign trade;
- providing the country with the necessary resources (raw materials, energy, etc.);
- the ratio between export and import prices.
Some goals are long-term in nature, such as changes in the degree and ways to enable the country to international division of labor. Others goals can be achieved in a short period of time, such as changes in the volume of exports or imports.
There are two main areas of foreign policy:
- a policy of free trade (free trade);
- protectionism.

The policy of free trade
The policy of free trade - it is the policy of free trade in which the customs authorities only perform registration functions are not collected export or import duties are not set any restrictions on foreign trade turnover.
The policy of free trade in pure form means that the government refrains from direct impact on foreign trade, leaving the market as the main regulator. However, this does not mean that the state generally eliminated from the effect on this area of business. It concludes agreements with other countries, to provide maximum freedom of its business entities.
Free trade policy leads to positive consequences, since in this case the country are becoming increasingly interdependent, and thus reduces the risk of hostile operations with respect to each other.
The policy of free trade allows you to get the greatest benefit from the international economic exchanges in the main countries economically more developed, although in its pure form it is never ever used.

Protectionism - policies to protect the domestic economy from foreign competition. In contrast to the policy of free trade, protectionism is excluded when free market forces, since it is assumed that the economic potential and international competitiveness of individual countries are different and therefore the free market forces can be disadvantageous to the less developed countries. Unlimited competition from stronger foreign states may result in less developed countries to economic stagnation and the formation of inefficient for the country's economic structure.
Protectionism in the country contributes to the development of certain industries. In agriculture-based countries, protectionism is often a prerequisite for industrialization. In addition, when protectionism reduces unemployment. However, too long application of this policy can and does lead to economic stagnation, as if to eliminate foreign competition, then weakened domestic entrepreneurs interested in improving the efficiency and efficacy of production.
In its extreme form of protectionism takes the form of economic self-sufficiency, in which countries seek to restrict imports to only those goods whose production in the country is impossible.