ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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*Promote greater trade among the parties
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*Increases competition and specialization
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*Broadens the market
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*Makes everyone happy
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Detailed explanation-1: -Uncompetitive domestic firms. Tariffs are often designed to protect domestic firms which produce at a higher cost than international competitors. With free trade, they will see a fall in demand and could go out of business.
Detailed explanation-2: -While the specifics of each FTA vary, they generally provide for the reduction of trade barriers and the creation of a more predictable and transparent trading and investment environment. This makes it easier and cheaper for U.S. companies to export their products and services to trading partner markets.
Detailed explanation-3: -The disadvantages are twofold. If FTAs are not set up within the right framework of policies, they can diminish rather than enhance economic welfare. The second disadvantage is that they are not good vehicles for liberalising trade in sectors on which parties outside the agreement have a major influence.
Detailed explanation-4: -Free trade agreements (FTAs) help expand global market opportunities for U.S. producers and exporters. Bilateral and multilateral trade agreements strip away trade barriers, reduce or eliminate tariffs, and promote investment and economic growth.