Free Trade Agreements Essay Example | Topics and Well Written Essays - 1500 words

Free Trade Agreements - Essay Example The per capita consumption in U.S tripled by introduction of free trade practice. Americans are depending on different countries in the world for different needs. Americans importing cameras and car from Japan, shirts from Bangladesh, videocassette recorders from South Korea, paper products from Canada, fresh flowers from Ecuador, Oil from Kuwait, steel from China and Computer Programmes from India. In 2001, U.S imports of goods and services totalled $1.6 trillion. Not only in importing goods, Americans are number one in world exporters. They sell computers, bulldozers, financial services, movies and thousands of other products to entire world. They are selling $1.3 trillion worth goods to different parts of the world. In the past three decades, the U.S imports and exports increased from 11 percent to 30 percent. And also financial investment is gown from less than 1percent to 3percent. One of major concern of the Americans was the large import from different countries may destroy the jobs and nation becoming dependent on others. But the trade is the great generator of economic well-being. It improves the competition, through the productivity and quality will improve. It will avail cheaper and better good for the consumers. By spurring economic activity and reducing cots, trade helps create jobs. By enhancing productivity and quality, the U.S companies makes vibrant in world market. Imports are the real fruits of trade because the end goal of economy activity is consumption. Americans view the free trade as an unfair trade. The cheap imports hurts the higher cost US suppliers, but consumers will gain from this. The U.S traders become more dependent on other countries. The domestic industries will fell down. It will destroy the jobs of factory workers, farmers and reduce the wages. On wrong heading into a trade, will sap the US economy and sour its relationship with other countries. The American live and work in a highly dependent Society. People buys good from thousands of sources, including different part of the world. U. S accepted specialisation and trade and as it rewards the standard of living is higher than any other country in the world. English economist David Ricardo explained the benefits of specialisation and trade. In his theory he explains, an average American worker produces 100bushels of soybeans or five pairs of shoes and a Chinese worker produces 8 bushels of soybean and 4 pair of shoes. U.S is more productive than China in both industries, but specialization and trade both the counties can gain more. By shifting American worker from shoe factory to soybean farm produces a gain of 100 bushels of soybeans at the cost of five pairs of shoes. Shifting two Chinese workers from farm to factory raises show out put by eight pairs but cuts soybean production by 16 bushels. The net effect is an increase of 84 bushel of soybean and three pairs of shoes. In this example both the countries should specialised on their own products and this will maximise the production. Both countries can divide the production between themselves and it will offer better than they were by their own. The specialization of trade arises out of the profit motive. Each country can expertise their own advantage and support to the countries for their needs as expertise on their product. By the country can offer better living standards to the people. If we consume only what we produce,