An Essay about International Trade Barriers
...ers reduce trade deficits in national budgets. Trade deficits occur when a country imports more goods than it exports and therefore suffers a loss in monetary terms. This can cause our nation to be more vulnerable to economic downturns. We lose self sufficiency and the ability to progress. Trade barriers prevent the occurrence of such a case by limiting the number of imports. An increase in free trade will increase consumerism. There will the greater consumption goods which leads to increased productions. This will lead to increased environmental pollution. So in this respect, the limiting of imports reduces consumerism which in turn reduces environmental destruction. Jobs have been lost in sectors which have been, in the past, unable to keep up with the changing markets of a free trading country. This means that unemployment will rise. By limiting trade with trade barriers, we protect jobs in Australia and for Australians. However, there are also many disadvantages in trade barriers. Trade barriers can invoke negative responses from other countries. Other countries may see our trade barriers as a threat, and in response but trade barriers up. This would mean a loss for Australia’s trading income. However, if we were to reduce our trade barriers, other countries might do the same in response providing better trading environments and more prosperous economic co-operations. Also, trade barriers can cause a “race to the bottom”. This means that countries will lower manufacturing standards to match the competition. This would mean that producers will “cut corners” because they do not wish to pay for additional material i.e. environmental safety, higher wages. Such a scenario would be disastrous for Australia and the world. Reduce trade barriers is one way to prevent this. Trade barriers favour the more dynamic firms which are able to adapt to competitive pressures in domestic markets will retain this competitive edge because they have achieved a level of superiority. Although this encourages more competitiveness in the market, it also destabilizes the smaller less dynamic companies. This would push small businesses out of competition. Trade barriers are biased toward dynamic firms. With the increase of trade barriers, the cost of living increases. As trade barriers force foreign companies to increase prices to sustain profits, the consumers are affected adversely by an increase in price. Increases in price over a wide range of goods, will eventually add up to a significant increased cost of living for the consumer. Tariffs in particular are an indirect tax to the consumer. If the 1988 tariffs were applied today, car would be 25% more expensive ad clothing alone would cost an average family $300 more annually. Also, tariff increase cost for local businesses. How, then can trade barriers be said to be a protection to local businesses. Trade barriers adversely affect the growth of developing countries. By closing off our/their markets, developing countries limit the expansion of their markets. This would prevent the growth of businesses. During the 1990’s a rise in average incomes for people in developing countries was caused by an opening of their markets to the world. One method of opening up markets is by implementing trade agreements. Trade agreements can take many forms. There are unilateral, bilateral and unilateral agreements and there are free trade agreements. Unilat...