What Does a Minister of International Trade Need to Know to be Effective at their Job?

Economic Approach

Driskill says that economists “almost universally support free trade as a policy”

However, Economists and free traders tend to oppose protectionism and discrimination

Consumer Benefit

As a result of comparative advantage it allows consumers to acquire goods at the lowest price possible price, providing them with an economic benefit

Returns to scale

Trading to the right country or with the right country can bring greater economic benefit as every country possesses a different share of specific goods and resources

Reduction in the monopoly powerof domestic firms

As a result of absolute and comparative advantage, many international firms possess the power to sell at a lower price than domestic firms which attracts the vast majority of consumers

Historical Approach

Frieden's First Approach to Capitalism

This act raised US tariffs on over 20,000 imported goods. An act designed to provide revenue, regulate commerce with foreign countries, to encourage American industries to protect American labor, and raised tariffs on the international community

Frieden's Second Approach to Capitalism

Free Trade influenced concepts of growth and stability to overall society. Whereas, autarky induced the opposite, economic struggle and hardship

Historians tend to argue that "free trade is mostly good"

World Trade Organization (WTO)

Disadvantages of WTO

Insecurity due to the fact that the WTO is not accountable for ensuring the nations’ security in any other aspect

Unfair to developing third world countries as the WTO's function is designed to benefit international superpower members

Their failure to uphold the principle of democracy. The policies of the WTO impact all aspects of society and the planet, although it lacks democracy and transparency

Advantages of WTO

Awakens monetary progress and influences global governance

Decreases cost of life for civilians of member countries, leaving them with an increased share of disposable income

Transparent, predictable and attractive investment

General Agreement on Tariffs and Trade (GATT)

Preferential Trade Agreements tend to operate significantly more efficiently than multilateral agreements because they reduce barriers to trade, like import tariffs, restrictions on trade in services, and other commercial practices that may intrude in the operation of international trade.

Military power can influence trade as international military monopolists can place sanctions on certain countries to prevent a potential increase in international military power

For example, Russia received a multitude of military sanctions from the international community in desire of assisting and aiding Ukraine from facing the cruel intent of the Russians.

Implications can potentially form through violating the principles of international law and trade such as international law compliance, ethical production, etc. resulting in potential international backlash

For example, thousands across the globe refused to buy the extremely reputable brand Canada Goose as they utilize animal fur to manufacture their products. Similarly, many across the globe pursue a parallel mindset on items manufactured through the method of child labour. Ultimately, inducing severely minimal export taxes in hopes of increasing the desirability to international market.

Within intergovernmental trade organizations such as the WTO, countries possess the power to implement sanctions, tariffs, quotas, taxes, subsidies, etc.

Domestic Tools to Restrict International Trade

Quotas

A limited amount of a specific product which under official controls can be produced, exported, or imported.

Export Taxes

Export taxes are implemented and increased with dependance on scarcity and high demand of products which would increase or decrease the export tax percentage

Export Subsidies

Can potentially increase domestic good prices as export subsidies are a government policy to encourage export of goods and discourage sale of goods on the domestic market

Sanctions

Used as a tool of protection, sanctions are coercive measures applied against a state or individuals that poses a potential threat to international peace and security

Tariffs

Tariffs increase the price of goods and services purchased from another country, making them less attractive to domestic consumers.

International Tools to Restrict International Trade

WTO

For example, restrictions relating to trade in nuclear materials, narcotic drugs, weapons, and several measures to protect the environment have been implemented by a majority of WTO members. Although not all members have as the WTO does not possess any real authority over these countries' actions.

United Nations

Known for promoting trade and economic activism in third world and developing countries that require trade development for the economic well being of the nation.