Importance of Trade Regulations and Trade Agreements

Date: Oct 11, 2017
Category: Economics

Trade regulations together with trade agreements are important with relation to international economics and global markets. Trade regulations and policies ought to be transparent and should promote fairness among member nations. Trade regulations guarantee liberated and competitive economic system. Trade regulations encourage free trade among nations and fair competition. They also prevent anti-competitive business undertakings for instance price fixing and monopolies. Trade regulation ensures a level trade field for global nations especially the poor countries. Trade regulation ensures fairness to the poor countries especially in cases where developed nations offer subsidies to their farmers. The subsidies usually distort markets since the pricing of commodities becomes a problem. Trade regulations allow the poor or younger nations to flourish even in the presence of the developed countries.

Trade agreements such as free trade agreements make it easier, and less expensive for companies to export their commodities and services while generating employment opportunities and boosting economies. However, free trade agreements may bear reverse effects for instance creating jobs abroad and reducing employment opportunities within the domestic markets. This applies to trade industries that initially had hard tariffs thus making imports cheaper. However, this improves or benefits the consumers who purchase goods from such industries at reduced prices and improves production efficiency. Free trade agreements make goods cheaper for consumers and businesses.

Trade agreements expand markets and encourage investment thus increasing trade flows and investment flows. Trade agreements provide investment protection that include access to international obliteration, which offer investors confidence to invest in international markets. Trade agreements augments exports to other countries considering the diversity in the industrial sector and the export markets may generate considerable job opportunities. Trade agreements integrate developing nation economies with the economies of developed countries thus creating an avenue for economic development. Additionally, trade agreements augments production of commodities in which a country bears comparative advantage.