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Arrest Trade Barriers by Free Trade Agreements

Aug 17, 2007
Arrest trade barriers by free trade agreements following international standards

Trade barriers are artificial disincentive to export or import traders. Example of trade barriers are tariff, quota and unnecessary import/export license requirements slapped against foreign traders to favor local traders.

Traders who suffer from these trade barriers are imposed additional costs that raises their trade prices, thus, it will be hard for them to compete fairly on pricing issues.

Once these foreign traders experience losses because it will loose good amount of customer due to high cost, moving out from the trade favors local traders and suppliers.

Economists believe that trade barriers decrease overall economic efficiency.

This practice deprives local consumers of the goods from other nations because the government safeguards local traders. This may be good because there is a fair chance for local players to get better, however healthy trading including foreign goods and services might be better.

To arrest issues against trade barriers imposed on foreign traders, the United Nations set up standards and procedure promoting free trade.

Free trade promotes the recognition of the important contribution of international standards and conformity assessment, which can affect efficiency of production and facilitation of international trade conduct.

Removing trade barriers, otherwise known as free trade encourages conformity to international standards that may lead to open trading between nations.

Even with the advent of free trade, respect of trader's intellectual property rights may still need to accord due respect. This does not necessarily favor one against the other. But to respect the rights and privileges of the intellectual proprietor. This is an ethical way of doing business. Foreign traders should not have a problem with this because just the same, they would want other traders to respect their intellectual property rights if ever.

Free trade eliminates the possibility of bribery, corruption and imposing undue payoffs. This is because this practice of cashing in on foreign traders may result to a barrier that prevents foreign traders to compete fairly and squarely in the marketplace. Should this happen, consumers will suffer because traders will get back at them on issues such as pricing and quality of service.

Removal of trade barriers except for reasons of national security and health is the main purpose of free trade agreements such as the North American Free Trade Agreement (NAFTA), European Free Trade Agreement, European Union and South American Community Nation.

These agreements ensure foreign traders some leeway on trade barriers; if not at all eradicate it. The United Nations International Standards plays a big role in ensuring protection of traders and industries.

For certain industries, however, such as agriculture and steel, even those countries that promote free trade extend heavy subsidy to local players. This is a safeguard of the government for the growth of these industries in their country.

This issue on subsidy may still be tolerable than other trade barriers that burden and costs foreign trader, especially corruption.

Finally, nations should avoid repeated use of trade barriers against each other to avoid trade wars that will not benefit anybody in the end. Free trade promotes economic efficiency, thus nations should recognize open trading to benefit from globalization.

Free trade allows consumers to enjoy goods from other nations, which commonly they will not be able to have access on should trade barriers continue to prejudice foreign traders hoping to enter the country.
About the Author
James Monahan is the owner and Senior Editor of http://www.BarriersBase.com
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