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Domestic Producers Might Oppose Free Trade Agreements Because Quizlet

Most economists agree that NAFTA has benefited the Canadian and U.S. economies. According to a report by the Council on Foreign Relations, regional trade increased from $290 billion in 1993 to more than $1.1 trillion in 2016, and the stock of U.S. foreign direct investment (FDI) in Mexico increased from $15 billion to more than $100 billion. However, economists also say that other factors may have contributed to these results, such as technological changes and expanded trade with China. Each country imposes certain restrictions on the import and export of goods in the broader interest of the country. Finally, as T. Scitovsky pointed out, free trade can be beneficial for the world as a whole, but it has never proven to be the best policy for a single country. Mercantilism is the theory of maximizing earnings through the export of goods and services. The goal of mercantilism is a favorable trade balance in which the value of the goods a country exports exceeds the value of the goods it imports. High tariffs on imported industrial goods are a common feature of mercantilist policy. Proponents argue that mercantilist policies help governments avoid trade deficits whose import spending exceeds export revenues.

For example, the United States has suffered a trade deficit since 1975 due to its elimination of mercantian policy. If there were no international trade, many countries would have to give up certain products. Thus, Iceland would have no coal, Nepal would have no oil, Spain would have no gold, and Britain would have no tea. Second, specialization leads to an increase in total production. Since the time of the ancient Greeks, economists have studied and discussed the theories and effects of international trade policy. Do trade restrictions help or harm the countries that impose them? And which trade policy, from strict protectionism to free trade, is best for a given country? Years of debate about the usefulness and cost of free trade policy for domestic industry have given rise to two dominant theories of free trade: mercantilism and comparative advantage. .