Free Trade and Government Regulations

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BUS 357

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Feb 20, 2024

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1 Free Trade and Government Regulations Sophie Mukasa The University of Arizona Global Campus International Business (BUS: 357 English) Instructor Kathy Colquitt January 15, 2024

2 Free Trade and Government Regulations A Free Trade Agreement is an agreement between two or more countries where the countries agree on certain obligations that affect trading goods and services (Trade.Gov). Some countries like the United States get involved in free trade agreements to reduce barriers to the country’s exports and protect the country’s interests to compete abroad. This paper will elaborate in the Pros and Cons of free trade for countries and the planet. The Pros and Cons of free trade. Some of the main benefits of Free Trade are as follows. Reduction or elimination of tariffs. Countries that are part of a trade agreement can save on products originating in the partner country. Fair treatment for investors; partner countries are obligated to treat other partner countries investors as well as they treat their own investors. Partner countries can participate in each other’s development of product standards. Partner countries can bid on certain procurements in the partner country as per Trade agreement. Free Trade Agreements come with Intellectual property protection whereby there is protection and enforcement of one partnering company’s intellectual property rights in the other partnering country. Partnering companies are able to supply their services to one another as regulated by FTA policies. In a nutshell, countries must be careful when setting up free trade agreements because if the FTAs are not set up within the right policies, it could raise a lot of disadvantages to the partner countries as well as diminish economic welfare. Government Role in Free Trade Governments step in to stabilize markets, regulate transactions, provide institutional frameworks and enforce rules around contract law and property rights M. Hall (2022). In addition, according to M. Hall article on investopia.com, Governments also have the capacity to make broad changes

3 to monetary and fiscal policy including raising and lowering interest rates. Not to mention that Governments can create their currencies and also cause inflation when it benefits the country in one way or another. With this in mind, when countries are signing Trade Agreements FTAs, policies should be carefully reviewed and applied to prevent countries that are stronger that interested partners from taking advantage and hurt the economy of one country while the other gets boosted. Conclusion In conclusion, whereas there’s several pros and several cons with Free Trading, the advantages out-weight the disadvantages and it is recommended that countries do practice Free Trade agreements in order to boost their economies and financial well-being.

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4 References Daniels, J. D., Radebaugh, L. H., & Sullivan, D. P. (2018). International business: Environments and operations (16th ed.). Retrieved from https://www.vitalsource.com/ Free Trade Agreement Overview (n.d) https://www.trade.gov/free-trade-agreement-overview M. Hall (2022 Government influence in Markets. https://www.investopedia.com/articles/economics/11/how-governments-influence- markets.asp#:~:text=Free%20markets%20are%20often%20conceptualized,contract%20law %20and%20property%20rights

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