Download Olivera Gina Olivera Mr. Tenorio Principles of Economics 15

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Gina Olivera
Mr. Tenorio
Principles of Economics
15 January 2013
Trading? Why do we do it? We know that the United State produces many products, such as
shirts, books, jeans, and machineries; but there are some things we don’t produce. Why? The reason is
that and unequal distribution of resources prevents countries from producing everything their citizens
need and want. This is also the reason why we trade. Trade agreements are essential between countries
because, it keeps and equal distribution of supply in the cycle of trading.
The International trade is based on resources that a country needs and another can provide. Each
country provides different resources. By specializing in the production of certain goods and services,
nations can use their resources more efficiently. According to the Law of Comparative Advantage, a
nation is better off producing goods and service at which it has an advantage.
The United States is the most significant nation in the world when it comes to
international trade. For decades, it has led the world in imports while simultaneously remaining
as one of the top three exporters of the world. Besides being the world’s largest exporter, the
United States is also the world’s top importer. The United States import nearly $900 billion in
goods and service, or 16.1 percent of the world’s total.
The U.S. is a member of several international trade organizations. The purpose of joining
these organizations is to come to agreement with other nations on trade issues. It also negotiated
many Trade and Investment Framework Agreements, which are often precursors to free trade
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agreements. It has also negotiated many bilateral investment treaties, which concern the
movement of capital rather than goods.
The United States Trade Representative has the principal responsibility for administering
the U.S. trade agreements. This involve monitoring our trading partners implementation of trade
agreements with the United States, enforcing America’s right under those agreements, and
negotiating and signing trade agreements that advance the President’s trade policy.
Most country has some form of trade barriers. “A trade barrier or trade restriction is a
mean of preventing a foreign product or service from freely entering a nation’s territory” (Arthur
O’s Sullivan and Steven M. Sheffrin, pg. 449). There are three common form of trade barrier:
Tariffs, import quotas, and voluntary export restraints. Tariff is basically a tax on imported
goods, both businesses and individuals have to pay tariffs. An import quota is a limit on the
amount of goods that can be imported. Voluntary export restraint, also known as VER, is a selfimpose limitation on the number of products that are shipped to a particular country.
United States trade policy has varied widely through various American historical and
industrial periods. As a major developed nation, the U.S. has relied heavily on the import of raw
materials and the export of finished goods.
While the United States has always participated in international trade, it did not take a
leading role in global trade policy-making until the Great Depression. Congress and The
Executive Branch came into conflict in deciding the mix of trade promotion and protectionism.
In order to stimulate employment, Congress passed the Reciprocal Trade Agreements Act of
1934, allowing the executive branch to negotiate and get involve in trade agreements for a fixed
period of time. During the 1930s the amount of bilateral negotiation under this act was fairly
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limited, and consequently did little to expand global trade. The U.S tried to figure out how to
solve the issue at hand in many ways, making and creating new ideas, until it became the leading
trade partner.
As time went by the United States became the world's leading consumer. It also became
the number one customer of companies all around the world. Many businesses compete for a
share of the United States market. In addition, the United States occasionally uses its economic
leverage to impose economic sanctions in different regions of the world. The USA is the top
export market for almost 60 trading nations worldwide.
The United States also has free trade agreements with 20 countries. Which are: Australia,
Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala,
Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, and
Singapore. The United States is also in negotiations of a regional, Asia-Pacific trade agreement,
known as the Trans-Pacific Partnership (TPP) Agreement with the objective of shaping a highstandard, broad-based regional pact.
Like every other aspect in life, there are both pro and con’s about trading. Thought it
benefits us all, our country has to watch how it trade with international countries. International
trade is complicated by the fact that different nations have different currencies. Countries pay for
imports in their own currencies and receive foreign currency for exports. If a nation imports
more than it exports, or vice versa, a trade imbalance can be created.
Trade agreements are an essential aspect of every country. It is through trade agreements
that alliances are formed. It is also a crucial part of the international relation and is a symbiotic
relationship between countries.
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Work cited:
http://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_the_United_States
http://en.wikipedia.org/wiki/Foreign_trade_of_the_United_States
http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/united-states/
http://www.ustr.gov/trade-agreements
Prentice Hall ECONOMICS by Arthur O’Sullivan & Steven M. Sheffrin