International Trade Policy Restrictions: Ethics, Pros, and Cons

Abstract

International trade is the purchase and sale of goods by companies in different countries. Consumer goods, raw materials, food, agricultural products, pharmaceutical products, energy, vehicles, and machinery all are bought and sold in the international marketplace. International trade allows countries to expand their markets and access goods and services by importing them, otherwise may not have been available domestically. International fair-trade policies and trade restrictions are the set of agreements, regulations, and practices by a government that affect trade with foreign countries, which is a combination of standards, laws, and practices that influence imports and exports. Trade policies can include regulations, devaluation of currencies, dumping, tariffs, and quotas, with which they want to restrict trade and set policies that protect local industries from foreign competition. Fair and ethical trade policies must have a number of benefits, including economic growth, employment, attracting domestic firms that operate abroad to produce locally more efficiently at lower costs of production, and to lead countries to autarky, prosperity, and to maximization of their social welfare. These trade policies are effective only if the price elasticities of exports and imports are high (elastic).