Methods to Increase Trade Between Countries and the Methods to Restrict Trade Between Countries.
M1 In this I am going to assess the methods to increase trade between countries and the methods to restrict trade between countries. When asses the methods of encouraging and restricting trade I will talk about the purpose for the methods of promoting and restricting international trade, identify how and why they might be used and I will decide how useful each method is giving appropriate reasons for it. International trade is the exchange of goods and services between countries.
FREE TRADE
This is the freedom to trade in a particular country versus regulated. For example IKEA a Swedish company is allowed to import its furniture into to the UK without being taxed. IKEA specialises in furniture production and Free trade with the UK enables to specialisation in the production furniture to continue s in which they have a comparative advantage. With specialisation they are able to take advantage of efficiencies generated from economies of scale and increased output. Consumers in the UK benefit in the domestic economy as they can now obtain a greater variety of good and modern furniture from IKEA.
TRARIFFS
These are additional taxes paid on imports and exports. Tariffs are used to reduce dumping. An example of how tariffs might be used is the ‘banana wars’. The term ‘banana wars’ refers to a series of trade disputes between the European Union, the United States and several Latin American countries concerning access to Europe’s banana market. So the disputes surround EU tariffs on banana imports. The EU charges duties on bananas imported form other countries except those imported from former European colonies in Africa, the Caribbean and the Pacific countries. The EU imposes these tariffs because it made agreements with it colonies to provide them with access to European markets and aid. Therefore the banana tariff enable the EU maintain a good political relationship with its former colony countries but on the other hand the countries affected by the tariff are
FREE TRADE
This is the freedom to trade in a particular country versus regulated. For example IKEA a Swedish company is allowed to import its furniture into to the UK without being taxed. IKEA specialises in furniture production and Free trade with the UK enables to specialisation in the production furniture to continue s in which they have a comparative advantage. With specialisation they are able to take advantage of efficiencies generated from economies of scale and increased output. Consumers in the UK benefit in the domestic economy as they can now obtain a greater variety of good and modern furniture from IKEA.
TRARIFFS
These are additional taxes paid on imports and exports. Tariffs are used to reduce dumping. An example of how tariffs might be used is the ‘banana wars’. The term ‘banana wars’ refers to a series of trade disputes between the European Union, the United States and several Latin American countries concerning access to Europe’s banana market. So the disputes surround EU tariffs on banana imports. The EU charges duties on bananas imported form other countries except those imported from former European colonies in Africa, the Caribbean and the Pacific countries. The EU imposes these tariffs because it made agreements with it colonies to provide them with access to European markets and aid. Therefore the banana tariff enable the EU maintain a good political relationship with its former colony countries but on the other hand the countries affected by the tariff are