Introduction The member countries under World Trade Organization (WTO) must grant most-favoured nation (MFN) treatment to products of other member countries with respect to tariffs and other trade matters. The MFN principle focuses on non-discrimination against imported products from other Member countries. As per the MFN rule, member countries are required to act in accordance with their scheduled commitments on tariffs and not allowed to apply tariffs beyond the assigned levels. Nevertheless, in certain circumstances, WTO member countries can deviate from their obligations under the MFN principle, given that they follow certain other conditions. Under the General Agreement on Tariffs and Trade (GATT) 1994, there exist various exceptions, which the member countries follow to depart from these obligations.
b) Introduction of free trade and trade agreement Another critical force of leading to globalization is the reduction of cross-border barriers. Trade is a particularly important element for transferring goods and services around the globe. Yet many countries set up restrictions to restrict the movement of goods to protect of their national interest. Measures such as imported quotas and tariffs are often imposed. The emergence of free trade zones and international organizations aim to reduce barriers through trade agreements.
Although, sales of consumer goods are not adjusted by the CISG but are adjusted by the UCC. Specific Similarities in Contract explanation: Contracts are often obscure in certain areas, but both the UCC and CISG provides the same way of interpretation. To decipher ambiguities, the UCC and CISG allow the use of course of dealing, course of performance and usage of trade. Specific warranty similarity is: Both provides similar coverage for warranties, including, specifically implied warranties of merchant strength and fitness for a particular purpose. These implied warranties may mention in sections 2-314 and 2-315 of the UCC and Article 35 of the CISG.
The main objective of this is to cut expenses of customers and suppliers and to expand the trade. A preferential trade agreement is a trading alliance that gives preferential access to certain products from the participating countries. This is done by reducing tariffs but not by abolishing them completely. This can be considered unfair to certain countries as they still have the tariffs and some just have very less. It is the first stage of economic integration.
In the world of International trade economists and scholars all understand and explain the different views regarding the level of control placed upon trade. International trade is defined by the Business Dictionary as trade between two or more partners from different countries in the exchange of goods and services thus it is simply the exchange of exports and imports on goods and services across international boundaries. The two most contrasting views in the international trade thought bubble include free trade and protectionism. Free trade is believed to open the global market, with a limited amount of restrictions on trade as possible whilst protectionism believes in the concentration of the welfare of the domestic economy by setting limits on the open-market policy. The term Protectionism is a politically motivated defensive measure that limits unfair competition from foreign industries in way of a policy.
HORIONTAL AGREEMENTS Horizontal agreements are co-operative agreements that are entered between the competitors of the same industry . The primary objective of competitors to enter into a friendly agreement is to avoid the competition and regulate the market according to its own whims and fancy. The major subject matters of these agreements relate to pricing of the product, distribution channel, selling strategies and the production channel. The competitors agree to share details of the product as well as the market that it would target. These agreements tend to violate the antitrust laws as they work towards eliminating the competition from the market.
Discuss the debate on free trade vs protectionism. Discuss both views and give your own opinion. FREE TRADE VS PROTECTIONISM FREE TRADE: Free trade is a policy in which the foreign cheap products are available in the market. It is followed by some international markets in which governments do not restricts imports from, or exports to, other countries. It allows consumers to buy from abroad just as freely as they can buy goods domestically.
This chapter it’s all about the monopoly or cartel, four-firm monopolistic competition, eight firm monopolistic competition and perfect competition. They have also trade restrictions could take the form of tariff, import quotas or buy national procurement policies; investment restrictions could keep foreign firm from opening or expanding their industrial and distribution outlets. When the government dismantles its trade and investment restrictions, foreign competition can help make the market structure more competitive. The United States using a measuring the cost of protection because of the domestic good and imported goods, they supply schedule of the imported goods is completely elastic while the domestic good is upward sloped they are
Free trade agreements are the agreements with the cooperation between the countries in order to reduce the trade barriers. This would result in an increase in trade between these countries as well as an improvement in the countries’ economy. The significant trade barriers are the import quotas and tariffs. The trade between the countries can occur in both goods and services. Each Trade agreements are different - different scope, different area coverage, different targeted goods and industries, for example.
• Examples of market economies is United States of America and Japan. Role of government • To pass laws to protect businessmen and consumers • To issue money • To provide public services – police • To prevent firms from dominating • The market and to restrict the power of trade unions • Repair and maintain state properties. Advantages: • Goods and services go where they are most in demand and free market responds quickly to people’s wants and wide variety of goods and services. • No need for and overriding authority to determine allocation of goods and services • Producers and consumers are free to make changes to suit their aims • Competition and the opportunity to make large profits, greater efficiency, innovation. Disadvantages: • There is misallocation of resources • It creates inequality of incomes • It is not competent in providing certain services.