International Trade

Advantages and Disadvantages of International Trade

The exchange of goods, services, capital between countries and regions is referred to as International Trade and it has given rise to the global economy. There are different forms of trade and the advancement in technology has also changed the economic trend among various industries. In such a way that international trade, most especially in terms of supply and demand directly related to the events happening all over the world.

International trade has sparked a lot of debate in recent times as the world seems to be becoming virtually smaller every day, the stringent and largely formal procedures that formed the basis of trade in the past have come tumbling down especially in this age of information technology, where platforms to communicate with almost anyone have turned the world to a global village. For effective trade, however, there are some factors that come into play, they include: the level of technological advancement, liberalization and international labor division; these factors set the ground for trade. If all these factors were standardized the world round, then benefits from international trade would be fair across the board but this is not the reality of our world and this factor in turn determines the extent to which a country benefits.

The major benefits felt from international trade are, promotion of information exchange which has led to better cultural understanding of different people, it can be attributed to raising the living standards of some people, it has promoted democracy, raised purchasing power of some nations; there is the general feeling of a more united world and countries no longer operate in isolation.

The most alarming trend of international trade is it is increasing the gap between the rich and the poor. The terms of trade are not fair nations seem to be getting all the benefits while the developing nations get the raw deal; it can be termed as modern day imperialism. Countries are today more affected by the trends of other countries. If there is recession, it is likely to be felt across the board, some corporations have taken advantage to relocate businesses to countries with cheap labor and weak environmental laws increasing environmental degradation.

Benefits of International Trade

The benefits of international trade can be depicted on the countries that have developed their income and those who have obtained trade power over the years. According to Stanley, "nations with strong international trade have become prosperous and have power to control the world economy. The global trade can become one of the major contributors to the reductions of poverty." This form of trade has flourished over the years due to the fact that countless benefits can be derived from importing and exporting of goods to other countries most especially in terms of demand and supply and the efficiency of that it offers.

According to Hata, "a country would consider trading internationally in an effort to give their GDP a big boost very quickly." This is true as some countries have better quality of products and they intend to market it to other countries for exposure and the transaction would be able to generate income. This will also be the case in return if a country intends to import goods from other countries that have the products and services they need.

Also, some products can only be found in a certain country such as agricultural products wherein each country has dissimilar weather thus the production of goods may vary in every country. Some agricultural products may be hard to produce in tropical countries while other countries on the other hand have an overflow of supply for that particular agricultural product. The following are a list of international trade:

Enhances the domestic competitiveness; Takes advantage of international trade technology; Increase sales and profits; Extend sales potential of the existing products; Maintain cost competitiveness in your domestic market; Enhance potential for expansion of business; Gains a global market share; Reduce dependence on existing markets; Stabilize seasonal market fluctuations.

Among others, engaging in the international trade leads to the exceptional performance of a company to cope with existing products and service all over the world. Once a country initiates international trade, the import and export of goods is maintained and enhanced to impress other countries for customer satisfaction purposes.

Problems Encountered with International Trade

Following the boost of industrialization and international trade supply the hindrance to the trade industry approached the world. The global crisis has greatly affected the market in the economy became at a loss affecting the whole world. Shah mentions that, "the extent of this problem has been so severe that some of the world's largest financial institutions have collapsed."

Also, it is that time when some companies have financial issues that resorted to bankruptcy and eventually closed their businesses. The Trade industry went down because the top players in the industry have suffered as well.

Then, the World Trade Organization (WTO) implemented the rules for international trade. According to Anderson and Cavanagh, "The General agreement on Tariffs and Trade (GATT) was an international organization created in 2947 to reduce trade barriers through multilateral negotiations. In January 1995, the GATT was replaced by stronger World Trade Organization (WTO) the result of eight years of GATT negotiations. Today, member countries number 125 (nearly the whole world except China, some former communist countries, and a number of small nations) and WTO rules apply over 90 percent of international trade."

This agreement gave rise to different controversies and misunderstandings because of the wide range of its coverage compared to the GATT agreement that focuses only on the reduction of tariffs among manufactured goods. It has been argued if the Uruguay round world would be more effective or the GATT agreement. Most of the businesses all over the world are encountering problems with the rules of these agreements.

Anderson and Cavanagh explain that the Uruguay round "is slated to result in average tariff reductions of 38 percent for developed economies, reducing average tariffs worldwide from 6.3 percent to 3.9 percent. In comparison, average tariff rates just after World War II were 40 percent. The most controversial outcome of the Uruguay Round was the establishment of much stronger enforcement mechanisms in the WTO." Their policy is deemed to be unfair because it only favors the powerful countries controlling the trade industry while developing countries need to cope up with them.

Conclusion

Therefore, the international trade paved the way for global transactions and increase in market profitability. With this, numerous benefits have been gained by different countries participating in the trade industry. The advancements in technology have also allowed efficiency and accessibility of information and in doing business transactions.

Benefits include increase in GDP sales and profits, development of quality products and services, market profitability and market size. International trade also extends potential on the existing products, gaining a global market share and reduces the dependence on existing markets. These benefits however, have problems along with it.

As mentioned earlier, the international trade industry would be able to minimize certain misunderstandings and disagreements with the proper implementations and fair international trade policy. Moreover, a strict implementation in terms of copyright and infringement policies would also help solve the different aspects of the country's property rights. The advancements of technology enhances the communication process in doing international business transactions thus different countries participating in the international trade have the need to cope with the changes in the trade business environment.

The only way international trade would be fair for all is if the countries had a level playing ground, if all factors were standardized then the potential theoretical benefits of international trade are immense, it would be possible for all countries to benefit and contribute to setting terms of trade; but for now the developed nations are the biggest gainers and the developing nations continue to struggle to reap the benefits of international trade.

Writing Performance:

Score Point 6

Writing Trait:

Commentary:

Focus & Meaning

There is very effective focus and meaning in the response. The writer establishes and maintains an insightful controlling idea or bottom line, and demonstrates a thorough understanding of the purpose of the task. Additionally, the writer clearly adapts the message to the intended audience. The writer successfully completes all parts of the task.

The writer effectively focuses on the controlling idea by providing details about the advantages of international trade. ("The benefits of international trade can be depicted on the countries that have developed their income and those who have obtained trade power over the years. According to Stanley, 'nations with strong international trade have become prosperous and have power to control the world economy. The global trade can become one of the major contributors to the reductions of poverty.' This form of trade has flourished over the years due to the fact that countless benefits can be derived from importing and exporting of goods to other countries most especially in terms of demand and supply and the efficiency of that it offers. ...According to Hata, 'a country would consider trading internationally in an effort to give their GDP a big boost very quickly.' This is true as some countries have better quality of products and they intend to market it to other countries for exposure and the transaction would be able to generate income. This will also be the case in return if a country intends to import goods from other countries that have the products and services they need.")

Content & Development

The response demonstrates very effective content and development. The writer develops ideas fully and memorably, using appropriate business concepts and terms.

The writer includes relevant points to explain and illustrate the advantages and disadvantages of international trade very effectively. ("Following the boost of industrialization and international trade supply the hindrance to the trade industry approached the world. The global crisis has greatly affected the market in the economy became at a loss affecting the whole world. Shah mentions that, 'the extent of this problem has been so severe that some of the world's largest financial institutions have collapsed.' ...Also, it is that time when some companies have financial issues that resorted to bankruptcy and eventually closed their businesses. The Trade industry went down because the top players in the industry have suffered as well.")

Organization

The organization of the information in the response is very effective. The response demonstrates a cohesive and unified structure with effective use of paragraphing or grouping of information. The writer uses logical connections and transitional devices throughout.

The introduction is very effective in presenting the overall message of the response. ("The exchange of goods, services, capital between countries and regions is referred to as International Trade and it has given rise to the global economy. There are different forms of trade and the advancement in technology has also changed the economic trend among various industries. In such a way that international trade, most especially in terms of supply and demand directly related to the events happening all over the world. ...International trade has sparked a lot of debate in recent times as the world seems to be becoming virtually smaller every day, the stringent and largely formal procedures that formed the basis of trade in the past have come tumbling down especially in this age of information technology, where platforms to communicate with almost anyone have turned the world to a global village. For effective trade, however, there are some factors that come into play, they include: the level of technological advancement, liberalization and international labor division; these factors set the ground for trade. If all these factors were standardized the world round, then benefits from international trade would be fair across the board but this is not the reality of our world and this factor in turn determines the extent to which a country benefits.")

Language Use & Style

The writer demonstrates very effective language use and style throughout the response. The writer employs precise, professional language and word choice. The writer demonstrates a defined voice and a clear sense of audience. The use of well-structured and varied sentences adds to the effectiveness of the writer's message.

Language and word choice in the response are professional in nature. ("As mentioned earlier, the international trade industry would be able to minimize certain misunderstandings and disagreements with the proper implementations and fair international trade policy. Moreover, a strict implementation in terms of copyright and infringement policies would also help solve the different aspects of the country's property rights. The advancements of technology enhances the communication process in doing international business transactions thus different countries participating in the international trade have the need to cope with the changes in the trade business environment.")

Mechanics & Conventions

The writer demonstrates very effective control of mechanics and conventions. There are few or no errors in punctuation, spelling and usage, grammar, and sentence structure.

The writer effectively demonstrates the correct use of punctuation (e.g., apostrophes, colons, commas, hyphens, italics, parentheses, periods, quotation marks, and semicolons). ("Then, the World Trade Organization (WTO) implemented the rules for international trade. According to Anderson and Cavanagh, 'The General agreement on Tariffs and Trade (GATT) was an international organization created in 2947 to reduce trade barriers through multilateral negotiations. In January 1995, the GATT was replaced by stronger World Trade Organization (WTO) the result of eight years of GATT negotiations. Today, member countries number 125 (nearly the whole world except China, some former communist countries, and a number of small nations) and WTO rules apply over 90 percent of international trade.'")