Trade and Multinational Companies

Trade and
Multinational
companies

Table of Contents
INTRODUCTION ..........................................................................................................................3
LITERATURE REVIEW................................................................................................................3
ANALYSIS AND DISCUSSION...................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Free trade refers to a plan of action through which government don't distinguish against
any kind of import or with respect to exports by applying any kind of tarriffs with respect to
imports or any kind of subsidy with respect to exports. According to free trade argument, the
labour which is divided across countries will led to better efficiency as well as high production.
It is also defined as a free market idea which is defined as a international trade. Free trade
argument is done between multiple nations to deduct obstacles with respect to imports and
exports. When a free trade policy is applied the products which are dealing in export and
imports and are bought and sold across different countries have less or even no government
taxes, subsidies or forbid to conquer their exchange. By applying free trade policy, a formal
agreement is made between nations which implies no trade restrictions. Free trade argument is
also known as the concept of “ Laissez-faire” trade (Meardi, 2018). There are two theories due to
which free trade policy initiated; comparitive advantage and mercantilism. Comparitive
advantage means means country power to produce products as well as services at low cost in
comparison to other countries. Mercantilism means increasing revenue by exporting all products
and services. The main objective of free trade agreement is to reduce obstacles to U.S exports,
protect U.S interests with respect to competition with other international countries and increase
the law in free trade argument of countries. The below report discusses about literature review of
free trade argument, analysis as well as discussion about free trade and conclusion.
LITERATURE REVIEW
From the view point of Tejvan Pettinger, free trade lead to less price for consumers,
increase in exports and receive an advantage from economy of scale as well as high choice of
goods. Free trade policy is beneficial due to many reasons like comparitive advantage, increase
in exports, economies of scale, increase in competition. Due to comparitive advantage, the
countries which have less opportunity cost, the economic welfare for all other countries gets
increased. Due to policy of free trade, it modifies countries to specialise in those products which
have competitive advantage (Young, 2019). Free trade agreement is also beneficial for
consumers who are engage in importing products and companies who are dealing in exporting
goods and as UK has comparitive advantage will lead to betterment in welfare of economy. Due
to concept of economy of scale, it is beneficial because it lead to less price for consumers which