International Business: Trade Agreements and Policies Essay

This essay examines the implications of trade agreements on the USA economy, analyzing the effects of various US government policies such as GATT, international trade policies, the Generalized System of Preferences, Antidumping and Countervailing duty Laws, and free trade agreements. It distinguishes between absolute and comparative advantage, providing examples to illustrate each concept. The paper also explores the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP), discussing their impacts and the US government's stance. The essay concludes by highlighting the challenges and opportunities for domestic producers in a trade-liberalized environment, emphasizing the role of advanced technology and effective trade policies in maintaining a strong market share. The essay fulfills the requirements of the assignment by providing a detailed analysis of US trade policies, trade advantages, and the impact of trade agreements.

Running head: INTERNATIONAL BUSINESS
International Business
Name of the Student
Name of the University
Author Note

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Introduction
The current study attains to analyze the implications of the trade agreements on the USA
economy. On the account of growing uncertainty related to trade relations, it is important to
overhaul the importance of trade agreements made by the USA government with other countries.
The paper examines that the consequences of trade policies are comprised of both negative and
positive aspects. Though, the USA government has been observed to withdraw several trade
agreements after the initial negotiation with other members.
Discussion
Five important USA government policies affecting trade with foreign nations include
General Agreement on Tariffs and Trade (GATT) 1947, International trade policy, the
Generalized System of Preferences (GSP), Antidumping and Countervailing duty Laws and free
trade agreements with other countries. The international trade policies are aimed at protecting as
well as promoting the domestic business in the international market. The study observes that
GATT has been formed to encourage the USA trade reducing the trade barriers on other foreign
products. GATT is referred as a collaborative movement to resolve the trade disputes across the
world. In light of Antidumping Laws of 1930, the unfair trade practice of foreign goods
comparatively at lower market price has been proposed to be banished to protect the American
Manufactures. Meanwhile, the Countervailing laws offer the USA producers monetary incentives
supported by the foreign traders (Anderson & Yotov, 2016). This in turn, helps the USA sellers
to earn profit selling foreign products in the domestic market. As per the findings, a larger
number of violation cases have been registered in the charge of unfair trade practice with the
USA economy. Under the Generalized System of Preferences, the impoverished countries gets
ample opportunity to explore trade regime into the foreign economies using the advanced
technology. Finally, the free trade agreements intensify the transaction of products and services

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across twenty foreign nations including the USA (Baier, Bergstrand & Mariutto, 2014). This
lowers the logistics and transportation outlays due to lower tariff rate.
Absolute advantage is gained when economy reaches its full efficient level for producing
a particular product. Absolute advantage is an important determining factor to analyze the
country’s production efficient zone (Laursen, 2015). For example, the USA would be considered
to have absolute advantage in commercial aircraft production if manufactured aircrafts are
charged with affordable price maintaining the highest quality. On the contrary, the comparative
advantage is measured by the degree of opportunity cost related to two different products
(French, 2017). The traders attain to compare the opportunity cost when economy is equally
efficient in producing two commodities. For instance, the USA economy is equally efficient in
production of both laptops and mobiles. Suppose the economy can manufacture 20 laptops or 20
mobiles. Meanwhile, laptops yield higher profit as compared to the smartphone. This difference
in the profit can be a cumulative consequence of lower operational cost, labor wage and
improved technology. In this regard, the economy will prefer to produce laptop as the
opportunity cost of laptop production is less in comparison with the mobiles. Comparative
advantage further assures the efficient utilization of the economic resources using the most
appropriate production technology.
Transatlantic Trade and Investment Partnership (TTIP) is the comprehensive trade deal
between the USA and the EU. It is the advanced version of Trans-Pacific Partnership (TPP)
from which the USA government has withdrawn its membership in 2017. Both trade deals are
aimed at improving the trade relationship between the USA and the EU (Linh, 2016). The study
has found that it is one of the largest trade agreements in the international economy. The USA
was initially agreed to trade with 10 Pacific Rim countries under TPP. This trade agreement is

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structured to cut down the tariff rate on the trading commodities among Australia, Canada,
Japan, New Zealand, Singapore, Mexico, Vietnam and Peru. However, TPP is stated as an anti-
democratic deal as its central focus was on the development of amortization business.
Henceforth, TPP has gradually lost its importance in the global trade market (Krist, 2015). On
the contrary, TTIP is considered more translucent and apprehensive in the context of the
international trade deal. TTIP is criticized for providing better benefits to the largest corporation.
Conclusion
On a concluding note, the paper states that trade agreements have enhanced the trade
condition along with causing some serious challenges for the domestic producers. Having been
the world’s largest economy, the USA economy enjoys the trade advantageous position in the
international economy. Advanced technology and effective trade policy are the driving source
for the country’s strong market share even in the presence of trade liberalized environment.

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Reference list
Anderson, J. E., & Yotov, Y. V. (2016). Terms of trade and global efficiency effects of free trade
agreements, 1990–2002. Journal of International Economics, 99, 279-298.
Baier, S. L., Bergstrand, J. H., & Mariutto, R. (2014). Economic determinants of free trade
agreements revisited: Distinguishing sources of interdependence. Review of International
Economics, 22(1), 31-58.
French, S. (2017). Revealed comparative advantage: What is it good for?. Journal of
International Economics, 106, 83-103.
Krist, W. (2015). Why we need the Trans-Pacific Partnership and how to get it right. Foreign
Policy Research Institute. May.
Laursen, K. (2015). Revealed comparative advantage and the alternatives as measures of
international specialization. Eurasian Business Review, 5(1), 99-115.
Linh, P. H. T. (2016). United States factors in the Trans Pacific Partnership (TPP). VNU Journal
of Social Sciences and Humanities, 2(2).