International Trade Agreements

International Trade Agreements

1. Summary

In this paper, the author, Dani Rodrik, is concerned with the transformation of trade agreements beyond import tariffs and quotas. The objective of the article was to present an alternative to using trade agreements to neutralize protectionists and instead focusing on agreements that promote rent-seeking-interests, politically well-connected firms as well as multinational firms.

While many trade agreements tend to enhance domestic interests, trade agreements suggested in the article could be utilized to promote international interests instead. According to Rodrik, trade agreements can only be viewed as efficiency-enhancing policies if they were focused on eliminating trade restrictions, including quotas and import tariffs. Rodrik criticizes the re4cent trade agreements, including the Trans-Atlantic Trade, Investment Partnership, and Trans-pacific Partnership, claiming that they do not act in favor of free trade agreements.

In this article, free trade is perceived as an appropriate medium for promoting technological progress. The author suggests that economists who conflate trade agreements with free trade base their arguments from a political economy perspective that views import-competing interests as the most powerful and dominant tools of the trade policy. The author perceives the trade agreements focusing on domestic regulations as tools for exploiting the developing countries.

While economists tend to associate trade agreements with free trade, trade agreements have gone beyond import tariffs and quotas. However, Rodrik suggests that trade agreements can be used to promote a mutually beneficial; trade by enhancing market access for the involved parties (Rodrik, 2018).

2. Opinion Essay

In his article, Dani Rodrik views trade agreements focused on creating domestic regulations as driven by self-interest. While economists are inclined to associate free trade agreements with free trade, the author offers a distinction between the two. According to the author, the description of trade agreements has extended far beyond mere import tariffs and quotas. This article seeks to suggest that trade agreements can be utilized in creating a mutually beneficial environment while eliminating protectionists (Rodrik, 2018).

The paper follows a systematic approach in defining trade agreements and distinction from free trade. Firstly, free trade is used to define a scenario where international trade is left to its natural course. On the other hand, trade agreements can be used to describe import tariffs, quotas, regulation rules, property, health and safety rules, labor standards, as well as investment measures.

In this case, I believe that free trade allows countries to trade freely without any restrictions. Similarly, trade agreements can be used to create a mutually-beneficial trade. Amid the ever-changing economic environs, countries utilizing protectionist strategy tend to impose tariffs on imports. In doing so, such nations ensure that imports become less competitive than locally produced goods.

After reading the article, it is clear that such scenarios arise in advanced countries that attract a lot of imports like the United States. These actions tend to negatively impact the ability to develop countries to export their goods. Simply put, the trade agreements characterized by protectionism tend to benefit the importers, particularly advanced economies, while negatively affecting the exporting countries. Therefore, developing trade agreements with minimum restrictions can help create a balance in the trade and therefore benefit the parties involved in the trade.

Reference

Rodrik, D. (2018). What do trade agreements really do?. Journal of economic perspectives, 32(2), 73-90.