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Explain why we need global trade agreements.                  

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cmuntz | (Level 1) Salutatorian

Posted May 6, 2013 at 5:56 PM via web

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Explain why we need global trade agreements.                  

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted May 6, 2013 at 6:11 PM (Answer #1)

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First, we should understand that many people would say that we do not need global trade agreements.  There are many people who would like to see less free trade.  However, economists are essentially unanimous in saying that free trade is an important way to increase the overall wealth of the world.  Therefore, agreements that allow free trade to happen are important.

Economists argue that free trade is important because it helps all countries that participate.  Countries specialize in the kinds of goods and services for which they have a comparative advantage.  They produce the kinds of products that they are best at and trade them to other countries.  With every country making the things they are best at making, the world as a whole produces more goods and services.  This is good for everyone in the world.

Global trade agreements are important because they allow this to happen.  They commit countries to opening their markets to goods from other countries.  Without such agreements, there would be less free trade and the world as a whole would be a poorer place.

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