Costs and benefits of regional and international trade, and which should Canada be then pursuing?

Essay by bono_grohlUniversity, Bachelor'sA-, January 2004

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The costs and benefits of international and regional trade agreements have become an especially controversial topic over the last decade with the prominence of such media-saturated terms, as, globalization. Unfortunately, this has also led to the creation of predisposed biases on issues where there has been insufficient information presented. Both regional and international trade agreements have their potentially harmful and beneficial side effects, but in protected trade environments the real losers will be those that choose the fate of their public servants, the general electorate. Although private domestic interests may be hurt in the process, the pursuit of international trade agreements would seem the most beneficial course of action for an elected government such as our own. I therefore propose that Canada should pursue agreements upon international trade, in order to maximize economic potential and minimize risks in trade and investment.

Regional Trade Agreements: Costs

The problems that arise out of regional trade agreements can be compared to those of the fledgling International Trade Organization of 1947.

A product of many compromises, protectionists opposed it because they felt it went too far in the direction of free trade, while free trade supporters failed to support it because they felt it didn't go far enough (F&L 299). Regional trade agreements have been more successful, however, as limited RTAs give firms preferential access to both low wage export platforms and rich country markets. This, in turn, encourages domestic trade liberalization, but still acts as a form of protectionism.

Regional trade has the distinction of being a short-term solution that can hurt long-run prospects. This is especially effective for politicians who have election considerations to think about..

As benefits tend to be concentrated, the costs of regional trade tend to be distributed (F&L 328). In other words, a few firms may benefit greatly...