The United States should regulate trade with foreign countries Essay Example for Free

The United States should regulate trade with foreign countries Essay Trade across the boarders is very important as; over the years, it has enhanced industrialization in most and improved the balance of payment in those countries. For this foreign trade to occur smoothly across these nations there needs to be regulations which govern the types of services and products to be sold and the conduct of the personnel involved. â€Å"Globalization therefore requires careful steering and improvement on the policy changes (Bhagwati 32). † Despite the regulations in place, foreign trade has a lot of benefits to individual countries and the United States is not an exception. Some of the benefits of foreign trade include: †¢ Specialization Countries are endowed with a variety of resources. This may be in the form of very skilled labor, precious minerals, good climate, and excellent infrastructure among other things. Since countries cannot produce all the goods they need, they will maximize their efforts in producing those goods that are bound to bring in more returns and will import the rest of the commodities that they have not produced. By doing this the country will develop further and will continually improve its balance of payments. Such trade also exposes the consumers to a variety of goods as they have options from different countries to choose from. Specialization is also linked with comparative advantage. Comparative advantage refers to channeling resources to the production of the commodities that will yield more return. Countries will therefore utilize resources in areas where they know they can get more returns. Other than concentrating on particular industries, it is important for countries to produce a variety of products because if they focus on the production of one commodity, when that particular industry is affected, the country will also be affected. â€Å"This may be due to changes in market forces caused by recession or the enactment of new trading policies (Baker A. 8). † The imports and exports of a country and the way they are priced therefore greatly determine how the country will progress especially. †¢ Competition Competition is important for businesses to grow as they are motivated to produce more and better commodities at lower prices. â€Å"Globalization reduces trade barriers thus encouraging the exchange of goods and job creation (January 32). † For competition to be effective it will depend on natural resources, the types of equipment and technology a country has and skilled laborers to produce the products. Combination of these factors definitely increases the specialty of industries. †¢ Economies of scale A country will gain more if it directs its resources to the most efficient industries. This will aid a country to improve it’s economies of scale by producing more output. â€Å"Openness to international trade contributes to economic growth (Boudreaux, 17). † Some companies therefore require a lot of research or a lot of funds and that is why they sometimes their competitive nature will be limited. Sometimes it is difficult to move resources from one industry to another especially when the industries have nothing in common. Knowledge-Intensive Products Between the years 1986-2001, the U. S benefited a lot from exporting manufactured products to other countries. This was because they have experts who designed better advanced products and manufacturing processes. The cost of marketing the products was minimized because they were unique products being brought into the market and people were eager to use them. Moreover, the workforce was well educated and trained. Looking at the benefits of international trade, we see that the United States as well as other countries have gained and that is why these business transactions need to be enhanced. Creating a proper business environment requires the enactment of policies that will ensure that the benefits accrued are maximized and the risks minimized. The U. S needs to regulate foreign trade for a number of reasons. ? Protection of local industries The U. S needs to protect the domestic industries which play a major role in the growth of the economy by creating trade regulations. This is because there is a need of increasing employment in certain industries which importation of products is hindering or being able to control the prices of goods and services. â€Å"When trade is not regulated by putting certain measures that limit the importation of certain commodities, importation will increase because the consumers will demand more foreign goods as opposed to buying the locally manufactured products and this will lead to deficits in the balance of payments (Smick 34). † ? Enhancing trade policies The U. S should regulate foreign trade because through processes like licensing the goods and custom regulations, the country through the customs authority. The customs Authority is in charge of enacting the policies that have been passed by the state on trade by imposing customs duties, trade restrictions and taxes agreed on so that they govern trade between the U. S and other countries. â€Å"The U. S customs service is already doing a good job in helping exporters because they give them information on duty rates, custom regulations and policies as used by the U. S and foreign countries and through its website, it has created an interactive forum where people are more knowledgeable about international trade and processes (Baker C. 111). † In doing so, the customs authority is able to control the goods that are entering the country therefore they make sure that they gain from all goods entering they country as this minimizes the evasion of paying taxes (Stein 71). This also limits the entry of illegal products entering the country for example, illegal drugs that can be harmful to the citizens. ? Proper planning Regulating trade with foreign countries will enable the Federal State to plan its activities better. This will help in the budgeting process so that they can forecast better on the market trend and adjust policies so that the country is not adversely affected by the global marketing changes. â€Å"This will enable them to distribute resources equally and channel resources to the sectors where they know they will generate more income (Mann 75). † This will also make the people in charge of the processes more accountable because in case of any faults, they will be held responsible for the actions they undertook. ? Technological enhancement Regulating trade is important because it enhances the technological innovations and inventions. Some countries can take advantage when there are no regulations in place that inhibit the usage of certain creations and design to create similar or even better commodities thus enhancing the competition in markets which they mostly dominated. The U. S therefore needs to regulate the trade as it helps in building these skills that propel the countries economy to greater heights. ? National Security Regulating foreign trade enhances national security because the state limits the chances of other countries controlling business activities in that country therefore, they can not directly influence the prices of commodities. This is especially related with the government owned businesses which need to be protected from being influenced by foreign companies such that they may decide to engage in business agreements for example partnerships and in case the state business is faced with financial difficulties or other risks, it has a higher risk of being taken over by the foreign company. National security is also enhanced by the use of Intellectual property rights as they enable the business to gain competitive advantage. â€Å"Products that are protected by patents or trade marks mean that they cannot be sold in countries that infringe the trademarks or patents and this helps in enabling fair trade (Hiebert 47). † The U. S should be able to benefit from the many experts it has in various fields. It needs to be in a position where they can minimize foreign governments from contacting them so that they share the secrets. For instance if people who produce military products are contacted by other governments and given better rewards, then they can easily go to those countries and develop war weapons which can be used against the country. That is why it is important to regulate trade with foreign countries. International trade is not possible without the use of foreign currency (Baker C. 20). The country is able to see how their products are priced against other currencies and continually monitors its cash reserves and how it spends its money so that the US dollar is stable. This is helpful especially at this harsh economic period when the country is trying to minimize on importation of commodities so as stabilize the currency. ? Environmental Protection Globalization and advancements in technology have contributed to the emerging issues of environmental pollution and its effects on the people. There is therefore the need to ensure that these cases are minimized and this will happen if the state commits itself to preventing harmful substances which might include chemical products that when used in the industries emit harmful substances into the environment as well as technologies from entering the country (Carlarne 30). The internet has enhanced international trade to the next level by making it easier and faster to make business transactions and trade. However, it is contributing to various cyber crimes where innocent people are exploited in the name of fake businesses in the U. S and people lying. Though there are measurers to make such processes legitimate, for example, creating rules on the use of digital signatures and agreements but still more needs to be done as people are losing a lot of money in such dealings and the people undertaking such trade crimes cannot be tracked. ? Reducing trade conflict When two or more organizations engage in constructive ventures, conflicts are bound to happen. â€Å"If there are no proper mechanisms to address the problems and the issues keep on escalating, then a lot of money which would otherwise be used on important ventures will be used to settle legal claims (Perdikis et al. 1). † The U. S since it deals with many countries in almost every industry; they have a greater chance of facing numerous claims. â€Å"They therefore invest a lot of money in hiring legal advisors and in compensations (Brown, Crowley, Mcclulloch Nakajima 2). † They need to regulate their trade so that the agreements are stricter but which gives them room to minimize the costs, resources, time and energy used in legal issues. There are many international bodies that are governing foreign trade in various aspects for instance, the General Agreement of Tariffs and Trade (GATT) which laid the policies that are now used by the World Trade Organization (WTO), plus different trading blocks in various regions and continents. Though they set the rules to be used by all involved countries, they sometimes do not always tackle the problems that are faced by individual countries face that is why the U. S needs to put their own trade policies as well as used those set by such bodies to make sure that their economy is well protected. ? Minimizing corruption There also cases where foreign trade official at the customs are being bribed so that they can allow the entry if certain goods into the country. The U. S government has helped to solve the issue by placing anti-money laundering laws and also corruption laws to prevent foreign government officials from being bribed so that they can either conduct business within the country or lighten their policies so that they can benefit (Braithwaite Drahos 162). â€Å"Such practices sometimes go undetected and finally when they are discovered, they create a bad image for the country (Stiglitz 52). † The state needs to tighten such measures so as to promote fair business practices and healthy competition. Some home based companies are not very keen on the industrial Total Quality Management standards (TQM) in place. Sometimes they overlook regulations so that they can produce more output and this has led to the exportation of substandard products. Trade regulations need to be enforced so that such companies engage in the production of quality products. Conclusion Regulation of foreign trade has enabled the United States to manage risks that are associated with foreign trade as well as curb unethical behavior in this business. More still needs to be done so that they safe guard the local business from being put at risk of being shut down. The regulations should be published in state journals and be accessible through the internet so that companies both local and foreign are aware of the policies in place.The regulations should also be found in the school curriculum ass the students and young professionals will be sensitized at an early age. Works Cited Baker, J. C. Financing International Trade. Greenwood Publishing Group, Westport: Praeger, 2003. Baker, S. A. An Introduction to International Economics. Orlando, Fl: Harcourt Brace Jovanovich Publishers, 1990 Bhagwati, J. In Defense of Globalization, New York, NY: Oxford University Press, 2004 Braithwaite, J. Drahos, P. Global business regulation, Cambridge University Press, 2000 p. 162 Boudreaux, D. J. Globalization. Westport, CT: Greenwood Publishing Group, Inc, 2008 Brown, C. P. , Crowley M. A. , Mcclulloch R. Nakajima D. J. â€Å"The U. S. Trade Deficit: Made in China? † Economic Perspectives, 29 (2005): 2 Carlarne, C. â€Å"Form the USA with Love: Sharing Home-Grown Hormones, GMOs, and Clones with Reluctant Europe. † Environmental Law, 37 (2007): 30. Hiebert, T. H. Parallel Importation in U. S. Trademark Law. Greenwood Press, 1994. January, Brendan. Globalize It, Brookfield, CT: Twenty First Century Books, 2003 Mann, C. M. Is the U. S. Trade Deficit Sustainable? Institute for International Economics, 1999. Perdikis, N. , Read, R. International Economics Study Group. The WTO and the regulation of international trade: recent trade disputes between the European Union and the United States, Edward Elgar Publishing, 2005 Smick, D. M. The World Is Curved-Hidden Dangers to the Global Economy, New York, NY: The Penguin Group, 2008 p. 34 Snyder F. G. Regional and global regulation of international trade, Hart Publishing, 2002 Stein, S. â€Å"Trade out of Whack: Making Sense of the Trade Deficit. † Policy Review, 128 (2004):