We can all agree that free trade between countries helps increasing prosperity of participating nations. After all, it allows consumers to buy more, better-quality products at lower costs. No wonder most countries worldwide are now advocating for free trade policies.
Keep in min free trade between countries helps promote fairness. When everyone follows the same rules-based system, there is less opportunity for cronyism, or the sheer ability of participating nations to skew trade benefits toward favored parties.
In the absence of such a system, bigger and far-better connected industries can more easily attain unfair advantages, such as regulators and tax loopholes, which shield them from competition. That aside, this blog post looks into the common myth surrounding free trade between countries.
Myth 1: More Exports Mean More Wealth
It is quite easy to believe that more exports automatically translate to more wealth. However, this is far from the truth. In reality, it’s the total level of trade- exports and imports- that most accurately reflects a country’s prosperity. As a quick reminder, prosperity is simply the breadth of and variety of what a country is able to consume.
Actually, more exports increase wealth only because they allow citizens to buy more imports and give non-citizens greater incentives to invest in the country. This, in turn, helps the participating country’s economy to grow.
Myth 2: Trade Treaties Require a Surrender of Sovereignty
One of the most advertised myth on free trade between countries is that trade treaties require a surrender of sovereignty. But the truth of the matter is that trade treaties enhance freedom. Nation-states routinely ratify treaties on a wide range of issues, including treatment of prisoners, human rights, and territorial waters, as well as international trade and financial transactions.
The good thing about trade treaties between countries is that they contain provisions that help governments avoid the worst damage that protectionism could inflict on their people. No wonder you can never skimp on what free trade between countries offers if you want to drive business success and help change your life for the better.
