Free Trade Research Paper Example | Topics and Well Written Essays - 750 words

Free Trade - Research Paper Example After all, states aim at managing the economy such that people get goods at the lowest possible or affordable costs so that they can consume more and improve their living standard. Unfortunately, states do not have matching ownership on various resources that are necessary in the economy. For example, natural resource reserves such as iron, petroleum, coal, aluminum, copper and other differ widely among the nations. Other resources such as skilled and unskilled laborers, technology, or capital all vary substantially across the nations. Therefore, it becomes necessary for the countries to produce goods based on their core competencies and availability of resources so that goods are produced at the most economical cost. The surplus produce can be exchanged with the goods produced by other countries economically. The benefit of economic production can be availed only when there are no tariff barriers between the states. The free trade provides significant economic boost to the member co untries in terms of GDP, employment. It is in fact a win-win situation for people of both the countries. Based on the above perspective, the US entered into a free trade agreement between Canada and Mexico on January 1, 1994 that came to be known as NAFTA. It is a world’s largest free trade agreement covering 45 million people with the combined GDP of the US, Canada and Mexico have surpassed US $17 trillion based on 2008 figures significantly up from the 1993 figure at US$7.6 trillion. It has been argued that North American employment levels have increased by 23% since its beginning. This amounts to a net gain of 39.7 million jobs (Naftanow.org , 2012). Trade bloc countries eliminate tariffs thus making the cost of imports cheaper. As a result, demand of the goods spurts due to lower price availability. For exporters, it provides an increased business opportunity and for importers, consumers benefit