This document discusses concepts related to international trade such as free trade, comparative advantage, absolute advantage, protectionism, trade barriers, the World Trade Organization (WTO), and the North American Free Trade Agreement (NAFTA). It defines key terms and outlines some of the benefits of free trade as well as reasons why governments impose trade barriers, such as protecting infant industries. The roles of the WTO and NAFTA in regulating trade are also summarized.

2.  FreeTrade
Free trade means that countries can import and
export goods without any tariff barriers or other
non-tariff barriers to trade.

3.  Benefits Of FreeTrade
Include:
Increased exports.
Economies of scale.
Increased competition.
Trade is an engine of growth.
Make use of surplus raw
materials.

4.  Theory of Comparative
Advantage (By David Ricardo)
A country has a comparative advantage if it can
produce a good at a lower opportunity cost than
another country.

5.  Theory of Absolute
Advantage (By Adam Smith)
Absolute advantage means that an economy
can produce a good for lower costs than
another.

6.  What is 'Protectionism'
Protectionism refers to government actions and
policies that restrict or restrain international
trade,
Types of protectionism
 Tariffs
 Quotas
 Subsidies

7.  Barriers toTrade
A barrier to trade is a government imposed
restraint on the flow of international goods
or services.
Trade
Barriers
Tariff Non -Tariff

8.  Tariff Barriers
This is a tax which is imposed on imported
goods and services. It makes imported items
more expensive to customers.
E.g.
Tariffs on imports of Chinese tires into
US.The US. Imposed tariffs of 35% on
imports of tires from China.

9.  Non –Tariff Barriers.
This is a wide variety of barriers which refers to
the changes in government policies.
E.g.
Import quotas, Embargoes, Sanctions,
Licenses andVoluntary export
restraints.

10.  Why government raise barriers
to internationalTrade?
To protect “INFANT INDUSTRIES”.
To protect non-renewable resources.
To provide more revenue.

11. TheWorldTrade Organization is an
intergovernmental organization
which regulates international
trade.

12. Roles of World Trade
Organisation
Provides a forum for the trade negotiations between its
member countries.
Handling trade disputes between the member countries
through the established rules and regulations.
Corporation with other international organizations.
Administering WTO trade agreements

13. NAFTA – North American
FreeTrade Agreement
NAFTA is a comprehensive trade agreement that sets
the rules of trade and investment between Canada, the
United States, and Mexico.

14. Roles of NAFTA
• Eliminate trade barriers in various service sectors
belonging to its member nations.
• Reduce high tariffs and help to promote agricultural
exports.
• Assure fair market value to investors by reducing
risk and offering the same legal rights that are
enjoyed by local investors.
• Help investors to claim against a government by
offering legal help.

15. Thank you…

16. •Countries want to give newly developing
industries (known as infant industries)
time to grow and become competitive.
However, in some cases the government
protection never ends and these
industries become competitive only
because they have been given the benefit
of the trade barrier.