Customs And International Trade Advice :
| In the mercantilism concept of trade that existed prior to 16th century, international trade between countries was bound by various regulations which included high tariffs and taxes. According to mercantilism, inflow of the capital into the country determines the economical health of the nation. However, with the opposition of this policy by certain economists, international free trade model came into existence. |
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With the advent of globalization and industrialization, the concept of international free trade was introduced in the early 19th century as an alternative to earlier existing mercantilism.
International free trade concept can be broadly defined as a transport of goods or commodities across international borders without the involvement of any government imposed regulations or trade barriers.
Free trade model is an unregulated form of international trade where all the parties involved in the transaction are equally benefited. In this type of trade, the commodities and services are exported without levying any duties, subsidies or taxes. This concept enables the international community to have a free access to the local markets and the domestic products. This process diminishes the ability of any industry to exercise monopoly in the market. Apart from these, free trade also facilitates free movement of labor and capital across the nations.
International free trade concept involving reduced tariffs has been strongly advocated by all the developed nations including United States, United Kingdom and European Union. According to a survey conducted among several economists in United States, the concept of free trade is hugely beneficial for the economic situation of the country. According to them, even the currently existing tariffs should be removed and the market should be made into open world trade. According to this survey which was conducted during 2006, several economists were even against the concept of restricting outsourcing. The advantages offered through free trade concept could be better understood through a detailed analysis of David Ricardo’s theory of comparative advantage.
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