| What are the basic laws of international trade? | | | | the existence of a fledgling industry. However, these |
| The most basic international trade laws relate to | | | | ideas are at odds with the most basic theories of |
| tariffs and subsidies and other forms of trade | | | | economic liberalism and international trade. |
| protection which unfairly advantage particular | | | | What is subsidy? |
| countries in trade relationships. The World Trade | | | | The subsidy is a payment made by national |
| Organisation was established in 1995 and represents | | | | government to support a local industry in order to |
| the most important development in the history of | | | | make a product cheaper to the end consumer and |
| international trade law. prior to this there were the | | | | therefore more competitive this is another form of |
| GATT treaties which is short for General Agreement | | | | trade protection which is used by national |
| on Tariffs and Trade. International trade Law | | | | governments at the behest of various interest |
| originated because of economic liberalism which | | | | groups inside their country who lobby for these |
| developed in Europe and the United States in the | | | | protections. Often the long-term effect of these |
| 18th century and later on. The major roles of the | | | | types of protection is that the industry becomes |
| World Trade Organisation are to regulate unfair | | | | globally uncompetitive and even more protection to |
| trading practices such as tariffs dumping and subsidies | | | | survive the globally competitive market. |
| and there are also some human rights aspects to the | | | | What is the theory of free trade that supports |
| work of the World Trade Organisation. In particular | | | | international trade law? |
| the world trade organisation is a center of the | | | | The most basic expression of the economic liberal |
| negotiation and completion of agreements such as | | | | theory which supports the formation of a global |
| trade related intellectual property rights (TRIPS). | | | | regulation system to prevent detection of the |
| there is also a major role for the World Trade | | | | national interests of local industries are the ideas |
| Organisation in relation to trade and human rights, | | | | ultimately of Adam Smith. Adam Smith theorised that |
| dispute settlement and at a more minor aspects of | | | | if countries were allowed to specialise in a particular |
| the functions which the World Trade Organisation | | | | area of production that they would eventually |
| performs. | | | | become more efficient in the production of particular |
| What is the tariff? | | | | types of goods and services. If this were to occur |
| A tariff is a government regulation imposed by | | | | on a global scale then the efficiency gains would be |
| national government which makes imports of the | | | | maximised in the production of all goods and services. |
| product into that country more expensive. The | | | | Though it must be noted that this did not include an |
| reason that this disadvantages imports into that | | | | estimation of the transport costs involved sending |
| country is that it makes them more expensive than | | | | goods and services across the world. There is some |
| their local competitors. Trade unions often lobby | | | | empirical evidence to suggest that the global |
| national governments to protect their industries | | | | specialisation into particular industries would improve |
| because trade unions members want their jobs | | | | the aggregate production of the global economy and |
| protected in those local industries. National | | | | lead to cheaper drugs are consumers across the |
| governments often succumb to this political pressure | | | | globe and less wastage of the earth's resources in |
| to allow trade protections to be put in place other | | | | the production of goods and services. |
| justifications for these types of trade protections in | | | | |