Free Trade – A Nation’s Way – Part 2
A trading nation is an international market where a high percentage of its gross domestic product is made up of exports. A nation that is most often referred to as a trading nation, is one where there is a high degree of political and economic stability, easy access to world markets, low taxation levels and a moderate to low consumption of imported goods. Many nations around the world have been identified as trading nations. Some examples of these are Singapore, Canada, Italy, Ireland, Norway, Sweden, Switzerland and the United States.
These countries are typically great at exporting their manufactured goods and energy. China is the largest trading nation in the world, according to estimates, and accounts for about 13% of global exports. China’s exports account for almost a trillion dollars in merchandise exports every year. It is estimated that China will surpass the United States in economic size very soon.
In order to be classified as a trading nation, you must follow some rules. For instance, you must have legal contracts with other foreign companies in different states of your country that agree to trade. You can freely enter into an agreement without having to pay tariffs or taxes to other states, and you can freely export your products to other countries that are signatories of the World Trade Organization Agreement. You must also respect other nations’ intellectual property laws, which is another prerequisite for free trade internationally.
The United States has been a trading nation for decades, and we have successfully been able to use our comparative advantages to our advantage by being the largest exporter in the world. We have been able to continually increase our exports without increasing our import fees. As a result, our gross domestic product (GDP) is growing at a much higher rate than any other nation in the world.
Now China wants in on this international trade pie too! China is no doubt tired of being called a “currency manipulator” by the United States, and it wants its piece of the international trade pie. Unfortunately for them, the United States has been quite successful at keeping its currency artificially low, so that they cannot sell us their excess goods, but rather buy our products at artificially low prices. Therefore, China does not realize how important its role is in the global economy, and how many jobs it will ultimately create in the years to come.
So, what is the solution? Well, the United States needs to start embracing a free trade mantra like the ones mentioned above, if we want to start building a stronger middle class in the United States and prevent economic stagnation. It would also help if we could raise our GDP every single year for the next decade or so – but sadly, we are sadly seeing that is not going to happen. But if we want to start improving our global economic standing in the eyes of the global community, then perhaps we need to start embracing free trade. That’s how you win friends and influence people all over the world.