The United States of America is a top exporter and importer of goods and services. Top imports include motor vehicles, cell phones, computers, oil, medicine, gasoline, and motor vehicle parts. Americans rely on technology gadgets such as computers and cell phones for day-to-day communication and data exchange. Interestingly, the country’s top imports are also in the export list, which indicates that the government is committed to ensuring that American producers and manufacturers have a reliable market. It is important to state that exports from and imports into the US are in intermediate goods, resources, services, or final goods form. On this subject, international trade plays an essential role in diversifying consumption possibilities of the American population. Firstly, it facilitates the production/availability of a variety of goods from which consumers can choose (McEachern, 2016). International trade affects consumption possibilities in the US by promoting rules and standards that enable efficiency in production and resource specialization. Resource specialization allows producers to meet market needs and preferences in a sustainable manner, which influences the availability of goods and services for extended periods. Innovation and the use of advanced technology in manufacturing and distribution ensure Americans can access goods or services conveniently (McEachern, 2016). This is a boost to their consumption possibilities.
Engaging in international trade is the best way countries can overcome the high costs incurred in producing certain goods while taking advantage of the available resources to produce surplus exports. Foreign demand is one of the determinants of which goods a country should produce and export (Basarac Sertić, Vučković & Škrabić Perić, 2015). A country can decide to engage in the manufacturing and assembling of cars after realizing a certain trend in international trade where vehicle purchases in a specific country or region are on the rise. Another factor that determines which goods a country should export is the availability of labor and resources (Basarac Sertić, Vučković & Škrabić Perić, 2015). Countries with highly trained labor benefit greatly from innovative and up-to-date production methods. Selling easily available raw materials or final goods to other countries is convenient, especially when the costs incurred are reflective of the country’s domestic gross product (GDP). Importantly, industrial policy plays an integral role in determining which goods a country should produce and export. Technological advancement and the role of society in an economy have changed the key priorities of a country’s bid to maintain sustainable economic development (McEachern, 2016). A good whose production process involves hurting the environment or the community in a negative way cannot be produced and exported. In this regard, the decision to export a specific product relies on price and non-price factors. Lastly, the country’s overall export performance determines what goods to produce and export based on economic and market factors of the other goods.
The World Trade Organization (WTO) is obliged to liberalize trade activities by providing governments with a forum to negotiate trade agreements based on universal policies and regulations. The organization allows governments to highlight the challenges faced in multilateral trade and find a convenient logical approach to mitigating the identified issues (Wto.org, 2018). Developing countries use the organization to negotiate for lower trade barriers while developed countries seek to identify gaps in international trade for production and innovation purposes. The WTO works to reduce subsidies and quotas; doing so allows importers and exporters to rely on each conveniently. Setting a specific monetary value of goods that a country can import or export within a certain period makes international trade fair and considerate of specific country needs (McEachern, 2016). Import and export quotas allow consumers and producers to adhere to international trade law, which is a fair approach to maintaining better international relations. The WTO is crucial in fostering multilateral trade because it conducts regular reviews of member countries on the nature and effects of its trade policies (Wto.org, 2018). Transparency in multilateral trade has led to the use of clean production methods, importation and exportation of safe and high-quality goods, as well as, fair trade policies.
The wrong aspect of the argument, “saving US jobs would require restrictions on cheap imports from other countries,” is that it fails to consider the factors involved in production, manufacturing, and distribution. Although China uses predatory pricing techniques to attract customers, it is essential to note that consumers choose the goods for their convenience. Cheap foreign goods are convenient to market segments consisting of low-income households (Kemeny, Rigby & Cooke, 2015). In this regard, the argument should center on lowering the cost of production to ensure that prices for domestically produced goods are convenient for the market. It is undeniable that the local consumers’ reliance on cheap foreign goods affects the growth and sustainability of local firms (McEachern, 2016). However, blaming the cheap producers for loss of jobs is economically illogical considering that other factors such as the cost of production, price of good or service, availability/convenience, and state of the economy affect the customer’s purchasing power (Kemeny, Rigby & Cooke, 2015). The negative perception of cheap goods (poor quality and durability) gives local firms an advantage. On this subject, firms in support of new trade restrictions to hurt the importation of cheap goods should focus on attracting consumers as opposed to complaining. Undeniably, cheap products are valuable to individuals with a tight budget.
Basarac Sertić, M., Vučković, V., & Škrabić Perić, B. (2015). Determinants of manufacturing industry exports in European Union member states: a panel data analysis. Economic Research-Ekonomska istraživanja, 28(1), 384-397.
Kemeny, T., Rigby, D., & Cooke, A. (2015). Cheap imports and the loss of US manufacturing jobs. The World Economy, 38(10), 1555-1573.
McEachern, W. A. (2016). Economics: A contemporary introduction. Cengage Learning.
Wto.org. (2018). What is the WTO?. Retrieved from https://www.wto.org/english/thewto_e/thewto_e.htm