Restrictions on trade agreements
Restrictions on trade agreements are common in many countries. Free trade has also been advocated in many countries. Without restrictions, trade would not be as smooth as some parties in the trade would suffer effects of the trade depending on the kind of trade. The restrictions are a form of control exercised by the government. These guard parties to the trade against harmful effects like economic depression and instability which can be brought about by free market. But trading policies are changing with time as the governments at certain points intervene by regulating imports and exports as well as price controls to both the consumers and the producers.
Interventions which are advanced include subsidies, tariffs as well as taxes and other restrictions like trade unions, legislation and quotas. The restrictions are a major determinant of prices of goods at consumer level. These protections cushion traders from competition as well as exploitation from other traders. Developed countries use these restrictions in order to increase revenues as well as to protect upcoming industries (Dennis, 4). Also, the aspect of mercantilism- being leader in trade and earnings from it as well as special interest such as to increase the dependence by consumers on locally produced goods and productivity gap between trading parties would lead the governments to restrict trade.
According to mercantilists, accumulation of wealth is the basis of trade and therefore countries allied to this form of trade suppressed other nations which are young in terms of economic development. These they achieved through restricting trade between them for own benefit. For example, the proliferation of colonists and colonies was based on this perspective. It is what is referred as extorting wealth from wherever and by whatever means. According to these, wealth has an end, and therefore more and more need to be created and accumulated through improved expertise (Hans, et al, 56). Diversification of the area of gain is unavoidable while arbitral ‘importation of goods and services is restricted under this in order to maintain a positive balance of trade’.
Mercantilism is usually government supported and industries are run by monopoly. They do not advocate for freedom and equal opportunity but instead advocate for severe regulation. This form of trade is characterized by selfishness in which use of force to make lower parties in the trade to adhere to the trade rules without even questioning. This means that they are supposed to surrender to wits and powers of their masters. These are usually pushed by their ‘need’ of acquiring more wealth for themselves (Cleopatra, Eric, 197). Mercantilists even restrict consumer behavior by laying down rules on what people should or should not buy by making sure that they choose for them during the buying and distribution process in the place where those goods are needed. In essence, this form of trade did not allow the prosperity of other parties except the merchants only. This is oppressive kind of trade which benefits only one side.
For example, the more gold and silver was in country’s treasury (Britain) the more they sought to increase it through these ‘unscrupulous’ means. The premise of this is that the country should increase exports while at the same time acquiring valuables like gold and sliver. This kind of trade led to the emergence of capitalism though unlike it, there is no leveled ground in this kind of trade.
Cleopatra, Doumbia-Henry & Eric Gravel, “Free Trade Agreements and Labor Rights: Recent Developments”, International Labor Review, Vol.145, 2006, pp.109-124
Dennis, Chasse, “Trade Agreements and Labor Problems: The Current Bearing of a Commons Proposal”, Journal of Economic Issues, Vol.42, 2008, pp.1-12
Hans, Michelmann, et al, Globalization and Agricultural Trade Policy, Lynne Rienner, 2001