建立自由貿易
 

首先要建立一個自由貿易,外國公司應該知道自由的優勢是什么, 為了擴張到其他國家應該做什么，和追求多么重要原料才能在這個行業成功。作為營銷顧問，我會對如何在這個自由貿易中擴張他們的產業到全球范圍提出建議，并且告訴他們公司為擴大業務必須擁有的條件和細節，以及讓他們知道這樣做的優缺點，以便他能做出正確的決定。

自由貿易是一個經濟概念，是指銷售產品的國家之間沒有關稅或其他貿易壁壘。自由貿易是不同國家之間的個人和公司沒有人為(政府)設置的貿易壁壘。國際貿易通常被不同國家的稅收,對出口和進口商品的其他費用,以及非關稅進口商品規定所限制;理論上,自由貿易是反對所有這些限制的。在現實中,貿易協定被支持者貼上了“自由貿易”的標簽，事實上這也許會為自己的自由市場產生障礙。

 

Establishing A Free Trade Economics Essay

 

To establish a free trade first, foreign company should know what is liberal and has the advantage of how, what should be done so they can enlarge other countries and how important the material to follow in order to succeed in this business. As Marketing Consultant I would advise on this free trade on how to expand their industry globally and the company must have components and details for expanding its business and also be willing to know the advantages and disadvantages so that he could be making the right decision.

 

Free trade is an economic concept referring to the selling of products between countries without tariffs or other trade barriers. Free trade is the absence of artificial (government-imposed) barriers to trade among individuals and firms in different nations. International trade is often constricted by different national taxes, other fees imposed on exported and imported goods, as well as non-tariff regulations on imported goods; theoretically, free trade is against all these restrictions. In reality, trade agreements that are labeled as "free trade" by their proponents may actually create their own barriers to a free market. Some critics of such trade agreements see them as protecting the interests of corporations.

 

Free trade offers many Opportunities such as:

 

Increased production and efficiency

 

This is when some of the countries that specialize in creating commodities where they have the comparative advantage will increase their production, instead of focusing on products or industries in which other countries have the comparative advantage.

 

By increasing production, countries increase their efficiency. By specializing, countries better allocate their resources and purchase cheaper resources from other countries.#p#分頁標題#e#

 

Customer’s satisfaction

 

Though free trade leads to a global market, consumers benefit from the competition and variety brought to the market. Cheaper goods and materials can be bought easily from foreign suppliers

 

Also another benefit to consumers is increased innovations. As free trade expands, competition also expands. To stay competitive, firms must seek ways to create the comparative advantage. This leads to increased innovation that improves products.

 

Employment and Economic Growth

 

In spite of the fact that free trade may cause jobs in one particular industry to make up overseas, jobs in the exporting and importing sides will increase. When productivity increases in importing and exporting, wages is likely to rise.

 

If the country has lowered its trade restrictions, the gross domestic product will rise. Since consumers can purchase quality products for cheaper, they have more expendable income.

 

Foreign exchange gains and decreased poverty

 

If the country purchases a product from another country with money, it is extremely important to send the exporting country non-interest IOUs in exchange for real goods. The exporting country, though, must use the money within the country that imported the products. For instance, the United States purchases steel from China with U.S. money at the current market value. China will later use the U.S. money to purchase computer programs from the United States at the future market value.

 

Also, countries that open their trade barriers to allow free trade have the chance to enter the global market, which will increase income for the country. Thus is to say trade barriers increase the cost of trading so consumers will have more disposable income with free trade.

 

Increased export

 

Countries with law trade restrictions usually cause hostility with other countries. Therefore, the country with the restrictions also limits its own ability to export. When a country removes their trade restrictions, other countries are more willing to accept the exports.

 

Minimizes War

 

When countries work together professionally, mutual respect for the countries' customs and cultures increase. Fears and prejudices diminish and countries are less likely to fight to each other.

 

Free trade Challenges:

 

Might increase the number of harmful goods imported

 

Loss of jobs in countries

 

Leads to 'dumping' which is when foreign firms sell their goods in another country for below their costs of production; a form of predatory pricing to drive out local competitors#p#分頁標題#e#

 

It prevents infant industries in a country from developing as it won't have economies of scale like larger firms abroad making it harder for them to compete on price

 

Free trade could lead to over-specialization in the long run so countries will suffer from depending too much on a few particular goods as they risk a huge fall in income if there is a change in demand.

 

International Trade is the exchange of goods and services between one country and another. The exchange of goods and services across international boundaries has enabled the principle of division of labour to be extended to the international sphere.

 

International trade arises because:

 

The production of different kinds of goods requires different kinds of resources used in different proportions

 

The various types of economic resources are unevenly distributed worldwide

 

The international mobility of resources is extremely limited

 

Becoming involved in international trade can help your business:

 

To increase in the standard of living of all people in the countries themselves. It enables consumers in all countries to have a larger quantity of goods and services than they would have had if they to be self – sufficient and specialization itself increase output.

 

Some countries will be able to sell their resources for foreign exchange which is used to import machinery and other factors inputs necessary for industrialization. Exports likely generate valuable foreign exchange for economic development.

 

It encourages efficiency since all producers involved in international trade will try to be more efficient in order to be competitive both in domestic and foreign market.

 

International trade will promote peace and security, because countries are mutually independent and so they will try to avoid outbreak war.

 

International trade also will enlarge the commodity market for a country’s commodities of scale due to the advantage of a large market. Economies of scale will contribute to fuller utilization of capacity and new industries may be set up which were not possible before due to a limited domestic market.

 

International trade broadens the consumer’s choice, providing them with access to a wider range of commodities from abroad. This greater variety increases the utility of consumers.

 

Problems faced by developing countries in International trade

 

Most developing countries produce primary products that are subject to declining terms of trade. The terms of trade refers to the rate at which the commodities of one country exchange for those of another. The reasons for declining terms of trade include income inelastic demand and the weak bargaining position of primary producers, for instance agricultural producers.#p#分頁標題#e#

 

Many developing countries are faced by protectionist policies of developed countries and the product of developing countries cannot go through the markets of developed countries.

 

Developing countries are plagued by balance of payment problems especially current account deficit. Since export earnings are insufficient to finance import expenditure, this goes to developing countries having severe external debt problems.

 

Many developing countries are export dependent and import dependent. This makes them particularly vulnerable to changes in the international economic conditions.

 

The production of primary products by developing countries leads to fluctuate widely in international markets fundamentally because of price inelastic demand and supply.

 

In order to participate in global trade, your business will need to bring additional costs, such as, traveling to foreign locations, developing new promotional material, modifying your product to meet the needs of a new market, and shipping overseas. For these reasons, the decision to engage on international trade should be done with eyes open.

 

Procedures of doing Global Business

 

There are several procedures you can use to enter a foreign market, including exporting, importing, licensing, joint ventures and off-shore production. For an existing business that creates a tangible product, exporting is the most common method. Start-up costs and risks are limited, and profits can be realized early on. And if you are beginning a new venture, the other choices are options that may reduce some of the start-up risks.

 

There are two basic ways to export: directly or indirectly.

 

Direct Exporting

 

In direct exporting, your company finds a foreign buyer and then makes all arrangements for shipping your products overseas. This method requires a lot of footwork and infrastructure, and entails more risk, but the potential profit rewards are often higher. If you choose to export directly, you have several options:

 

Sales Representatives/Agents -- Essentially, you employ foreign-based representatives or "agents" who work on a commission basis to locate buyers for your product, just as you would domestically.

 

Distributors -- You strike a deal with a foreign distributor, who purchases merchandise from you and resells it with a markup. The distributor maintains inventory and provides after-sales service to the buyer.

 

Indirect Exporting

 

Your company uses an export intermediary to perform most of the details of the export arrangement. Many small businesses choose this option, at least at the outset. There are several types of export intermediaries:#p#分頁標題#e#

 

Commissioned agents - These are brokers who link your product or service with specific foreign buyers, allowing the primary company to fulfill the order and handle packing, shipping and export documentation.

 

Export Management Companies (EMCs) and Export Trading Companies (ETCs) -- These companies operate in the country where the goods are to be exported. EMCs generally represent your product to promote it to other prospective overseas purchasers, while ETCs usually work according to demand, finding a need and sourcing your product for foreign buyers. Both types of companies usually take care of all aspects of the export transaction (including conducting market research, promoting your product overseas, accessing proper distribution channels, and locating foreign distributors), making them a possible option for smaller companies that lack the time and expertise to break into international markets on their own. EMCs and ETCs usually operate on a commission basis, although some work on a advance basis and some take title to the goods they sell, making a profit on the markup.

 

Industry

 

Industrialization refers to the process of transforming raw materials, with the help of factors of production into consumer goods or new capital goods which permits more production. Here is an example of Wheat industry (agriculture industry) to fully exploit the free trade opportunities when looking to expand into foreign market for the first time.

 

Wheat is a grass that is cultivated worldwide. The global grain trade has always been of interest to investors because wheat represents one of the single most important components of world food consumption. Wheat is one of the worlds key staple products, with about 10 percent of production traded on world markets each year.

 

The United States is one of the world's largest wheat producing countries. Japan is one of the largest importers of wheat in the world, with imports originating from Australia, Canada, and the United States. Exportable wheat supplies are also available from Argentina, Europe, Ukraine and other areas of the world, depending on crop situations. This makes wheat a truly global market and allows traders to enter into a global environment to create a broad trading strategy using wheat alone or in combination with other grains.

 

FREE TRADE THEORIES

 

The theory of Comparative advantages:

 

Fully employ all resources world wide

 

Allocate those resources within countries to each country’s comparative industries

 

Allows the countries to trade free thereafter

 

The concept of comparative advantage on Wheat industry (Agricultural) and Wine Industry (Beverage)#p#分頁標題#e#

 

The principle of comparative cost states that even where one country has an absolute advantage over the other in both industries, specialization and trade can still benefit both countries provided each country has a comparative cost advantage.

 

Let say, two countries England and Portugal producing two goods, which is Wheat and Wine using labor as the flat input in production. Assume that the productivity of labor lies between industries and across countries, and assume that Portugal has more productive in both goods.

 

Table1:

 

Country

 

Wheat (cost per unit in man hours)

 

Wine (cost per unit man hours)

 

England

 

15

 

30

 

Country

 

Wheat

 

Wine

 

Portugal is proportionally better producing Wine than Wheat. Therefore, Portugal is said to have a comparative advantage in the production of wine. England is relatively better at producing Wheat than Wine; likely England is said to have a comparative advantage in the production of Wheat.

 

Trade might be advantageous:

 

Cost of production as shown in table 1; England is assumed to have 270 man hours available for production. Before trade takes place it produces and consumes 8 units of Wheat and 5 units of Wine. Portugal has little labor resources with 180 man hours of labor available for production before trade takes place it produces and consumes 9 units of Wheat and 6 units of Wine. Total production between the two economies is 17 units of Wheat and 11 units of Wine.

 

If both countries now specialize, Portugal producing only Wine and England producing only Wheat where total production is 18 units of Wheat and 12 units of Wine. Specialization has enabled the world economy to increase production by 1 unit of Wheat and 1 unit of Wine.

 

The fundamental generalization of the theory of gains from trade can now be stated as: Whenever opportunity costs differ among countries, specialization of each country by producing those commodities in which it has comparative advantages will make it possible to increase production of all commodities relative to the quantities available to them if each country attempted to be self-sufficient. And as for the principle of comparative advantage recommends that a country should specialize in the production of only those commodities in which it has a comparative advantages and export surpluses of such commodities worldwide.

 

The Concept of absolute advantage

 

A country is likely to have an absolute advantage in the production of a particular commodity if with a given quantity of resources it can produce more of that commodity than can any other country using the same quantity of the same resources. Let assume for instance that it takes 100 man hours to produce 1 ton of Wheat flour in England and 300 man hours to produce 1 ton of Wheat flour in Portugal. This means that 100 man hours of Portugal will produce only one third ton of Wheat flour. Since a given quantity of labor (100 man hours) produces more Wheat flour in England than in Portugal. England is said to have an absolute advantage over Portugal in the area of Wheat Production.#p#分頁標題#e#

 

Therefore, if country A has an absolute advantage over another country B in 1 commodity while B has an absolute advantage over A in another commodity, the total production of both can be increased by each country specializing in the production of the commodity in which it has an absolute advantages, it is important to know that trade is necessary to achieve gains from specialization.

 

Limitations of the theory of Comparative Advantage

 

The theory of comparative advantage takes places under conditions of constant costs or constant returns of scale. The theory lies on the unrealistic assumption that opportunity cost ratios remain unchanged as resources are moved from one industry to another. In other words, as specialization increases we are likely to encounter the law of diminishing returns whereby the gains from specialization will be reduced if the industry is experiencing increasing costs (diminishing returns). Although, increasing specialization will yield the benefit of economies of scale and under conditions of decreasing costs, benefits will be considered.

 

Transport costs may outweigh any comparative advantage

 

Governments may restrict trade

 

The theory assumes the existence of two countries and two commodities in the world. This assumption is unrealistic and therefore, the theory is not a very good explanation of international trade

 

The gains from trade are modifies by existence of transport costs and tariffs. The economic effects of these are very similar since in both cases the cost of moving goods is increased

 

Protectionism - barriers to international trade

 

Import controls are barriers to the free movement of goods and service that seek to distort the pattern of trade between countries.

 

A variety of import controls can be introduced.

 

Tariffs

 

A tariff is a tax on imports and is used to restrict imports and raise revenue for the government. We assume in the diagram below that producers from other countries can supply the good at a constant price of Wp - their supply curve is perfectly elastic.

 

The domestic demand and domestic supply curves are shown. If the market price is Wp, output Qs is produced by domestic firms and Qd will be the demand from home consumers. Because Qd>Qs, imports will come into the economy to satisfy the excess demand.

 

A tariff is placed on the value of imports. This raises the price of imports and as a result, domestic demand contracts and domestic supply expands. Home producers can supply more at the new higher price. The tariff gives domestic firms a competitive boost. The volume of imports has reduced.#p#分頁標題#e#

 

The effect of the tariff depends on the price elasticity of demand and the price elasticity of supply. A tariff will have a greater effect the more elastic the demand and supply. If the demand is inelastic then the imposition of a tariff will have little effect on the level of imports. The introduction of tariffs by one country can lead to retaliation responses from other countries. This retaliation can lead to damaging trade-wars.

 

Import Quotas

 

An import quota directly reduces the quantity of a product that is imported and indirectly reduces the amount of money that the export producers receive. The main beneficiaries of quotas are the domestic producers who face less competition.

 

Export Subsidy

 

An export subsidy is a payment to a domestic producer who exports a good abroad. If receiving an export subsidy, a firm can remain competitive abroad by exporting up to the foreign price (because the subsidy will cover some of the difference) yet receive the higher price domestically. The effects of a subsidy are the opposite of those of a tariff.

 

Voluntary Export Restraint

 

A voluntary export restraint is similar to an import quota. With a VER, the exporting country voluntarily restricts the number of goods that it ships to its trading partner. Foreign exporters must purchase licences from its government and then exports its allotted amount. The price they receive for their goods, minus the cost of the export licence, is their profits

 

The Heckscher – Ohlin theory:

 

The model was developed by Swedish economist, which states that countries export the products that use their abundant factors intensively and import the products using their scarce factors intensively. A country is considered as labour abundant if it has a higher ratio of labour to other factors than does the rest of the world. On another side, a product is labour – intensive if labour costs are a greater share of its value than they are of the value of other products.

 

Well, in the trade patterns of some industrialized countries we simply find a fair confirmation of the H – O prediction. Example; Japan is crucially dependent on imports of natural resources intensive primary products (agriculture, fishing, forestry, and minerals). However, it has a particular export advantage in technology intensive products as H-O would predict.

 

Market Factors to Assess

 

1. Demographic and Geographic Factors

 

Check on a sufficient population size, growth and density in the correct demographic region

 

Check on climate compatible with your product

 #p#分頁標題#e#

Check on shipping distance economically feasible

 

Check if there is a sufficient physical distribution and communication network

 

Check if the natural resources you may need are available

 

2. Political Factors

 

Check if the government amenable to trade with that country

 

Check if the country politically stable

 

Check if the government have heavy involvement in business

 

Check If there are existing trade restrictions, tariffs, non-tariff barriers or bilateral trade agreements

 

3. Economic Factors

 

Check if the economy sufficiently developed to support your product

 

Check if foreign trade a significant part of the economy

 

Is the country's currency stable? What is the inflation rate, availability, controls and stability of exchange rate.

 

4. Social/Cultural Factors

 

What is the literacy rate and average educational level in the country?

 

Is there a middle class that would support your product?

 

How is the market similar to and different from your domestic market?

 

Do the people have sufficient disposable income and a propensity to spend money on products similar to yours?

 

Are there language and cultural barriers to doing business?

 

5. Market Access Factors

 

Are there limitations on trade, such as high tariff levels or quotas?

 

Are there local standards, practices and other non-tariff barriers?

 

What documentation will you need?

 

What is the country's policy on honoring patents and trademark protection?

 

6. Distribution and Production Factors

 

What are local manufacturing conditions?

 

What are local labor laws?

 

Is there labor available with the skills you may need?

 

Are there sufficient regional and local transportation and storage facilities?

 

Are there intermediaries available if you need them?

 

Forming Connections in Your Market

 

Once you've identified the product or service you want to import or export and the country that interests you, you need to make business connections in the chosen market. You need to determine whether you will handle your global business directly or choose an agent, distributor or intermediary to act on your behalf, and if so, you need to find someone qualified to do so.#p#分頁標題#e#

 

Export Mailing Lists - These are custom searches of the databases of prospective overseers’ customers. You select market criteria, then receive a list of relevant manufacturers, agents, retailers, service firms, government agencies with names, addresses, contacts, products and other information. Output is available as mailing labels or on disk.

 

Trade Opportunities Programs - This service collects sales leads from overseas firms looking for U.S. products. Lead details include specifications, quantities, delivery dates and bid deadlines.

 

Agent/Distributor Service - This is a matching service that performs a custom search of foreign import agents and distributors, contacts them with your company's literature and products, then prepares a report identifying six prospects that are interested in doing business with you.

 

Once you've identified potential sources, contact them to seek specific product information, such as specifications, product samples and prices. Contact them by letter, fax, email, telex or cable. At this point, it's best to translate your business's own literature into the language of the country where you plan to do business. Although contacts at most foreign companies that do international business will speak English, it's best to communicate in your potential source's language.

 

Pricing Your Product

 

Pricing a product is always one of the most important parts both of marketing a product and making a business profitable, and, unsurprisingly, pricing a product for the overseas market is one of the most critical factors for entering foreign markets. Prices must be high enough to generate a reasonable profit, yet low enough to be competitive in overseas markets.