Running head: CREATING TRADE POLICY 1

Interests Creating Trade Policy

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CREATING TRADE POLICY 2

Interests Creating Trade Policy

A trade policy is a specific principle that governs diverse buying and selling activities across and

within borders. Implementation of these policies affects or benefits different stakeholders differently

(Zhae, 2008). According to Feenstra (1995), effects include losses because of interfering with

production and benefits from favorable trade terms and shifts. Trade policies implemented in the

financial industry include quotas, tariffs, and free trade, and they have a significant impact on the

economic growth of a country.

Globally, creating a preference in trade is reshaping the economic system (Clausing, 2001).

Much preference should direct towards consumers during the creation of a trade policy. According to

Clausing (2001), once a principle favors consumers, benefits accrue to all parties, including the

businesses and their employees. For example, free trade involves all restrictions (e.g., quotas) on trade

cut off to benefit a buyer. There is a free flow of goods and services at considerable costs and various

goods to choose from. With free trade, exports and imports are encouraged, which elevate economies of

scale, a win-win situation for consumers, businesses, and their employees.

A beneficial trade policy creates economic growth (Rodrik, 1992). When there is an unstable

one, it can be more dangerous than not having one, leading to economic stability complications (Rodrik,

1992). In turn, the businesses fail, and therefore consumer needs are not met.

Summary

Consumer needs should take the central concern in creating trade policy. Consumer preference is

an essential aspect of creating trade policy, not only to the consumer but also to the producers. However,

one elevates customer benefits; it should not be at the expense of other parties, therefore assessing

agreements regularly.
CREATING TRADE POLICY 2

References

Clausing, K. A. (2001). Trade Creation and Trade Diversion in the Canada- United States Free Trade

Agreement. Canadian Journal of Economics, 34(3), 677-696

Feenstra, R. C. (1995). Chapter 30 Estimating the Effects of Trade Policy. Journal of International

Economics, 3, 1553- 1595

Rodrik, D (1992). The Limits of Trade Policy Reform in Developing Countries. The Journal of

Economic Perspectives, 6(1), 87-105

Zhae, Y (2008, September). The Analysis of Trade Policy Formal from the Benefit of Producer and

Consumer. International Journal of Business and Management, 3(9), 62- 64