Introductory Trade Issues: History, Institutions, and Legal Framework
Read this chapter. While we are all a part of the economy, we can't see all parts of an economy at any one time. This chapter describes policy issues, controversies, and the history of international trade. You will learn about international economics, FTAs, GATT, WTO, anti-subsidy laws, and bound vs. applied tariffs. You will read about real-world issues such as policies restricting trade and forging agreements to reduce trade barriers. Test your knowledge by answering the exercises in each section.
Introduction
Economics is a social science whose purpose is to understand the
workings of the real-world economy. An economy is something that no one
person can observe in its entirety. We are all a part of the economy, we
all buy and sell things daily, but we cannot observe all parts and
aspects of an economy at any one time.
For this reason,
economists build mathematical models, or theories, meant to describe
different aspects of the real world. For some students, economics seems
to be all about these models and theories, these abstract equations and
diagrams. However, in actuality, economics is about the real world, the
world we all live in.
For this reason, it is important in any
economics course to describe the conditions in the real world before
diving into the theory intended to explain them. In this case, in a
textbook about international trade, it is very useful for a student to
know some of the policy issues, the controversies, the discussions, and
the history of international trade.
This first chapter provides
an overview of the real world with respect to international trade. It
explains not only where we are now but also where we have been and why
things changed along the way. It describes current trade laws and
institutions and explains why they have been implemented.
With
this overview about international trade in the real world in mind, a
student can better understand why the theories and models in the later
chapters are being developed. This chapter lays the groundwork for
everything else that follows.
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