One of the key issues any nation faces is how to structure its trade Essay

One of the key issues any nation faces is how to structure its trade relations with other nations. A. How and why did England st - Essay Example During mercantile period, increase in exports over imports was considered the means to enhance national wealth in British colonies. Lahaye further points out that, The Navigation Act passed in 1660 limited the trade to be conducted by English ships and English seamen; and this encouraged English ships monopoly over trade within British Empire and highly limited the trade of foreign vessels within English ports. Further revisions of act improved the trade process in England. The revisions of act ensured that the trade shipped from its point of production to England or colonial port prior to its shipping to its foreign destination. At the same time, it also demanded the foreign goods set for colonies to be stopped in England prior to the distribution. This made England a well known centre for colonial trade. It encouraged the flow of goods through the country and thereby allowed the taxes to be levied. Further phases of Navigation Act grouped products as those to be shipped to ports wi thin British Empire and as those to be shipped to foreign countries. It also imposed regulations on the manufacture and trade of colonial products. British government supported products like iron, lumber, and other raw materials needed within Empire. At the same time, the colonial products that competed with products produced at home were discouraged. As a matter of fact, the mercantile system in Britain allowed for colonial monopoly over certain markets such as of tobacco and also provided the way for development of colonial shipbuilding. Free trade, as the name implies allows the free movement of goods, capital, and labor between nations. It provides specialization in manufacturing and export of products in a country overcoming all possible barriers of trade process. Free trade enables smooth conduction of trade between countries ‘without the influence or intervention of government through quotas or duties’ (Free trade explained). The scale of production depends on th e size of the market; if the market of nation is small, it may not encourage the producers to produce variety of products. Free trade combines individual markets with a larger world market proving beneficial to small sized markets. The expansion of the market size improves competition and enables the individual firms to enhance their trade. Free trade provides better economic environment for individual markets with the access to advanced technologies and better resource allocation. The feasibility of the technology helps domestic firms to connect with other individual firms abroad thereby enhancing the productivity of land and labor. This will also help industries in narrowing the range of goods and services. It ensures decrease in the costs of goods while maintaining the efficiency of utilized resources. Some of the factors that make free trade highly preferable for successful trade include the accessibility of enhanced production factors and free access to global markets. The unhi ndered access to global markets provides firms with the essential information on trends prevailing in the global market. As free trade improves competition, companies try to satisfy the customers with innovative products. Thus free trade amplifies innovative creations and improves productivity. Moreover free trade is advantageous in eliminating oligopolies and monopolies (free trade explained). However, free trade cannot be always regarded as the best policy due to