International trade policy is an integral part of every state’s financial policy, which involves influencing foreign trade through economic and administrative levers, such as taxes, subsidies, and restrictions on imports and exports. The United States currently has a number of trade arrangements with foreign countries. They help facilitate the exchange of goods and eliminate barriers to trade, which ultimately involves investment and results in economic growth. Policies governing trade with foreign nations play a crucial role in the flow of goods between the U.S. and other countries. The U.S. government policies affecting international trade include the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS).
Besides, the International Organic Trade Policy, the Antidumping and Countervailing Duty Laws, and the Generalized System of Preferences (GSP) define the restrictions for international trade. The GATT and GATS aim to ensure equal treatment for all the parties to the agreements, liberalizing the trade. The International Organic Trade Policy regulates the exchange of organic products between the U.S. and other nations. The Antidumping and Countervailing Duty Laws were developed to protect businesses from unfair competition, pricing, and subsidies. The GSP promotes economic growth in developing countries by providing the duty-free treatment of goods.
Along with the policies mentioned above, the U.S. has free trade agreements (FTAs) with 20 states regulating the shipment of products worldwide. Overall, U.S. government policies regarding trade have international repercussions. Factors of production are economic resources needed for the production of goods and services. They are traditionally divided into three main types: land, labor, and capital. In economics, land can refer to agricultural land, real estate, or natural resources and products extracted from or cultivated on land. Labor can be defined as the effort executed by an individual toward producing a service or a final product. Capital is the purchase of goods with money aimed at bringing revenue for a business. In general, factors of production are building blocks combined in a way to create economic growth.
Factor mobility is quite a self-explanatory term as it describes the ability to move resources from one production to another. It can refer to the movement of factors within an industry, across industries within a country, or between countries. The beneficial or detrimental effect of factor mobility should be considered in regard to income redistribution. For instance, a free trade agreement made by the U.S. with another country results in winners and losers for both parties. If the industry’s output prices grow, it benefits the employees. In contrast, if the industry’s output prices drop, the employees are harmed. At the same time, a statement holds that the export industry employees are advantaged, while employees in the import-competing industry are harmed by factor mobility. Thus, the mobility of the U.S. factors of production can both be good and bad for U.S. trade.