International Economics, - Essay Example

The success of RTA is mainly due to low trade barriers with all global partners. This means the most positive impact will be gained from free trade as researches show that least amount of tariff or no tariff is most advantageous for a regional trading agreement to become successful. Custom union, common market and economic union, all impose a certain amount of tariff on the goods. This greatly affects the amount of goods to be traded as an economist said: ‘the successful expansion of trade among the members of a regional trade agreement tends to be associated with increasing extra regional imports as a share of GDP and with the growth of world trade.

’, and extra regional imports will only be increased if there will be no or minimal tariff. Economic unions and custom unions are only beneficial for international trade and can only produce positive results if implemented in conjunction especially in case of EU, and this what happened in 1990’s. Trade can only be flourished if the country undertakes international trade and involves in exchanging goods and services from different countries around the globe. International trade means starting trading of goods with foreign countries which means foreign exchange pouring in the country, leading to more GDP and resulting in more finance for the industries to make exportable goods.

As exports will increase due to more exportable stock, trade will be flourished. International trade improves the relations between two or more countries. Improving relations means more chances of your own good to be sold in their markets, thus fostering trade (Nayan et al, 2010). International trade increases the productivity of a country; more production takes place leading to more people getting employed in the country, and therefore with more share in the GDP, there will be more growth in the world of trade.