Trade Can Make Everyone Better Off

world trading

International trade helps every nation to use its resources optimally. Foreign trade is the exchange of goods and services between two or more nations, which involves import and export. Foreign trade plays a significant role in the share of the gross domestic product (GDP). China is full of resources mostly because of its size and population, and the Chinese use the resources to the fullest; they export labor, technology, and other manufactured products. The recent rise of China is caused by its good foreign relations with other countries, especially with the African nations, with which China has become a major trading partner. They export labor to these countries to help in the improvement of infrastructure and technology. With the vast resources in China, the United States of America can greatly benefit building a partnership with China on the trading basis. This partnership will increase the exchange of information for both countries. The trade between China and USA will benefit everybody either directly or indirectly.

Money is the medium of exchange that allows countries to trade worldwide. There are benefits of global trade that have been the major factors influencing its expansion since the second half of the past century. The benefits of the USA trading with China are numerous, and beneficiaries of the trade relationship will not only be the two nations but the whole world too. The current bilateral relationship is referred to as Sino-American relation: both nations refer to each other as potential threats but also as strategic partners. This relationship is regarded as one of the most important bilateral relationships of the 21st century. Traders benefit from the increased markets for their products and services since both countries are highly populated with China being the most populous country in the world. It means that the demand for certain goods and services will increase, which entails an increase in supply as well. The demand and supply curves will have to be at equilibrium. For the supply to meet the demand, production will be more capital extensive in order to accelerate the production process (Finn, 2007). Increased markets mean that the GDP of both countries will increase significantly as will the incomes in the households and companies.

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An extended and permanent relationship with China will satisfy the need of the United States to develop economically. It will support households and private ventures, create jobs, increase contact between the Chinese and the Americans. Thus, the cooperation will result in efficient working governments and lower export prices by dissolving barriers of trade.

A bilateral trade agreement between the two countries will mean that tax reduction on products will become the part of the agreement. Some products depending on their nature will be tax-free while others will have significant tax reductions. The U.S government does not benefit from the tax reduction directly, but the reduction will attract more investors to the country. The government will benefit in tax paid via VAT of the products once on the markets. Since in the USA, there is no customs duty to pay for goods while leaving the country, the quantity of goods being exported will increase.

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Furthermore, the Strategic Economic Dialogue (SED) between the United States and China serves as a guideline for the countries in their economic long-term development and relationship. This agreement was established in 2006, and since its development; China has become the third leading and the fastest rising partner in the United States’ exports. The American workers benefit from the increasing exports, which are unloaded at the United States ports. Containers at the ports are transported by American railroads and delivered by trucks. Since the trade agreement between the countries, the unemployment rate in the United States has decreased significantly. It was proved in 2009 when the imports in the United States fell and the unemployment rate rose.

Both in China and the United States, the modernization processes take place, which has led to huge industrial structures. The countries have become the largest labor divisions in the world. China reduced the product tariffs from 31.5% to 17% making the imports of products in the United States more impressive (Finn, 2007). Consequently, trading between private parties in China is easier since it is allowed by their tariff agreement that does not require going directly to the government of China dissolving the protection barriers of imports.

Finally, agriculture has become the most successful sector in the United States due to the access to China’s market. Both countries complement each other by importing and exporting agricultural products. The American farmers will benefit from exporting to China while the Chinese population will have a constant supply of food and a better standard of living. In fact, the agricultural sector in the United States produces nearly 400,000 jobs. Thus, almost 30% of the United States economic growth is from exports.

To conclude, in the United States, the labor standards were relatively poor until their improvement due to the evolving labor guidelines. American workers have been choosing formal employment rather than the informal one. The tariff reduction by China has contributed and complimented the labor standards in the United States. The relations with China benefit the interests of the United States in terms of economic growth and profit. China would have to reduce the restrictive tariffs that raise the prices of United States goods, which would grant access to the untapped market of China. Moreover, there have been over 2.7 million jobs created since China’s cooperation with the United States (Finn, 2007). The relations between the Chinese and American people improved as well, which contributes to a stable and free market. The reduction of the costs of the international communication and shipping in the United States due to the tariff reduction, which makes it easier for cross-border trading of various products, is also one of the advantages of trading with China.

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