Globalization and Trade 

Free trade and flexible labor markets can help increase countries’ competitiveness and wealth. Increasing liberalization of world trade is one engine behind the dramatic increase in global prosperity since the 1950s. Open trade increases consumer choices and can offer them better products and lower prices.

Globalization has led to increased movement of goods, services, labor, technology and investment in the world. Increased trade and globalization lead to innovation and technological advances as people in countries around the world seek to offer those products and services that they can produce more efficiently or that are of higher quality.

Countries that open their borders to the free movement of goods and services generally experience higher economic growth as incentives increase to shift to higher value usage of labor and resources.

In the trade debate CEI advocates free trade without qualification, but cautions that trade treaties should focus on trade, and leave other issues for other forums.

Tariffs
Tariffs are “taxes” or duties countries impose on imported goods and services in an attempt to protect domestic producers from competition or to raise government revenues. Both rich and poor countries use tariffs to discourage imports of certain goods and services.

Tariffs raise costs for consumers, limit consumer choice, discourage innovation, and often lead to retaliation, that is, a country hurt by high tariffs may then impose them on certain imports to punish the other country.

Subsidies
Subsidies are government payments to producers of goods and services either through direct payments, or other means, such as loan guarantees. Subsidies are used to protect domestic producers by lowering their costs of production so that their exported goods can be sold more cheaply in world markets.

Besides domestic taxpayers’ paying for these subsidies, subsidies act as a trade barrier, since producers in other countries, especially poorer ones, often can’t compete with producers that are subsidized.

CEI works to reduce or eliminate tariffs and subsidies so that increased trade and economic growth are not stunted.