Free Trade With Other Countries
A trading nation is a nation in which foreign trade constitutes a substantial portion of its gross domestic product. Because of the great importance of trading with other nations, these nations are often able to maintain competitive rates for their goods and services because they have the necessary infrastructure, legal systems, and trading offices that allow for smooth trade between the various trading partners. This allows the nation to maintain its standing as a world leader in the international business sector. There are numerous nations around the world, which would like to develop such a relationship with other nations. However, it is often difficult for these nations to obtain access to capital or foreign exchange, which are required in order to be able to make commerce possible.
China is a great example of a trading nation, as it is the largest consumer in the world. This being the case, China regularly purchases all kinds of goods, including agricultural products, heavy machinery, automobiles, electrical equipment, chemicals, and other forms of exportable goods. China’s most important economic engine is the growth of its domestic market, which has opened up opportunities for Chinese exporters to expand their business all over the world. For example, China is currently the largest manufacturer of automobiles in the world, accounting for almost 20% of the automobile market. As a result of these tremendous numbers, China is able to purchase large amounts of commodities from other nations, including petroleum, steel, aluminum, textiles, and other agricultural goods.
In addition to the United States and China, a trading nation could also be comprised of various South American countries, European nations, and Japan. All of these different countries have their own unique advantages to offer, but they also have a number of disadvantages that must be weighed carefully against the benefits before making a trade agreement with another nation. For example, although India is a rising economic power, it is not highly respected in the international community, and this may pose a significant problem when trying to enter into some type of free trade agreement. Furthermore, India’s government has an ambitious agenda that includes expanding its global influence and gaining more clout in the global scene. These things alone may pose a problem in negotiating a good free trade agreement with the United States or another comparable nation.