International Trade In Capitalist Countries

In a capitalist society, citizens are encouraged to trade on the world stage and are also incentivised for it. Each citizen has an equal opportunity to make profits and companies have the opportunity to gain access to untapped markets. Historically, capitalism has allowed many people to rise out of poverty. According to The Daily Wire, the number of people living in extreme poverty has declined by 80% from 1970 to 2006. This can be primarily attributed to the opportunities that are afforded to people when they have the freedom to choose the path they want their financial future to take. When an individual believes that there is an incentive to work hard productivity increases dramatically. For example, in China during the majority of the 1970s farms were under Mao Zedong’s state control, and due to his communist ideologies crops were sold at a fixed price to the state and the rest was divided amongst the farmers. Considering that there was no incentive to work hard the farms were inefficient. In 1978 the village of Xiaogang, covertly began practising capitalist ideologies and because, of this shift productivity increased exponentially. When Beijing found out it resulted in the communist state recognizing the benefits of the free market and gave farmers the right to own land and sell their crops on the world stage. This single event is credited with lifting 500 million Chinese citizens out of poverty. Historically, in capitalist countries international trade is crucial to a healthy economy and there is a significant emphasis on setting up strong trade relationships with other countries. Due to this a capitalist country such as, Canada, has many trade agreements in place with other countries that allow for low tariffs for many industries. For example, NAFTA and CETA.

NAFTA, which stands for the North American Free Trade Agreement was signed by the United States, Canada and Mexico. The agreement eliminated many trade barriers and as a result NAFTA quadrupled trade between the 3 countries in 20 years. In 2016 trade between Canada and the United States was worth $752 billion. NAFTA increased trade and foreign investment in Canada. According to the Office of the U.S. Trade Representative, exports from Canada to the U.S increased by 150% since 1998.

CETA, stands for Canada - European Union Comprehensive Economic Trade Agreement. CETA was signed on October 30th, 2016. CETA aimed to virtually eliminate trade barriers and addressed, insurance on investment, and enhanced access to European markets. Before CETA 25% of Canadian goods were tariff free in EU countries but, once CETA came into effect 98% of Canadian goods were tariff free.