Globalization has led to the integration of national markets and the global interdependence of countries in trade of variety of goods, services, and commodities. International trade flows have over the past years experienced dramatic expansion with increase of world merchandise and commercial services imports and exports. The increasing integration of the world economies and international trade contribution are some of the important factors that have led to the expansion of the world economy. Liberation of the trade barriers such as tariffs, international solidarity and the independent unilateral trade structure reforms has led to the engagement of many nations in the international trade. Today the world economy is trade driven with foreign countries trading and investing directly through the negotiations, agreements and the strategic use of policies between each other.

The trade liberation assured the nations development benefits due to international trade driven globalization which improves qualitative benchmarking of integration in international trade. The qualitative benchmarking of trade integration increases the competitiveness enhancing the capacity of production. It also enables the facilitation of trade with higher level of exports and imports creating a more environmentally sustainable and climate-friendly production with competition culture and technological advances. The accelerated liberation and the economic growth due to the increased returns from the international trade have enabled the global developments which include the poverty eradication, food security education investment (World Trade, 2010).

The global trading has made major efforts in reducing the inequities and democratizing the trade and development gains within and across nations. The rules of trading system and the trade policies of the partners are affecting the development processes especially in the developing countries. This has led to the strategic management and more balance of the developing countries variables in trade and development policies. The evolvement of the multilateral trading system has recognized the challenges of structure and economic factors that composed the trade guidelines restricting the trade policy action (World Trade, 2010).

Trade liberalization process experienced the lowering and keeping prices of imported goods relatively low, thus affecting the domestic market and increasing the country’s incomes. The price transmission is dependable on the competitive structure of the world economy with the enterprises shifting the resources due to the impact on wages and employment caused the trade liberalization. Trade liberalization affects the resources on which it shifts wages and employment flexibility which occurs simultaneously. Trade liberalization also has an adverse effect on the government revenues on the situation where there is a reduction or the elimination of the taxes in an effort of maintaining the microeconomic stability of the country. The liberalization can impose positive or negative impacts or neutral effect on the government revenues which is relatively dependant on the domestic as well as the international reforms. Environmental protection fair wages and workers right should be included in every trade agreement.

Application of International trade Theories

Several international theories have revolved explaining different models in evaluation and prediction of international trade patterns in regards to the tariffs. These theories include the gravity model, ricardian model, heskscher model explaining several tarrifs. Several risks are also outlined in the theories on which the political, economic and environmental risk takes the largest part. The gains experienced in the developing countries as a result of trade barrier removal are high than the benefits acquired from the increased accessibility of the developed countries markets. However the developing countries earn substantial costs from opening up their often overlooked markets. The developing countries experienced extensive problems from the reduction of their trade barriers increasing the taxes due to the reduction of the tariffs. Trade barriers removal also leads to the disruptions in agricultural sector of economy with the widespread displacement of the countryside population. The fast import Liberalization can increase the unemployment and underemployment level, as well as dangerous levels of social and economic instability in a country.

Political factors affect the adoption and desertion of the stabilizing and structural programs in the international trade as many countries incorporate various measures standardizing the macroeconomic of the country economy. Analytical framework is usually set for the linkage examination between exchange rate policy and the governments in efforts of stabilizing the macroeconomic which is highly influenced by the structure of the financial systems. Imported intermediate and capital goods plays a major role in the country’s investment enhancing the liberalization and the country’s productivity in the international trade (Diana T and Carlos A, 2009).

International Trade and Economic Growth

Globalization has today affected the world economy of various nations due to the fast development of the international trade market increasing the corporate and business events. Worldwide economies are adapting to a vibrant market conditions with more companies and businesses making global presence felt by a strong competitive network. Diversification in international transactions in the international trade system is changing world economy and capital investments increasing the economic activities globally. International trade organizations have introduced guidelines that create harmony among the trading nations due to the international capital movements, external assets, investments. The trade is ensuring the equilibrium and the stability of the world economy with the revelation of the lacunae prevailing in the economy of a particular country (Toru K. and Kazumichi 2010)

World Trade Organization (WTO), a body responsible for the implementation of several agreements pertaining to multilateral trade activities has made attempts in creation of a worldwide uniform trade structure with the introduction of multilateral treaties (GATT) through several agreements. However the attempts experienced a lot of dissatisfaction and rebellion from many developing countries as the restrictions on the constraints on export, health regulations, sanitary regulations, embargoes and licensing as well as minimum price regulations were increasingly affecting on their economic welfare. Many countries raised the issue of equality in the agreement on which many did not see the interest of all the nations equally. They argued that the agreements could distress the financial and the monetary systems and negatively impact the international trade system.

Role of World Trade Organization in International Trade and the world economy

International Trade And Economic Growth increasing liberalization of trade and capital markets is due to the adverse effect of the governments as many governments fails to protect their economies from foreign competition and the import tariffs influence as well as nontariff barriers such as import quotas, export restraints, and legal prohibitions. International trade institutions have been established in efforts of free trade promotion eliminating the protectionism. These institutions include the World Bank, International Monetary Fund (IMF), and General Agreement on Tariffs and Trade (GATT) which was later changed to World Trade Organization (WTO). International Trade has over the years influenced the global economic growth with the economy and liberalization of trade restrictions especially the developing countries. The introduction of the World Trade Organization (WTO) has enhanced the multilateral trade activities with the implementation of several multilateral trade agreements. It has contributed to the global competitiveness providing efficiency in domestic business units as they get exposed international competition. The entrepreneurs are today getting easy access to technological innovations due to the integration with the world economy enhancing their productivity. Trade protectionism measures are high in the developing countries taking advantages of the international trade regime benefits.

Developing countries and the countries with economies in transition in the accession process are facing some challenges due to the world trade organization agreements. These countries continues to be subjected to further liberalization and rigorous reform commitments which includes the commitments exceeding the level of agreement and commitments undertaken by existing WTO Members of a similar level of development. The countries are also denied the equal and fair treatment rights whereby some of the existing WTO members are favored and enjoy some terms of the agreements without the normal procedures. The terms and conditions should be enjoyed between the member states with equal opportunities without the special and differential treatment. Trade preference is providing competitive advantage to many smaller and vulnerable economies representing considerable trade policy instrument for trade and other developments. Preference margins are being constantly removed allowing an international trade and development harmonization measure with diminishing income. This enables trade preference with regional and multilateral liberalization and lowering of trade tariffs preferences. The existing preference needs the improvements in the policies and the administration procedures with realistic rules United (Nation Conference in Trade and Development, 2010).

Non-tariff barriers and standards

The importance of the non tariff barriers has risen in efforts of protecting and regulating trade enabling a remarkable trend in international trading system with multilateral trading system. The non tariff barriers nature of application has also changed in many countries regulatory policy now focusing on environment, public health and safety protection ensuring quality domestic market standards. Stardards has become a major area of concern in the world trade as many countries fail to comply with the existing WTO rules and regulation on which they perceived them as costly and unreliable. They urge that the technical specification of the product and services brings additional costs and financial burdens on the businesses in market orientation especially in the developing countries. In essence the cost of export and import occurs in the expense of foreign regulations transformation, technical experts hiring in the explanation of product facilities regulation of production, regularly changing requirements and changing goal posts.

The utilization rate of the trade preferences is negatively affected by restraining rules of origin and other non-tariff barriers which prevents full exploitation of these preferences. The Supply capacity constraints often limits the capacity of many developing countries duty-free and other preferential opportunities exploitation thus development of competitive production capacities is an important factor in realization of the market access opportunities to the developing countries (Toru K. and Kazumichi 2010).

Trade adjustment issues

Many countries especially the developing countries that were not economically stable were over the past avoiding the active participation in international trade which entails risks especially those associated with strong competition in international markets. They feared that those companies that are less competitive and compliant will be eliminated out of business due to increase in world competition. Many of them argued that the new companies require temporary protection from the government until they build the strong foundation in competition and the vulnerability .Thus the governments issued the restrictions and prohibitions reducing the selected imports by introduction of quotas, and raising the import prices high make imports. They also impose several tariffs in an effort of enhancing the country’s economic status, however such protectionist strategies are economically dangerous as they continued poor efficiently production of goods by the producers leading to the country’s economic stagnation.

The international trade negotiations and agreements prompted changes in policies, legislations and trading strategies in adoption of trading dispensation. This trade liberalization enhances the trade and welfare generation without the externalities which is a short term regulation of trade reforms. Importers uses the existing channel while exporters who come from different sectors explores new markets as world economies and market opens up .This process stimulates the adjustment of the trade reforms as the country experience the transition thus the trade liberalization that has an effect on the country’s domestic company is a policy of choice. The proposed U.S Trade and Globalization Adjustment Assistance Act (TGAA) was formed in 2007with an aim of assisting workers, communities, firms, and farmers affected by trade liberalization with any country. Adjustment assistance and support such as trade initiatives is required by the developing countries in the liberation process

The development benchmarking of polices governing the international trade services sector is important as they assess the deliverance ability and the increased capacity, technology transfer and the global social benefits. The challenges facing developing countries is the design and implementation of comprehensive policy frameworks for the international trade which includes a well negotiated market access and the commitments that can provide the gain from the opening of their services markets and the effective use of both the private and public sectors. Empirical studies on the international trade shows that trade liberalization and gender is negligible as it exhibits gender related effects. The expansions of exports are relatively related to the increase in employment level of women especially in the developing countries and the sub Saharan region. Empowering of women in the international trade is a powerful engine of dynamic trade expansion for the global economy.

Globalization and the international trade is enhancing the integration of international markets, global trading and the interdependence of countries globally in the exports and imports of wide range of products, services, and other commodities. This is due to several stimulating factors and transitions such as liberalization of tariffs and other barriers to international trade, the foreign investments of countries through trade and investment agreements and the technological innovations in the international infrastructure which has enabled international development cooperation with common use of strategic policies. Many countries are benefiting in the trade due to increase in both quantitative and qualitative integration level in the global economy and the reformed international trading system as a result of globalization. Positive results of the trade liberations such as the poverty eradication, increased welfare and the level of employment are gradually begging to be felt in many developing countries where as the high expectation of the trade driven globalization is still insufficient. The insufficiency is highly contributed by the unstable economic, social, political, social and environmental costs which are vital factors in the development and the success of the global economy. Surprisingly many countries still holds the rivalry in each other further inhibiting the international trade. Today, the international policy makers are looking on the ways to maximize the benefits and development of the international trade and minimizing their costs in an effort of developing international driven trading system of global economy. This includes the efforts of creating a sustainable trading environment eliminating the trade inequalities and democratizing trade and the developments benefits in international level of the globalizing world.