[MUSIC] The issue of international trade may be the most important in this election, where, sir, do you stand? >> I am all for free trade, when all nations trade freely, all nations gain and the world will prosper. >> I am for free trade too, but only if it is fair trade. If our trading partners use illegal exports, subsidies, or manipulate their currency, our workers and economy will suffer. >> You, madame, are not a free trader, you are simply a protectionist who wants to impose punitive tariffs. >> Let me remind you, sir, a tariff is not protectionist if it is used simply to defend our country against unfair trade practices. >> Well, at least voters will have a clear choice in this election. >> Many businesses rely on the import of everything from energy and natural resources to sophisticated assemblies for the manufacturing of their products. Many more businesses are involved in exporting their products to the world. And in this modern age, as ships and planes and trains and trucks move cargo around the world, trade has become essential to the health and vibrance of the global economy. That's why, in our next two lessons, we are going to explore the many dimensions of international trade. In this lesson we will begin with a quick overview of some of the key definitions in the language of international trade. Common terms like tariffs and quotas, to more sophisticated concepts like mercantilism and countervailing duties. Once we have established this foundation, we will then move briskly to an analysis of the two main competing theories of trade. Theory of Absolute Advantage and the Theory of Comparative Advantage. Through such analysis we will come to better to understand the various patterns of trade that we observe in the world. We will also be able to explore and dissect the famous gains from trade argument that has been used for centuries to justify the opening of national markets to global trade. Through such a dissection, we shall see that the economist gains from trade argument on behalf of more open international trade is not quite as simple as many economics textbooks would have us believe. Instead, we shall learn that while trade can indeed benefit the many, it can also cause tremendous economic and political disruptions within a society. Moreover, when some trading nations engage in unfair trade practices at the expense of their trading partners, the gains from trade argument tends to turn more into a zero sum gain with clear national winners and losers, rather that a positive sum gain where all nations win. [MUSIC]
