You play with toys made in China, eat bananas grown on Caribbean islands and wear shirts sewn in Bangladesh, all because of trade.

Trade lets countries sell goods and services to other countries, and buy other goods and services from the same or different countries.

“People sell things they are good at making to other people who like or need those things,” says Ian Goldin, an economist and the World Bank’s vice president for external affairs.

To be able to trade with one another, countries have come up with international rules that regulate trade among nations. There is even an international organization that oversees these trade rules. It is called the World Trade Organization. Its goal is to come up with trade policies and agreements to help producers of goods and services, exporters, and importers conduct their business with people around the world.

But many countries in the world are dissatisfied with some trade policies. They consider them unfair. They sometimes think that trade will hurt them more than benefit them. They become afraid that their own farmers and factories will suffer if they import similar products from abroad—especially from a country where people earn less money or supplies are cheaper. They are also afraid that, as a result of competition, some local workers who make those products will lose their jobs. Many experts think these policies hurt poor nations more than rich ones.

Countries sometimes make it expensive to import and sell foreign goods and services on purpose. For example, if something is produced more cheaply in Country A, Country B may add fees to make the lower cost imported goods more expensive. Some wealthier countries do this to protect the jobs, companies, and farms within their own borders from competition. This makes it expensive for poor countries to sell their goods and services to rich countries because they need to pay the fees to enter these markets. It also makes prices higher for consumers.

Some poorer countries charge high fees to import things that they do not make, like cars and computers. This can be to encourage their people to spend money on things made in their own country and to boost the local economy. However, these “luxury” items can also be tools to help a country develop.

Many wealthy countries give special support and money to their farmers. This is called agricultural subsidy. Governments give these subsidies so that farmers in their countries can afford to sell their crops at a low price and continue to make a good living. But this makes it more difficult for farmers from poor countries to sell their products abroad. It costs poor farmers more money to grow crops (because they don’t get help from their governments). And they have to sell their crops at a cheaper price so they can compete with low prices that farmers from rich countries charge. Sometimes they do not even make enough money to pay for their seed, land, and fertilizer.

Government officials (mostly finance and trade ministers) meet regularly through the WTO to talk about these trade rules and to try to come up with fair ones. The rules need to be updated every few years because circumstances change.

This is important because open and free trade benefits consumers around the world. All countries can make and sell things that other countries need and want.

What does it mean?

goods and services: Things that are produced by a country's economy. Examples of goods include food, clothing, machines, and new roads. Examples of services include actions of doctors, teachers, merchants, tourist agents, construction workers, and government officials.

policy: A plan or course of action, as of a government, political party, or business, intended to influence and determine decisions, actions, and other matters.

agricultural subsidies: Monetary assistance a government gives to a person or group to support production of farm products. Subsidies are given for enterprises the government considers to be in the public interest.

Related Links
World Trade Organization