Ethics in International Trade

International trade is the purchase and sale of goods by companies in different countries. Consumer goods, raw materials, food, agricultural products, pharmaceutical products, medical equipment, iron and steel, plastics, chemicals, clothes, energy, vehicles, electrical and electronic equipment, nuclear reactors, aircrafts, machinery, wind turbines, rare earth minerals, weapons, military materials, all are bought and sold in the international marketplace. Ethics has become a big issue in the last decades, due to globalization, where they try to harmonize hundreds of different cultures, customs, traditions, and values to a uniform one, but it is impossible and unachievable. International trade allows countries to expand their markets and access goods and services by importing them, otherwise it may not be available domestically; but there are many cases which cause serious problems with domestic production. As a result of international trade (exports and imports), the markets become more competitive, however ethical and fair trade is necessary for countries to maximize the wellbeing of their citizens, given their income constraints. International fair-trade policies and trade restrictions are the set of agreements, regulations, and practices by a government that affect trade with foreign countries, which is a combination of standards, laws, and practices that influence imports and exports. Trade policies can include regulations, devaluation of currencies, dumping, tariffs, and quotas, subsidies, with which they want to restrict trade and set policies that protect local industries from foreign competition. Fair and ethical trade policies must have a number of benefits, including economic growth, employment, attracting domestic firms that operate abroad to produce locally more efficiently at lower costs of production, and to lead countries to autarky, prosperity, and to maximize their social welfare. These ethical and fair-trade policies are effective if the price elasticities of demand for imports and supply of exports are high (elastic). The empirical results show that most of these elasticities are small (inelastic). JEL classification numbers: D6, F10, F13, F42, I38, J38, L40, C52.