Country A wants to lower trade barriers with its neighbor, Country B. While both countries support free trade, they are both reluctant to lower their barriers because they are not sure the other country will reciprocate. What obstacle is preventing the advancement of free trade between these countries?

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Business

Xander Matthews

4 April, 17:19

Country A wants to lower trade barriers with its neighbor, Country B. While both countries support free trade, they are both reluctant to lower their barriers because they are not sure the other country will reciprocate. What obstacle is preventing the advancement of free trade between these countries?

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Answers (1)

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Jacob Flores · Answer 1

The correct answer is: Insecurity.

Explanation:

To begin with, the countries that are free trade supporters tend to lower their barriers to the world due to the fact that they believe in the free interaction between parties and in the absence of the government regarding those matters, in order to establish better conditions that are set by the own economy itself as a whole. However, in the case where both countries are reluctant to do it because they are not sure the other will reciprocate then the free trade between those countries is suffering due to the insecurity of not knowing if the other country will or will not lower the barriers. They believe that if one lowers its barriers and the other does not do it, then the first one will be in a disadvantage because products of the second country will enter easily the first country and its own production will suffer from that situation.