Free trade agreements should stimulate trade between two or more countries. The six main advantages of strengthening international trade are that these results underline the importance of quality. A naïve approach that only examines the impact of trade agreements on prices (uncorrected on quality) could wrongly conclude that trade agreements do not affect consumers. At least for trade agreements implemented by the EU, the overall effect translates into quality changes. Once we have adjusted prices to quality, we find that trade agreements have reduced quality-adjusted prices by almost 7%. The general picture of the benefits of the trade agreement for Indian exporters is that international trade is the modern framework for prosperity. Free trade policy opens up new areas of competition and innovation. Free trade leads to better jobs, new markets and higher investment. Free trade spreads values and beliefs, as well as goods and services. Since international trade depends on traders and businesses complying with their agreements, countries and businesses are more accountable and therefore more stable. The impact of trade agreements on consumers is an area that has recently been somewhat neglected by research.
One of the central principles of the international economy is that reducing barriers to trade increases prosperity. Trade agreements between countries reduce trade barriers for imported products and should, in theory, provide consumers with well-being gains through increased diversity, access to higher quality products and lower prices. A better solution than protectionism is to include rules in trade agreements that protect against inconvenience. These agreements set the reduction and removal of tariffs for each type of product, which has a considerable impact on businesses. The purpose of trade is to provide access to a wider variety of goods and services. According to the Heritage Foundation, free trade “encourages competition and encourages companies to innovate and develop better products… Prices are low and quality must remain high. Free trade allows regions and businesses to focus on the goods or services they do best. International trade increases a company`s market share. The result is lower costs and increased productivity, resulting in higher production rates. This is why international trade rules established in free trade agreements (FTA) must be used strategically. We consider this estimate to be a lower limit for the actual welfare gains of trade agreements, for a number of reasons.