Why? .
Because it is a case of opportunity costs. If a country spent all of its resources producing numerous goods, but was the most efficient at producing one good among all of the goods it produces. Then, why waste the time and resources producing all of the goods when you can specialize in your production and save resources and time. This importing and exporting would benefit both countries. Therefore, Comparative Advantage is not about absolute costs of production, but opportunity costs.
Protectionism.
CONS: .
Protectionism increases the price of imported goods, reducing the amount of imports, with the intent of protecting some domestic industry from foreign competition.
Free Trade and competition drives down prices increasing the spending power of consumer money.
However, remember that consumers are the main beneficiaries of trade and the main victims of protectionism.
So, why then would Political leaders enact damaging restrictions such as Tariffs and Quotas on the public? .
BECAUSE:.
Government officials do not always act in the public's best interests. They can tend to enact policies that have very narrow and concentrated benefits for special interests and then disperse the costs of the policies around to a large part of the population. Policies that are harmful to the country in the long run can often generate votes and large monetary contributions to the short term political candidate.
Protectionism is an unfair and restricting policy to the private sector and a monetarily damaging policy for the public.
Trade Organizations.
Pro: Trade agreements are negotiated and signed giving all involved a voice. They provide a legal framework for international commerce. They guarantee trade rights and bind governments to keep their trade policies.
.
1 Trade Organizations foster goodwill and diplomatic relations across the globe and helps to keep international peace.
They allow disputes to be handled in a supported forum and to be handled constructively.