In fact, economists consider this law of comparative advantage to be fundamental. As Dominick Salvatore says in his basic economics textbook International Economics, the law of comparative advantage „remains one of the most important and still undisputed laws of economics. The law of comparative advantage is the cornerstone of pure international trade theory. [5] In trade based on product differentiation and economies of scale, several countries can produce the same product as a whole and exchange parts and differentiated products with each other. Thus, the United States could specialize in the production of jeeps and Europe could specialize in the production of Volkswagen. It is clear that much of the output in the modern economies of the industrialized countries is in sectors with rising staggered yields, and in these sectors the return to factors of production would not be offset by international trade. Indeed, in a low-labour economy, labour returns could rise rather than decrease, as the factor compensation theory would predict. Empirical evidence indicates that, in most cases, trade restrictions do not achieve their stated objectives. By the time lump-sum restrictions are imposed, equity and employment decrease instead of improve [7]. Even measures to protect certain sectors tend not to achieve their stated purpose. Stock markets in the footwear, color TV, automotive and other sectors fell after the implementation of protectionist guidelines. Employment developments around the announcement of trade restrictions also deteriorated. The steel industry`s experience with trade restrictions has been accompanied by a deterioration in the sector`s equity index [8]. However, they also recognized a role in regional integration, which would allow members of a trading bloc to eliminate trade barriers between them while maintaining a discriminatory duty on imports from third countries.
[18] Accordingly, Article XXIV of the GATT provides for a substantial derogation from the most important reference principle, which allows countries that may discriminate against non-members of the bloc. [19] In a customs union, members remove barriers to trade among themselves, but establish a Common Customs Tariff for imports from third countries. . . .
